    [Senate Hearing 105-866]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 105-866

     DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
            INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1999

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

                                    HEARINGS

                                    before a

                              SUBCOMMITTEE OF THE

                COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                           ONE HUNDRED FIFTH CONGRESS

                                 SECOND SESSION

                                       on

                               H.R. 4194/S. 2168

     AN ACT MAKING APPROPRIATIONS FOR THE DEPARTMENTS OF VETERANS AFFAIRS
    AND HOUSING AND URBAN DEVELOPMENT, AND FOR SUNDRY INDEPENDENT AGENCIES,
      BOARDS, COMMISSIONS, CORPORATIONS, AND OFFICES FOR THE FISCAL YEAR
               ENDING SEPTEMBER 30, 1999, AND FOR OTHER PURPOSES

                                   __________

            Corporation for National and Community Service
          Department of Defense--Civil
          Department of Housing and Urban Development
          Department of the Treasury
          Department of Veterans Affairs

          Environmental Protection Agency
          Executive Office of the President
          Federal Emergency Management Agency
          National Aeronautics and Space Administration
          National Science Foundation
          Nondepartmental witnesses

                                   __________

             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
    46-124 cc                    WASHINGTON : 1999

    _______________________________________________________________________
                For sale by the U.S. Government Printing Office
    Superintendent of Documents, Congressional Sales Office, Washington, DC
                                     20402
                               ISBN 0-16-058137-0

                          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 VA, HUD, and Independent Agencies

                    CHRISTOPHER S. BOND, Missouri, Chairman
    CONRAD BURNS, Montana                BARBARA A. MIKULSKI, Maryland
    TED STEVENS, Alaska                  PATRICK J. LEAHY, Vermont
    RICHARD C. SHELBY, Alabama           FRANK R. LAUTENBERG, New Jersey
    BEN NIGHTHORSE CAMPBELL, Colorado    TOM HARKIN, Iowa
    LARRY CRAIG, Idaho                   BARBARA BOXER, California
                                         ROBERT C. BYRD, West Virginia
                                           (ex officio)

                       Jon Kamarck, Clerk to Subcommittee
                              Carolyn E. Apostolou

                                 Minority Staff
                                  Andy Givens

                                C O N T E N T S

                                  ----------

                            Thursday, March 5, 1998

                                                                       Page

    Federal Emergency Management Agency..............................     1
    Corporation for National and Community Service...................    55

                            Thursday, March 12, 1998

    Department of Housing and Urban Development......................    93
    Department of the Treasury: Community Development Financial
      Institutions Fund..............................................   155

                            Thursday, March 19, 1998

    Department of Veterans Affairs...................................   169
    Department of Defense--Civil: Cemeterial Expenses, Army..........   277

                            Thursday, April 23, 1998

    National Aeronautics and Space Administration....................   287

                            Thursday, April 30, 1998

    Environmental Protection Agency..................................   331

                             Thursday, May 7, 1998

    National Science Foundation......................................   559
    Executive Office of the President................................   589
    Nondepartmental witnesses........................................   647
        Environmental Protection Agency..............................   647
        Department of Housing and Urban Development..................   746
        Department of Veterans Affairs...............................   788

     DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
            INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1999

                                  ----------

                            THURSDAY, APRIL 23, 1998

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:38 a.m., in room SD-138, Dirksen
    Senate Office Building, Christopher S. Bond (chairman)
    presiding.
        Present: Senators Bond and Mikulski.
        Also present: Senator Bumpers.

                 NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

    STATEMENT OF DANIEL S. GOLDIN, ADMINISTRATOR
    ACCOMPANIED BY MALCOLM L. PETERSON, COMPTROLLER

                    OPENING STATEMENT OF CHRISTOPHER S. BOND

        Senator Bond. Good morning. This hearing of the Senate VA,
    HUD, and Independent Agencies Subcommittee will come to order.
        The subcommittee meets today to review the budget request
    of the National Aeronautics and Space Administration [NASA],
    and we welcome Dan Goldin, NASA's Administrator, and his staff.
        NASA's budget request totals just under $13.5 billion,
    nearly $200 million less than the fiscal year 1998 enacted
    level. Once again, NASA is proposing to do more with less and
    to make its missions smaller, cheaper, and better. We
    appreciate NASA's willingness to step up to the plate and
    actually to do more with less, instead of just talking about
    doing more with less sometime in the future.
        Last year at this hearing, I believe we talked about the
    excitement that NASA was generating--the awe-inspiring visions
    allowing us to picture the far reaches of the universe, to see
    the birth of stars and galaxies, and to imagine the possibility
    of life existing throughout the universe. This past year has
    continued that excitement--the landing of the Mars Pathfinder
    on the Fourth of July and the explorations of Sojourner, the
    little rover that could, which captivated the Nation. I also
    commend NASA's Associate Administrator for Space Science, Wes
    Huntress, for a job well done, and wish him well in his new
    endeavors.
        On the other hand, the past year has also done little to
    alleviate some of the concerns we expressed last year,
    particularly over the construction of the International Space
    Station. The problems we discussed last year, both those with
    the U.S. contractors and with the commitments from our Russian
    partners, have continued. The opportunity that we gave NASA and
    the contractor in last year's conference report to reexamine
    the funding profile, schedule, content, and efficiency of the
    program, only has been given lip service and NASA has not used
    this review effectively in my view. Instead, NASA has only
    reiterated the need for transfer authority, which was denied
    last year.
        I continue to remain concerned over the exploding cost of
    the International Space Station in which the overall cost of
    the program will grow from $17.9 billion to some estimates of
    $23.3 billion, perhaps even more at completion. I do not think
    it appropriate to rob other programs and initiatives to pay for
    the space station and how we balance the space station with
    space and Earth science programs is of grave concern.
    Obviously, these are areas which we will wish to explore during
    this hearing.
        We also have questions remaining concerning NASA's use of
    uncosted carryovers. Last year we were surprised that the
    shuttle program, which had allegedly been cut to the bone, was
    able to come up with an excess of $200 million in fiscal year
    1997 to be used as part of the shortfall in the space station
    program. We expressed concern that NASA was using an internal
    bank of uncosted carryovers to allow the agency to bail out
    other programs, despite the purposes for which Congress had
    appropriated the funds.
        This year uncosted carryovers seem to be the answer for all
    of NASA's cost overruns and also a way to start new programs in
    the existing budget. However, if the funds which were
    appropriated by Congress have already been obligated for their
    intended purpose, they cannot be spent again merely because the
    agency has not yet costed the obligation. Now, this committee
    needs to understand NASA's use of uncosted carryovers both for
    NASA's credibility and for us to understand the actual funding
    costs of the programs.
        In addition, this is another difficult year for funding
    decisions for this subcommittee. The President again has
    submitted a budget that raises expectations by not structuring
    spending decisions according to fiscal requirements and program
    needs. We have significant funding needs that we must address,
    ranging from medical care for veterans to climbing costs
    associated with housing for low-income Americans to relief for
    victims of disasters. We are not far enough along in the budget
    process to have an allocation for the subcommittee. So, it is
    premature to discuss absolute levels of funding that might be
    available to NASA, but we can be sure, as in the past, that the
    allocation will be tight. Therefore, we need to understand
    NASA's funding priorities for its programs.
        We are living in a rapidly changing world and possibly also
    in a rapidly changing universe. We count on agencies like NASA
    to inspire us to explore and understand not only the world, but
    also the universe. We also count on NASA to use its vision to
    serve the Nation and to benefit life on Earth.
        Let me now call on my distinguished ranking member, the
    Senator from Maryland, Senator Mikulski, for her opening
    statement. Senator.

                         STATEMENT OF BARBARA MIKULSKI

        Senator Mikulski. Thank you very much, Mr. Chairman, and I
    want to welcome the Administrator, Dr. Goldin, and look forward
    to our conversation today.
        I also want to note the presence of the new Associate
    Administrator for Human Exploration and Development in Space,
    Joe Rothenberg, who was the former Director of Goddard, a
    Maryland resident. We have a light in the window for you.
    [Laughter.]
        And I also want to extend my greetings to the new Goddard
    Director, Mr. Al Diaz, and to the new Associate Administrator
    of Earth Science, Ghassem Asrar. Welcome.
        Let me start by saying that it is good to see that the
    proposed funding level of $13.46 billion in the fall to see--I
    am pleased to see the amount that finally got into the budget.
    I was deeply concerned that there would be less money this
    year, that the promises that had been negotiated would fall
    short, and that we would again have very stringent funding
    issues.
        I do believe that we have very stringent funding issues
    because I believe that when one looks at the overall increased
    funding at various science agencies, that NASA is not moving
    ahead in the way that others are.
        I want to thank Mr. Bond and Mr. Goldin for the work that
    they did to ensure that the out-year funding for NASA did not
    dip to a level that would essentially begin to hollow out or
    downgrade NASA.
        NASA has done many wonderful things. Its mission to explore
    new frontiers with new technologies is essential in our
    everyday life. NASA has been good for science, good for
    business, and good even for human health in the protection of
    our environment. We know that investing in NASA's science and
    technology has been good for business and that new industries
    have been built on space exploration, such as personal
    computers, communication satellites, and weather forecasting.
    Space exploration has generated more than 30,000 product
    spinoffs. It has been good for science by providing improved
    scientific knowledge about other planets and life here on
    Earth.
        I have been really pleased that in the last year there have
    been incredible discoveries. The landing of the Mars Pathfinder
    suggests the possibility of hidden subsurface water. The Hubble
    telescope discovery of 1,000 bright young star clusters,
    resulting in the collision of two galaxies, and just this week
    the discovery of the birth of a solar system that suggests that
    there is even other life to be considering. These outstanding
    discoveries help us better understand the universe and help us
    develop predictive environmental, climate, and natural
    disasters.
        Our investment in NASA has been good for human health. It
    has saved lives with the techniques that we have developed, and
    what is going on in the work of new x-ray technology and new
    opportunities on tumor research is outstanding.
        Though I am a strong supporter of NASA, let me tell you,
    though, Mr. Goldin, I have some yellow flashing lights that I
    would like to discuss.
        First, I would like to note my very strong concern about
    NASA's future role in the Federal Government's overall science,
    research, and technology efforts. I do not want, as we talk
    about 21st century research and science funding, that NASA will
    be left behind.
        Second, I am concerned about the funding of the space
    station and the schedule of its ongoing operation. In
    particular, I am particularly concerned about the fragile
    nature of the Russian participation. As I stated at last year's
    hearing, my concern is more with the Russian financial
    situation, not with their technical competency. In our
    conversation, I want to hear more about what is the Russian
    participation, particularly in the light of the departure of
    Prime Minister Chernomyrdin.
        I also want to know how the Russians are dealing with the
    impact of the proliferation of missile technology that could
    lead to the manufacture of the weapons of mass destruction.
        Third, I am concerned about--in addition to the missile
    technology transfer from Iran, closer to home, I want to hear
    how NASA will be meeting the needs of adequate funding for the
    Space Telescope Science Institute and what is the status with
    respect to implementing the WOBS 2000 plan.
        Last, but also very important, is my concern about the
    agency's year 2000 readiness. In a GAO report, I note that NASA
    itself got a D in terms of being ready to deal with the Y2K
    problem and I look forward to hearing your comments on that.
        As always, I view these conversations as enormously
    constructive and look forward to hearing your response both
    here in the hearing and our ongoing work and cooperation.
        Senator Bond. Thank you very much, Senator Mikulski.
        Now, Mr. Goldin, we will make your full statement--oh,
    excuse me. Senator Bumpers.
        Senator Bumpers. Mr. Chairman, I am not going to abuse your
    hospitality----
        Senator Bond. We are delighted to have you here.
        Senator Bumpers [continuing]. By taking up the committee's
    time. I just wanted to come by and hear Mr. Goldin's testimony,
    and with your permission, I might have a couple of questions.
        Senator Bond. Thank you, Senator.
        Senator Mikulski. It is great to have you at the NASA
    hearing.

                         statement of daniel s. goldin

        Senator Bond. Now, Mr. Goldin, if you would give us your
    statement. We will make the full statement a part of the
    record, as always, and invite you to make such comments as you
    think are appropriate for the oral presentation.
        Mr. Goldin. Chairman Bond, Senator Mikulski, Senator
    Bumpers, I am very pleased to be here today.
        This week we have not only seen what the work of our
    Nation's space program does, but the incredible scope of that
    work. Yesterday, as Senator Mikulski pointed out, newspapers
    were filled with pictures of a solar system revolving around a
    young star that is 13 trillion miles away. And, at the same
    time, we are peering out at the infinite vastness of space, our
    brave astronauts on the shuttle, working with researchers at
    the NIH, are looking inward at the infinite complexity of the
    human brain.
        These projects would not be possible without this
    committee's support of the origins program and the life science
    program. So, I want to begin today by thanking all of you for
    that support, especially Senator Mikulski who was responsible
    for bringing NASA and NIH together back in 1992.
        Mr. Chairman, my message today is this: NASA brings the
    same sense of commitment and conviction that led to this week's
    events to making our budget work. We continue to do more with
    less and we continue to do what we say we will do.
        Since 1993, NASA's budget has come down, but we have made
    those reductions work for us and for the American people. Mr.
    Chairman, we have explored new worlds. We have enhanced life
    here on Earth and we have already saved the American taxpayer
    $25 billion, and by the end of fiscal year 2000, we will have
    saved the American taxpayer $40 billion. We are a high
    performance agency and our budget cuts have not changed that.
    Nothing says it better than this: The 1999 budget is down, yet
    we started 10 new programs.
        Let me share with you another example. In the 1980's we
    launched only two interplanetary probes. In the next year or
    so, we will have launched one about every 10 weeks.
        We are doing some exciting things in aeronautics and space
    transportation too. Over the past year, we joined forces with
    the aviation industry, the FAA and DOD and made an important
    new commitment to Americans in air travel, cutting the crash
    rate by a factor of 10. With this budget, NASA will help build
    a stronger America by committing to air and space travel that
    is not only faster, better, and cheaper, but cleaner and much
    safer.
        In the area of Earth science, you will notice that the
    budget is lower in its 5-year projection than last year. There
    is a good reason for that and we are very proud of it. We now
    have lower-cost spacecraft that meet or exceed our toughest
    requirements. This lower budget not only fully funds our
    current programs, it also provides funding for two new programs
    and complements a third. This is a balanced aeronautics and
    space program.
        We feel good about where NASA is today and where the agency
    is going. We will be working closely with you on all aspects of
    our budget, especially the International Space Station. We are
    all concerned about the cost overruns and schedule slips. I am
    not going to sugar-coat them. There have been some problems,
    even more so for our Russian partners, but we are getting it
    done. We are moving with confidence toward the first element
    launch this year. We are building the station and we will
    enrich our children's lives in ways we cannot even begin to
    imagine.
        A final word about the station. To date, with the exception
    of $100 million that the Congress gave us, we have accommodated
    all the additional space station requirements within our own
    decreasing budget and at the same time, as I mentioned, we have
    strengthened all our other enterprises. This is because the men
    and women of NASA are doing an extraordinary job and I want to
    thank them and salute them. They represent the very best of
    America.

                               prepared statement

        I want to thank you again for your support. I began by
    talking about the vastness of space and the complexity of the
    brain. Perhaps the only thing more infinite than those two
    things is our imagination. At NASA we tapped that imagination.
    We opened the air and space frontiers. Our mission is to
    pioneer the future. This is what we do for America, but this is
    not something NASA does by itself, not by a long shot. This is
    something the administration makes possible. This is something
    that you make possible. This is something we must do together.
        Thank you. I am happy to take your questions.
        [The statement follows:]

                     Prepared Statement of Daniel S. Goldin

        Mr. Chairman and Members of the Subcommittee, I am pleased to be
    here to present to you NASA's budget request for fiscal year 1999. I
    look back at 1997 in pride at what the NASA team has accomplished. It
    was an incredible year, one in which discoveries from NASA missions
    filled the calendar, the front pages of our Nation's newspapers and
    magazines, and television screens around the world: images of rocks,
    nicknamed ``Scooby Doo'' and ``Barnacle Bill,'' from the surface of
    Mars; images of the surface of Jupiter's moon Europa, suggesting the
    possibility of hidden, subsurface water; spectacular images from the
    Hubble Space Telescope of a galactic collision and the resulting birth
    of 1,000 bright young star clusters; the image of the El Nino weather
    phenomenon underway in the Pacific, combining information taken from a
    variety of earth observing satellites and instruments; and the image of
    the Space Shuttle Endeavor, lighting up the night sky, on another trip
    to the Mir Space Station, where U.S. and Russian astronauts are gaining
    experience in space operations that will prove invaluable in the
    assembly and operations aboard the International Space Station.
        This is what NASA is all about. Our vision says it best. NASA is
    about exploring, about innovation, about pushing the frontiers of
    aeronautics and space. NASA's Strategic Plan defines this vision and
    poses fundamental questions of science and research that provide the
    reason for why we exist and the foundation for our goals. These
    questions are fundamental for everyone:
      --How did the universe, galaxies, stars and planets form and evolve?
            How can our exploration of the universe and our solar system
            revolutionize our understanding of physics, chemistry, and
            biology?
      --Does life in any form, however simple or complex, carbon-based or
            other, exist elsewhere than on planet Earth? Are there Earth-
            like planets beyond our solar system?
      --How can we utilize the knowledge of the Sun, Earth, and other
            planetary bodies to develop predictive environmental, climate,
            natural disaster, and natural resource models to help ensure
            sustainable development and improve the quality of life on
            Earth?
      --What is the fundamental role of gravity and cosmic radiation in
            vital biological, physical, and chemical systems in space, and
            how do we apply this fundamental knowledge to the establishment
            of permanent human presence in space to improve life on Earth?
      --How can we enable revolutionary technological advances to provide
            air and space travel for anyone, anytime, anywhere more safely,
            more affordably, and with less impact on the environment and
            improve business opportunities and global security?
      --What cutting-edge technologies, processes, and techniques and
            engineering capabilities must we develop to enable our research
            agenda in the most productive, economical, and timely manner?
            How can we most effectively transfer the knowledge we gain from
            our research and discoveries to commercial ventures in the air,
            in space, and on Earth?
        This is the first NASA budget formulated in response to the goals
    of the Government Performance and Results Act (GPRA). To demonstrate
    our commitment to the achievement of the goals of GPRA, we have
    implemented a Strategic Management System. This system assigns
    guidelines and responsibilities for program development including
    planning, implementation, execution, and performance evaluation.
    Central to the system are the four NASA Strategic Enterprises that
    encompass the programs and activities that support our goals, and are
    responsible for answering these fundamental questions and satisfying
    our customers' requirements.
        The NASA Strategic Plan defines our vision, mission, and goals for
    the future. While GPRA requires 5-year plans, NASA has laid out a
    course of proposed opportunities for the next 25 years. The NASA
    Performance Plan provides evaluation measures and performance targets
    for selected programs and activities for our Enterprises and
    Crosscutting Processes. We will hold ourselves accountable to achieve
    our goals and performance targets and do what we say we will do. We
    have established challenging, though realistic, achievement targets and
    will inform you of our progress when we publish the Performance Report
    in March 2000.
        We at NASA will celebrate our 40th anniversary this year. I am
    proud of the NASA team that has reinvented NASA to make it better than
    ever. NASA's transition over the past several years has been
    incredible. The amount of upheaval, uncertainty, and challenge to every
    aspect of the way we do business has touched every corner of NASA. It
    has been hard, incredibly hard. But the NASA team has met that
    challenge and emerged stronger, more flexible, for the fight. And the
    results are obvious. Faster, better, cheaper is not a slogan--it is
    routine. The fiscal year 1994 budget included funding for 11 Space
    Science missions; the fiscal year 1999 budget request contains funding
    for 28 missions. The original Earth Observing System envisioned a few
    large and expensive spacecraft. The current EOS program encompasses
    many much smaller missions at a significantly lower cost. This will
    enable the infusion of new technology development and is responsive to
    emerging scientific discoveries. The NASA Aeronautics Program is at the
    forefront of the Administration's National Partnership in Aeronautics
    Research and Technology. And all the while, the size of our workforce
    has been reduced by 5,700 FTE since 1993, and is on target for a total
    complement of about 17,800 by fiscal year 2000. We have reduced the
    size of Headquarters by over half in this time.
        One thing has not changed--NASA's commitment to a space and
    aeronautics program that is balanced, relevant and stable. Let us go
    back two years. In the fiscal year 1997 budget request, the outyear
    planning numbers were disappointing, but we knew they were not cast in
    stone. In 1996, the President's National Space Policy committed to
    stable funding for NASA. In the fiscal year 1998 budget request, the
    President gave NASA a stable funding level of $13.5 billion for fiscal
    year 1998 and an outyear baseline of $13.2 billion. The fiscal year
    1998 budget request was a vote of confidence from the President and the
    Administration. It was a vote of confidence that NASA had done what it
    needed to do--technically, scientifically, and organizationally--for
    the Nation's space and aeronautics program.
        Once again, in the fiscal year 1999 budget request, NASA has been
    given a vote of confidence from the President. NASA has pledged to meet
    its commitments, and with the fiscal year 1999 request we will continue
    to deliver on our promise. Total funding in the fiscal year 1999 budget
    request for fiscal year 1998 through fiscal year 2002 represents an
    increase of $442 million over last year's runout. This budget is a
    resounding success for NASA. It also expands our horizons in two
    areas--Space Science and Future Space Launch.
        Last year's incredible achievements of NASA's Space Science Program
    significantly advanced our understanding of the Universe and posed even
    more daunting questions. The landing of the Mars Pathfinder spacecraft
    on the surface of Mars and exploration of the surrounding terrain by
    the Sojourner rover captivated the Nation for several months. The
    Hubble Space Telescope discovered over 1,000 bright, young star
    clusters resulting from the collision of two galaxies. The launch of
    the Cassini spacecraft will result in the first landing of a probe on
    one of Saturn's moons. Examination of images and data from Galileo is
    adding to our knowledge of Jupiter and its moons. The early pictures
    coming back from the Mars Global Surveyor are amazing in their depth
    and detail and add to the knowledge gained from Mars Pathfinder.
        NASA's fiscal year 1999 budget includes a major funding increase
    for Space Science that will capitalize on this success. These funds
    will support an augmentation to the Mars Surveyor Program to enhance
    the Mars 2001 lander and the initiation of a series of Solar
    Terrestrial Probes to track solar phenomena and their impact on the
    Earth. We will also be able to initiate mission development for the
    Gamma-ray Large Area Space Telescope that will investigate the end
    states of stars' lives and to seek out the most extreme environments in
    space. The budget also continues NASA's commitment to the search for
    the origins of life. In response to evidence of possible subsurface
    oceans discovered by the Galileo mission on Jupiter's moon Europa, we
    will begin planning for a mission to launch in 2003 to enable closer
    investigation of this possibility.
        The second area that holds enormous potential for the future is the
    next generation of launch vehicles. In order to achieve significant
    savings in the cost of space missions, we must lower the cost of going
    to orbit by orders of magnitude. The Reusable Launch Vehicle (RLV)
    program is addressing the critical technologies needed to achieve major
    leaps forward to meet the challenges and lower the costs of future
    space missions. In fiscal year 1997, the X-33 and X-34 programs both
    successfully passed critical design tests.
        Funding requested in fiscal year 1999 will continue hardware
    fabrication and testing in preparation for flight demonstration of both
    these technology demonstrators in 1999. The RLV program is a
    partnership between NASA and industry, built on industry-led
    cooperative agreements. Phase II of the X-33 program, encompassing both
    flight and ground tests, is underway and is expected to lead to a
    decision by the Government and our industry partners whether full-scale
    development of an RLV should be pursued. New funding is included in the
    NASA budget runout to support a decision at the turn of the century on
    what type of operational launch systems NASA should invest in that will
    reduce the costs of access to space.
        The International Space Station (ISS) development effort is at its
    most critical point. During 1997, the program focused on the continued
    qualification testing and manufacture of flight hardware. We are only a
    few months away from the scheduled first element launch and subsequent
    assembly flights throughout 1999. Node and Laboratory module
    fabrication is complete and the node and pressurized mating adapter
    have been delivered to the Kennedy Space Center for launch preparation.
    Activities are well underway to support crew training, payload
    processing, and hardware element processing. Our international partners
    have continued development of flight hardware in support of their
    commitments. The President's fiscal year 1999 budget request includes
    revised outyear estimated for ISS to address important future needs,
    including funds to provide a long-term solution to the safe return of
    the full complement of Station crew members. Without the additional
    funds included in the fiscal year 1999 submission, short-term fixes
    would likely result in very expensive outyear problems. I have included
    a comprehensive status of this ambitious program later in this
    statement.
        NASA has stated from the outset that this program was not going to
    be easy. The size and complexity of the ISS is unprecedented. Our
    continuing work with the Russians is providing an invaluable foundation
    for the assembly and construction activities of the Space Station that
    are now only a few months away. Despite the concerns surrounding the
    condition of Mir last year, the experience we are gaining through our
    cooperation with the Russians will be instrumental to the success of
    this program. NASA remains firmly committed to building the
    International Space Station on time and at the least cost to the
    American taxpayer. President Clinton has been unwavering in his
    commitment for the United States to continue to play a leadership role.
    NASA will deliver on this commitment. NASA is grateful that the
    Congress appropriated $230 million of the additional $430 million
    sought by NASA in fiscal year 1998 to meet program requirements and
    maintain an adequate level of program reserves. Adequate program
    reserves must be available to enable accommodation of unforeseen
    technical developments inevitable in a program of this complexity. The
    pending fiscal year 1998 appropriations transfer authority is sought in
    order to maintain planned assembly schedule for the U.S. and its
    international partners, react to new program requirements as the need
    arises, and control outyear costs. We continue to seek the support of
    this Committee to address this need.
        Our highest priority continues to be the safe launch, operation,
    and return of the Space Shuttle and crew. NASA's proposed fiscal year
    1999 budget will enable the continuation of Shuttle upgrades, including
    work on the Main Engine and the Orbiter. In addition, improvements to
    Shuttle performance, such as the Super Lightweight External Tank,
    remain on track. Over the next two years, Space Shuttle operations will
    continue the transition to a single prime contractor. In sum, the Space
    Shuttle team remains committed to delivering on its promise: meeting
    the flight rate for less money and with improved safety.
        Research progress on the Mir space station, the Space Shuttle, and
    on the ground continued expanding our understanding of fundamental
    physical and biological processes while pointing the way to the most
    productive areas of research for the International Space Station. In
    addition to biomedical data, Mir research produced the first multi-
    generation plant experiments in space and expanded the duration of in-
    flight tissue culture experiments from two weeks to over four months.
    On the Space Shuttle, the flight and reflight of the first Microgravity
    Space Laboratory mission foreshadowed the flexibility and regular
    access our research communities will enjoy on the International Space
    Station. The mission yielded the first measurements of specific heat
    and thermal expansion of glass-forming metallic alloys, and the crew
    were able to sustain the weakest flames ever burned either in space or
    on Earth and studied the longest burning flames ever ignited in space.
    Combustion research in space may lead to applications that help reduce
    pollution and increase energy efficiency on Earth.
        NASA's fiscal year 1999 request for the Earth Science Program,
    formerly the Mission to Planet Earth Program, will continue to provide
    valuable data right now to improve our understanding to the Earth
    system. Data from missions underway, including the Upper Atmosphere
    Research Satellite, TOPEX/Poseidon, and SeaWIFS, as well as data from
    the recent NASA Scatterometer mission, is contributing to an integrated
    understanding of the El Nino phenomenon that is affecting weather
    patterns around the world. The commercial implications of this weather
    condition are profound--stretching from the commercial fishing industry
    to record storms and snowfalls across the Nation. The Earth Observing
    System (EOS), the centerpiece of NASA's contribution to the U.S. Global
    Change Research Program, has undergone a profound transformation. As a
    result of this summer's Biennial Review, the program is now positioned
    to respond quickly to new advances in instrument technology and
    scientific breakthroughs, which will be complemented by a series of
    small, rapid development Earth System Science Pathfinder missions.
        Funding included in NASA's fiscal year 1999 request for Aeronautics
    and Space Transportation Technology will continue to contribute
    significantly to the needs of the Nation. In the summer of 1997 over
    the sands of Kauai, NASA's solar-powered aircraft Pathfinder set an
    altitude record for propeller-driven flight of over 71,500 feet. In
    1999, we will begin flights of the Centurion, which is designed to
    reach 100,000 feet. This type of technology will enable high-altitude,
    long-endurance for affordable, unpiloted science missions. The fiscal
    year 1999 budget also continues our commitment to the Administration's
    Aviation Safety Initiative. NASA will invest $.5 billion over the next
    five years to develop, in partnership with industry and other Federal
    agencies, breakthrough technology for safer, more reliable air
    transportation.
        These are the highlights of NASA's fiscal year 1999 budget request.
    Enclosure 1 of my statement discusses the fiscal year 1999 plans of
    NASA's Enterprises in detail, and the manner in which NASA's budget
    request supports the Agency's continuing efforts to deliver better
    programs for less.
                                  enclosure 1
                   human exploration and development of space
        NASA's Human Exploration and Development of Space (HEDS) Enterprise
    includes the International Space Station, Space Shuttle, and Life and
    Microgravity research. HEDS seeks to bring the frontier of space fully
    within the sphere of human activity for research, commerce, and
    exploration.
    International Space Station
        In 1993, we undertook the significant challenge of building and
    integrating the world's largest and most advanced orbiting laboratory
    with the combined resources and mutual interests of fifteen nations,
    now sixteen. We are ready to launch this year and we plan to achieve 6-
    crew capability in November 2002, just 5 months later than originally
    planned. This performance is a tribute to thousands of dedicated NASA
    civil servants and contractor employees across this Nation.
        As a partner, the U.S. is performing well in meeting milestones and
    overcoming issues. The U.S. Node 1 was delivered to the Kennedy Space
    Center (KSC) nine months ago, and is undergoing final preparation and
    checkout along with two Pressurized Mating Adapters. Several other key
    elements have also been delivered to KSC, including the ZI Truss and
    the third Pressurized Mating Adapter, in preparation for launch early
    next year. A very complex piece of equipment, the Integrated
    Electronics Assembly, is now being outfitted at KSC with critical
    components of the power system in preparation for a mid-1999 launch. We
    expect the U.S. Laboratory module and the remaining flight hardware for
    the first six flights to be delivered to their respective launch sites
    by the end of 1998.
        The dedication of our workforce has enabled this impressive
    performance in the face of unforeseeable difficulties. A large majority
    of our international partners are also performing well. By the end of
    1997, the partners had completed over 100,000 pounds of flight
    hardware; another 50,000 pounds is to be completed by the end of 1998.
    To date, those partners have invested over $4.5 billion in their
    contributions to the program.
        Together, the United States and our partners had produced over
    368,000 pounds of flight hardware at the end of 1997; by the end of
    1998, this amount will almost double. When the Station is complete, we
    will have a research facility on-orbit exceeding one million pounds.
        We are clearly in a position to move forward to begin the on-orbit
    assembly of the International Space Station. To help us do so more
    proficiently, the knowledge gained on the Phase 1 Shuttle/Mir program
    will be used to the fullest. This preparatory step to the assembly and
    operation of the ISS continues to be a dramatic success. Our seventh
    and last U.S. occupant, astronaut Andy Thomas, has now been on board
    Mir for 89 days. By the time he returns to Earth, the United States
    will have accumulated a total of 804 days of uninterrupted presence in
    space. Adding to this the 115 days which Dr. Norman Thagard spent on
    Mir prior to that time, U.S. astronauts will have spent over 919 days
    in space aboard a space station by the end of Phase I. This exceeds by
    almost five months the total time accumulated by all 91 Shuttle flights
    since the beginning of the Shuttle program in 1981.
        This unprecedented experience has taught us how to work across
    international boundaries on complex space operations, including on-
    orbit rendezvous and docking, rapid turnaround resupply, and on-orbit
    maintenance and repair. Our understanding of long-term space research
    has also improved with new appreciation in many areas, from
    physiological effects of the microgravity environment, to crystal
    growth, to space radiation effects on electronics. The Shuttle/Mir
    experience has been equally valuable on the ground. ISS operational
    plans and mission control procedures, documentation and integration
    have been refined as a direct result of Phase 1 experience. The
    knowledge and experience gained from the Shuttle/Mir program is
    contributing materially to the ISS in terms of reduced risk, and safer,
    more proficient assembly.
        Development Phasing Down/Utilization and Research Increasing.--As
    we near the end of our Phase 1 activities and begin to complete major
    ISS hardware modules, the development effort is entering a downward
    curve in terms of manpower and resources, and efforts in preparation
    for the utilization of the Station's research facilities are ramping
    up. The ISS utilization program has been restructured to better phase
    the on-orbit deliveries of research equipment to be more in concert
    with the actual availability of the on-board resources for research,
    particularly during the assembly sequence.
        The fiscal year 1999 multi-year budget plan reflects a lower annual
    funding level for the Research Program for fiscal year 1999 in
    recognition of the revised timeline for the ISS assembly schedule. At
    the same time, the Research Plan reflects an increase in annual funding
    levels for fiscal year 2002-2003 above levels assumed in last year's
    budget. All priority research facilities will be onboard the ISS by the
    completion of assembly. NASA remains fully committed to meeting Space
    Station research requirements and will accommodate the funding
    requirements for those research capabilities in the funding runout of
    the program.
        In addition to improved synchronization of planned utilization with
    on-orbit research support capabilities, another significant benefit
    from the rephasing of the Research Program has been to allow research
    facility designers additional time to infuse new technology into their
    designs to improve the facilities' operations and reduce operational
    expenses. This will result in an even more capable and effective
    research capability than that originally planned after the 1993
    redesign.
        Our plan calls for taking advantage of research opportunities as
    early in the assembly sequence as possible. There are recognized
    difficulties in performing research during ISS assembly, but we are
    committed to taking maximum advantage of all opportunities during that
    period, as we did during the early flight tests of the Space Shuttle
    program. Facility-class research payloads will begin being delivered to
    the Space Station on flights 7A.1, Utilization Flight-1, and
    Utilization Flight-2. Development of research facilities for UF-1 and
    UF-2 is well under way including the Human Research Facility, Express
    Racks, and Microgravity Science Glovebox. Deployment of the Express
    Racks is concentrated early in the assembly sequence to allow multiple
    research opportunities.
        Most research during the early assembly phase and up to Utilization
    Flight-3 in late 2001 will be concentrated in small-scale experiments
    such as those compatible with EXPRESS-rack and Middeck locker-class
    accommodations. We will take advantage of opportunities on assembly
    flights to transport Middeck-class payloads to the ISS and return
    research products.
        Examples of research during the assembly phase include protein
    crystallization to aid in structure-based drug design; three-
    dimensional cell tissue culturing to better understand normal and
    abnormal cell growth; plant growth to investigate genetic engineering
    potential; and zeolite crystal growth to improve materials for chemical
    processing.
        Further activities to support assembly-period research include:
      --deployment of ISS facility-class payloads and accompanying research
            hardware, beginning with one internal pressurized utilization
            rack in 1999, and building to 27 racks and 14 external
            equivalent payload sites for NASA by the end of assembly;
      --utilization of external attached payload sites, beginning with
            Utilization Flight-4 in early 2002;
      --addition of dedicated Space Shuttle research flights for the U.S.
            and international life and microgravity research community in
            October 1998 (STS-95) and possibly May 2000 (STS-107), and
            possible development of stand-by research missions and payloads
            to fly on an ``as-available'' basis during assembly to further
            support continued access for space research; and,
      --increased Shuttle middeck locker capability, from 4 to 17 lockers,
            beginning with Utilization Flight-3.
        ISS Research Capabilities Improved.--While maximizing research
    opportunities during assembly, we will continue our efforts to ensure
    the best possible research capability is aboard the completed Station.
    The following are examples of these ongoing activities:
      --continued selection of world-class investigations for both ground-
            and space-based research opportunities. NASA is working to
            increase the number of Life and Microgravity Sciences and
            Applications Principle Investigations (PI's) with research
            grants from 700 PI's in 1997 to 900 PI's by 2001;
      --increasing opportunities for commercial involvement with the ISS,
            working through NASA's 11 Commercial Space Centers (CSC),
            coordinating between NASA, industrial affiliates, and academic
            and government partners to advance commercial space interests.
            These CSC's represent over 136 industrial affiliates and more
            than 50 university affiliates;
      --continued pursuit of a capability for commercial use and operation
            of the ISS;
      --continued efforts to take advantage of any opportunity to enhance
            research capability in the course of making changes in schedule
            and configuration of the ISS; for example:
        --improvements made to the ISS platform itself have resulted in
                indirect positive impacts in research capacity, such as
                improvements in resource provisions and functional
                reliability;
        --Russian-driven ISS changes have provided early power with the
                photovoltaic module, increased external thermal control for
                attached payloads; a new flight attitude for better power
                generation, and additional control authority and refueling
                capability for the Control Module (FGB);
        --several ISS changes have improved the capability of research
                facilities, such as: the addition of the Early
                Communications System; the ISS Systems Integration Lab;
                Multi-Element Integrated Testing; enhancements to the
                Portable Computer System; and the active rack isolation
                system;
        --the addition of wiring scars to the U.S. Laboratory module
                enhances communications capability for data transfer, and
                the addition of a Communications Outage Recorder ensures
                that no research data is lost during communications
                dropouts;
        --the addition of an Environment Monitoring Package to characterize
                the external environment for attached payloads ensures that
                designs adequately address environmental effects on
                attached payloads; and,
        --definition of ISS telescience communications requirements,
                including Ku uplink and downlink bandwidth, plus video
                improvements.
        The research capability resulting from these items will be robust
    in providing opportunities for life and micro-gravity sciences, Earth
    sciences, space sciences, engineering research and technology
    development, and the commercial development of space. The ISS will also
    provide a learning experience for living in space, and will demonstrate
    the technology required to provide the capability to further explore
    the space frontier.
        Development Challenges Remain.--Although significant progress has
    been made, we still face a number of development challenges as we
    approach the initial phases of assembly of this enormous vehicle.
        The U.S. Laboratory module is currently 6 weeks behind schedule,
    having improved its schedule position over the last few months. The Lab
    team continues to meet milestones intended to recover schedule to meet
    the target launch date of May 1999. Their performance against several
    key milestones in the near term, including installation of the Lab
    hatch and additional racks, and the performance of element
    qualification testing, will contribute to a more accurate assessment of
    schedule risk.
        Software development and testing is expected to remain a key issue
    throughout this year. The software development and testing schedules
    are tightly linked with the schedules for system and element level
    testing, operations planning and crew training. As difficulties develop
    in any area, a broad range of affected parties will need to tightly
    coordinate corrective actions to prevent the problem from developing
    into a schedule slip.
        Subcontractor parts delivery issues continue to be a challenge for
    a variety of reasons. We expect to continue to struggle with this issue
    due to the enormity of the program and multitude of potential problem
    areas at the subcontractor level. Our continued close monitoring of
    this issue includes measurement of subcontractor cost, schedule,
    technical, quality and recovery.
        As reflected in the President's request for fiscal year 1999, a
    requirement has been added for development of a Crew Return Vehicle
    (CRV) which is intended to be continuously present at the Station while
    it is occupied; a ``placeholder'' estimate has been included in the
    proposed budget, which we will refine further. A CRV capability is
    required to have capability to transport up to 7 crew members. The
    Russian Soyuz capsule, which can carry three persons, is currently
    being modified to accommodate more diverse physical sizes of
    astronauts. It will serve the CRV function until the U.S. CRV is
    delivered in 2003. The X-38 is a system technology demonstration
    program which should provide the primary design basis to satisfy the
    crew return requirement. An internal study is currently being conducted
    to verify X-38 capability to CRV requirements. The CRV requirements
    will also include be examined as part of a larger future launch study
    being undertaken by NASA and industry. The production of CRV
    operational vehicles is planned to begin in fiscal year 2000.
        As we work to mitigate these key issues and continue our diligent
    management of this massive program, the performance of our prime
    contractor, Boeing, remains under close scrutiny. Boeing has projected
    their variance at completion (VAC-their estimated increase over the
    originally contracted budget) to be $600 million, rebaselining their
    performance plans to incorporate this amount. They have been performing
    according to this new plan, but some deterioration has occurred. There
    is a $50 million threat to Boeing's cost mark for fiscal year 1998, but
    this is within NASA's fiscal year 1998 operating budget, NASA having
    estimated more conservatively for prime performance by including budget
    coverage for a Boeing VAC of $817 million.
        Pending Fiscal Year 1998-1999 Requests Address Current/Future
    Requirements.--NASA's fiscal year 1999 budget proposal and proposed
    fiscal year 1998 appropriations transfer authority address these kinds
    of issues, and others, in meeting current ISS requirements and
    addressing important future needs.
        Mr. Chairman, as you know, in September 1997, NASA outlined for the
    Congress a requirement for an additional $430 million in fiscal year
    1998 for the International Space Station, which NASA indicated could
    largely be accommodated within NASA's overall budget. The requirement
    for additional funding for ISS was driven by:
      --Russia's announced delay of their Service Module from May 1998 to
            December 1998;
      --the emergence of significant cost growth in the prime contract
            effort;
      --necessary technical program changes which had not been definitized
            at the time of the formulation of the fiscal year 1998 budget
            request; and,
      --the need to provide an adequate overall funding level sufficient to
            avoid risk and address unforeseen problems and technical
            developments.
        We are grateful that Congress accommodated $230 million of the $430
    million requirement through reallocations of NASA funding and an
    additional appropriated amount above the President's request. On
    February 20, 1998, the Administration forwarded to Congress a request
    for enactment of fiscal year 1998 appropriations transfer authority for
    NASA as part of the proposed fiscal year 1998 emergency/non-emergency
    supplemental appropriations to address the $200 million ISS shortfall.
    This provision would permit NASA to transfer a total of $173 million in
    uncosted funds from NASA's Science, Aeronautics and Technology and
    Mission Support appropriations accounts to the Human Space Flight
    account for the Space Station; the remaining $27 million would be
    reprogrammed within the Human Space Flight account.
        The total $430 million estimated additional requirement for ISS in
    fiscal year 1998 was developed in recognition of the critical
    importance of maintaining both adequate prime contractor funding levels
    and adequate reserves to address unanticipated requirements in the
    major hardware and software integration effort currently in progress.
    With the $230 million made available to date, the ISS program has
    funded all prime contract requirements and changes that have been
    definitized; however, without the additional funds, the additional
    liens and threats already identified for fiscal year 1998 place the
    program at high risk. In fact, the ISS program is today in a deficit
    posture for fiscal year 1998; that is, the program has identified liens
    and threats the costs of which, if all occur, will exceed available
    fiscal year 1998 funds.
        NASA's fiscal year 1999 budget request for the ISS was developed
    with the assumption that an additional $200 million in fiscal year 1998
    would be made available. These additional funds would help the program
    to maintain its developmental activities and maintain a reasonable
    level of program reserves to accommodate unplanned technical
    developments over the remainder of the year. Fortunately, since the
    submission of the fiscal year 1999 budget and fiscal year 1998 budget
    supplemental requesting appropriations transfer authority, the program
    has performed well, thus reducing the immediate urgency for the $200
    million in additional fiscal year 1998 funds. We still believe,
    however, that funds are needed for uncertain fiscal year 1998 risks as
    well as budget threats that exist for fiscal year 1999. To the extent
    that budget shortfalls arise and additional funds are not available,
    NASA would need to protect near-term development activities to avoid
    costly disruptions and, therefore, would be forced to reduce:
    operational readiness activities; activities for Phase III of ISS
    assembly; and/or, ISS research projects and utilization support.
        NASA believes it is imperative that up to $200 million be made
    available to the ISS program, and is prepared to work with the
    Committee to secure an acceptable plan to identify these resources.
        In October 1997, NASA established an independent Cost Assessment
    and Validation Task Force, chaired by Mr. Jay Chabrow, under the
    auspices of NASA's Advisory Committee (NAC) on the International Space
    Station. The Terms of Reference call for the Task Force to provide
    advice and recommendations for cost effective modifications to the
    present business structure and cost-management practices of the ISS
    Program, and for determining total ISS cost over the program life. The
    report is expected to be released for general review in the immediate
    future; in public sessions the CAV has highlighted cost and schedule
    concerns with a variety of risk areas in the Program. The team has also
    commended NASA on its management of this incredibly complex project.
    While we may differ on the level of criticality of specific issues
    raised, I believe the CAV team has captured important risk areas for
    NASA and the ISS Program to consider.
        The President's fiscal year 1999 request provides multi-year
    funding through an advanced appropriation for the complete development
    of the Station, with Station assembly beginning in 1998 and estimated
    to be complete by late 2003. The additional funding included in the
    fiscal year 1999 proposal for fiscal year 1999-2003 totals $1.4
    billion, including the pending request for appropriations transfer for
    fiscal year 1998. This increased estimate provides necessary funding
    for:
      --Boeing performance-NASA's estimate of remaining resources required
            to accommodate prime contractor cost growth (the majority of
            resources required to address this requirement has already been
            incurred in prior years);
      --Changes-includes an estimate for changes definitized to date, plus
            a planning estimate for future changes;
      --Sustaining Engineering-incorporates negotiated value with prime
            contractor for sustaining engineering and projections for
            outyears;
      --Logistics-incorporated negotiated value with prime contractor for
            spares and projections for outyears;
      --Crew Return Vehicle-formally incorporates a requirement for
            development of this capability to the budget profile; and,
      --Reserves-provides for restoration of reserves to accommodate
            anticipated future challenges.
        Mr. Chairman, let me emphasize that only a fraction of these
    revised outyear estimates are tied to actual ``overruns.'' The greatest
    challenge for any development program is to minimize the occurrence of
    such overruns. They are tolerated only to the extent that they result
    from our technical objectives proving to be more difficult to reach
    than originally believed. Overruns for lack of effort, lack of due
    diligence, or any other avoidable cause are unacceptable. However,
    certain increases in program costs can be prudent and necessary if they
    result in ensuring the success of the program mission.
        Development of the Interim Control Module is an example of a
    prudent additional expenditure, in this case, to guard against costly
    schedule delays evoked by Russian Service Module issues. Implementation
    of a Multi-Element Integration Test program (MEIT) is another example
    of a decision to make an additional expenditure which adds very
    important capability. Conducting integrated testing and verification of
    elements on the ground greatly increases our confidence in successful
    on-orbit operations and greatly reduces risk of increases in future
    costs.
        Russian Funding Commitments Must Be Met.--The positive
    accomplishments I have outlined and the budget discussed above could
    both be threatened by any further performance difficulties on the part
    of our Russian partners. The concern is not one of quality; our
    confidence in Russian technical capability remains unshaken. In fact,
    when provided with necessary resources, the Russian Space Agency has
    performed in an excellent fashion. The issue is uncertainty in Russian
    Government funding for ISS, which impedes not only the ability of the
    Russian Space Agency to meet the development schedule of the Service
    Module, but also the ability to produce the Progress and Soyuz vehicles
    which provide logistics supply and crew rescue capability for both the
    Mir space station and the ISS.
        I can report several recent developments concerning Russian
    Government funding for their contributions to the ISS Program. The
    Ministry of Finance transferred $20 million to RSA the week of March 9;
    it has been reported that an additional $15 million was transferred to
    RSA, leaving $44.5 million to be transferred prior to the end of May.
    RSA also received $40 million in 1998 funds earlier this year to pay
    suppliers in critical areas. The approved 1998 Russian Government
    budget, passed by the Duma the week of March 4, includes $100 million
    for the ISS Program; this budget was signed by President Yeltsin on
    March 27. This, however, does not cover the full funding required in
    1998. An additional $240 million is required through off-budget funding
    to fully support the Russian contribution to ISS. We will closely
    monitor the actual distribution of these funds.
        Considerable technical progress with respect to Russian
    contributions has been made as well. The Service Module (SM) test and
    flight hardware are much further along than one year ago. We have
    received reports from NASA officials in Russia that 95 percent of all
    Service Module components have been installed, with an additional 2-5
    percent to be installed in the next two weeks. The Complex Stand test
    article electrical cable installation is complete, with autonomous
    testing having been performed since November. Stage 2 of the electrical
    cable installation has been completed for the Service Module Flight
    Article. Lifetime testing on major components is progressing with no
    significant problems. Although progress has been steady, the Russians
    acknowledge that the Service Module is three to four months behind the
    baselined December launch date.
        Because of the important role played by the Service Module in early
    command and control and habitation capability, any serious delay in its
    development clearly impacts the entire ISS Partnership. We will
    carefully monitor the progress of the Russian Government in allocating
    funds, Russian progress in the integrated testing of the Service Module
    test article, and flight article hardware and software deliveries.
    Given the critical decisions we are currently facing, NASA's near term
    decision criteria are firmly established. On April 28 there will be a
    Russian General Designers Review and on April 29 a Joint Program
    Review. NASA will use information from these meetings to assess Service
    Module milestone progress and technical issues, funding status and
    impacts on schedule. In May, NASA will assess SM and U.S. Laboratory
    status and finalize a recommendation to manifest the Interim Control
    Module or confirm SM, FGB and Node launch dates. On May 25, the Space
    Station Control Board will approve a new assembly sequence with
    concurrence of all International Partners. Finally, on May 29, a Heads
    of Agencies meeting is scheduled to validate the baselined assembly
    sequence.
        In addition to these requirements, we remain extremely concerned
    about the status of RSA plans to de-orbit the Mir space station. The
    total number of Progress and Soyuz vehicles required to support ISS,
    continued Mir operations, and Mir deorbit exceeds Russia's current
    annual production capability. This anticipated vehicle shortfall will
    occur during the most intensive period of ISS assembly operations and
    the shortfall could cause significant risk for the ISS. We will
    continue to work to secure a commitment from RSA to a timely de-orbit
    of Mir.
        Mr. Chairman, I have discussed the real technical progress of our
    ISS team, both here in the United States and in our partner countries.
    Over the last four years we have made great progress with the support
    of the President and the Congress. Each year, we have made progress in
    overcoming problems and meeting new challenges. I believe that the
    fiscal year 1999 budget request for the ISS Program, combined with the
    request for fiscal year 1998 transfer authority, represents a fair and
    realistic, but admittedly ambitious, budget that will enable us to
    complete development of a world-class, orbiting research facility, with
    minimum cost to the U.S. taxpayer. It should be emphasized that NASA's
    fiscal year 1999 budget proposal for the International Space Station
    assumes that the appropriations transfer will be approved. We seek the
    support of this Committee for the additional fiscal year 1998 resources
    as outlined and for full funding of the President's request for fiscal
    year 1999.
    Space Shuttle
        The fiscal year 1999 budget request for the Space Shuttle program
    supports two major activities: Safety and Performance Upgrades ($571.6
    million) and Space Shuttle Operations ($2.487 billion). Safety and
    Performance upgrades funding supports the modifications and
    improvements to the flight elements and ground facilities, which are
    expected to expand safety and operating margins, enhance Space Shuttle
    capabilities to meet customer requirements, and provide replacement of
    obsolete systems primarily through the Upgrades Program. Two of our
    most critical Phase I upgrades have recently passed major milestones.
        First, STS-89, our most recent Shuttle flight, was launched using
    the new large throat main combustion chamber in the Space Shuttle Main
    Engine which was designed to allow the engine to operate at a lower
    chamber pressure while maintaining performance. The lower chamber
    operating pressure reduces operating temperatures and pressures
    throughout the engine system, resulting in improved reliability and
    safety margins. The wider throat accommodates more cooling channels and
    an accompanying reduction in hot gas wall thickness, thereby increasing
    chamber life. This design is less labor intensive to produce and
    maintain. The performance of the new hardware was excellent during the
    flight. This new hardware will help to improve Shuttle safety,
    reliability and maintainability. Second, the first Super Lightweight
    Tank designed to support assembly of the International Space Station
    was officially certified for flight and rolled out of its assembly
    facility. The tank is 7,500+ pounds lighter than its predecessor and
    will allow the Shuttle to carry heavy cargo to an orbital inclination
    of 51.6 degrees.
        Shuttle Operation funding supports hardware production, ground
    processing, launch and landing, mission operations, flight crew
    operations, training, logistics, and sustaining engineering to maintain
    and operate the Shuttle fleet. The main operational contract, the Space
    Flight Operations Contract with United Space Alliance, successfully
    completed a first year of transition and consolidation while supporting
    eight missions in fiscal year 1997. Phase II of the consolidation,
    began in fiscal year 1998 and will continue in fiscal year 1999. Six
    Shuttle flights are manifested for fiscal year 1998, including our
    first assembly flight of the International Space Station, a truly
    historic landmark. However, because of technical problems at the
    contractor facility, there is a possibility that the launch of AXAF
    could be delayed until early fiscal year 1999. Space Station assembly
    will dominate fiscal year 1999 with eight scheduled flights.
        The Shuttle program will continue to focus on flying safely,
    supporting the manifest, improving support to our customers and
    reducing cost.
    Life and Microgravity Sciences and Applications
        NASA's Office of Life and Microgravity Sciences and Applications
    looks forward to important flight- and ground-based research
    opportunities in 1998 and 1999 which will prepare NASA and its research
    communities for the transition to research operations on the
    International Space Station. Laboratory research on Station will
    include biotechnology, biomedical research, combustion science, fluid
    physics, gravitational biology, and materials science. The Station will
    serve as a platform for Earth observation as well as for space physics
    research. It will support engineering research as well as testing and
    research for an array of advanced technologies in scientific, medical,
    and life support operations and engineering research. We are working to
    facilitate commercial participation in Station research to help to
    bring new findings and products to markets on Earth. The fiscal year
    1999 budget request for Life and Microgravity Sciences and Applications
    is $242 million.
        1998 will see the end of both the Shuttle/Mir program and the
    Shuttle/Spacelab combination. Each of these platforms has played a
    significant role in preparing NASA for research operations on the
    International Space Station. Fourteen years of Spacelab-based
    experience have identified the most promising fields of research, while
    operations on Mir have prepared us for long duration research aboard
    the Station.
        Research highlights of the Shuttle/Mir missions include the first
    successful seed-to-seed-to-seed plant experiments in space; that is,
    two generations of plants were grown in the Mir greenhouse from seeds
    transported from the ground. New measurements were made of the change
    in position of the South Atlantic Anomaly, a location where the trapped
    radiation belts dip closest to Earth, related to long-term drift of
    Earth's magnetic field. Researchers demonstrated a new technique for
    protein crystal growth that produces many times more crystals per
    mission. Analysis and publications of results from Mir will continue
    through 1999. Over 15 research papers have been published to date; 30
    are expected to be published by next year. An element of the final U.S.
    Shuttle mission to Mir in May 1998 is the Alpha Magnetic Spectrometer,
    a payload sponsored by the Department of Energy. Proposed by Nobel
    Laureate Dr. Sammuel Ting, the Alpha Magnetic Spectrometer will search
    for cosmic sources of antimatter and dark matter. Detection of either
    would have far-reaching research implications concerning the origin of
    the universe and the fundamental structure of matter itself. The Alpha
    Magnetic Spectrometer also will be deployed on the International Space
    Station for long term operations after the turn of the century.
        On April 17, NASA launches Neurolab, the last scheduled Space
    shuttle/Spacelab mission. Neurolab brings together the research efforts
    of three U.S. government organizations and five international space
    agencies to conduct an outstanding set of 26 research investigations.
    Peer review for the mission was conducted by the National Institutes of
    Health, and the broad participation of the research community has
    ensured scientific excellence on the mission. Neurolab focuses on the
    most complex and least understood part of the human body--the nervous
    system. The goals of the mission are: (1) to understand how the brain
    and nervous system interpret and adapt to new environments; (2) to shed
    light on how gravity influences the development and function of the
    nervous system; and (3) to use this knowledge to address nervous system
    afflictions on Earth.
        Neurolab will expand the knowledge base available to researchers
    and physicians studying human physiology on the ground. For example,
    research on balance, blood pressure regulation, sleep, and the
    adaptability of the nervous system could make contributions to our
    understanding of medical problems that affect millions of Americans.
    Neurolab has a significant place in NASA's long-range plans. Long-
    duration space flights will become common as the ISS is built and
    occupied. This makes an understanding of how the human body functions
    in microgravity vital; Neurolab is expected to contribute key answers,
    clarifying the requirements for our future residency on the ISS and for
    improving health on Earth.
        In order to ensure continued access to flight research during the
    assembly of the International Space Station, NASA has added dedicated
    Space Shuttle research flights for the U.S. and international life and
    microgravity research community in October 1998 and possibly May 2000.
        The 1998 mission, STS-95, will include a SPACEHAB module and
    payloads in the payload bay. SPACEHAB is under contract to integrate
    and support operations for payloads in the pressurized volume of the
    module and Shuttle middeck, and is responsible for marketing a large
    portion of the accommodations. Microgravity investigations in the
    module and middeck on STS-95 will include research in biotechnology,
    biomedical, biological, and fluid physics. Biomedical research includes
    the aging process as developed under a NASA-National Institute on Aging
    agreement. Associated with the flight of Senator John Glenn on this
    mission, NASA is discussing with the National Institute on Aging how to
    maximize the scientific benefits of this unique opportunity. Both
    agencies want to conduct parallel ground-based studies with aged
    subjects who remain on Earth but undergo pre- and post-flight testing
    comparable to the STS-95 crew. These control subjects will enrich this
    project and greatly facilitate comparisons of responses to space flight
    with normal aging on Earth. A significant part of the research on STS-
    95 will be conducted to further the objectives of the commercial
    development of space. This will include research in support of new
    pharmaceuticals, separation techniques to facilitate developments such
    as blood element replacements, cell research to reduce host rejection
    of transplants, research on synthetic bone, a drug to block cancer
    metastasis, new antibiotics, micro-encapsulation techniques for
    enhanced drug delivery, and enhanced plant-derived products.
        The May 2000 mission, STS-107, is another mission of opportunity
    for multidisciplinary and internationally sponsored research. The
    carrier for this mission will consist of a double module developed by
    Spacehab especially for research purposes. The STS-95 approach will be
    used as a template for the management and operation of this mission.
    The HEDS Enterprise is currently developing the research themes for
    this mission; considerations are being given to peer-reviewed and
    commercially sponsored research in biotechnology, materials sciences,
    biology and biomedicine. NASA will continue to seek partnership with
    NIH, NSF and other organizations in accomplishing this research.
        In 1998 and 1999, NASA will expand its ground-based research
    program on the biological effects of space radiation. The radiation
    environment in space is substantially different from the radiation
    environment on Earth, and its biological effects are not well
    understood. Investigations will continue using proton and high-energy
    ion beams, including research using facilities at Loma Linda University
    and Brookhaven National Laboratory. This research focuses on the
    mechanisms by which space radiation modifies cells and tissues to
    become cancerous. Some of this work is sponsored jointly with the
    National Cancer Institute. A new collaborative effort will begin with
    the Space Flight and Space Science Programs to include radiation and
    soil/dust measuring devices on robotic missions to Mars beginning in
    2001.
        The newly established National Space Biomedical Research Institute
    (NSBRI) selected thirty-two research proposals in early 1998 and is
    working to complete a plan for developing advanced countermeasures for
    controlling the effects of space flight. Working with the Johnson Space
    Center, the NSBRI has begun a process to define the critical elements
    necessary to develop and validate procedures to assure crew health in
    orbit and on return to Earth. These procedures will be defined in 1998
    and implemented in 1999 so that they will be fully functional by the
    time of International Space Station operations.
        NASA conducts its research activities in close cooperation with
    commercial, academic, and government researchers. With the launch of
    the first elements of the International Space Station this year, our
    primary research focus will be to prepare this diverse community for
    efficient and effective operations using the Station's expanded
    laboratory research capabilities.
                                 space science
        NASA's Space Science Program is a shining example of the new way of
    thinking at the Agency. In the last few years, we have removed billions
    of dollars from planned spending and have reengineered all aspects of
    how we do business. Expensive missions are a thing of the past. The
    size, complexity and cost of spacecraft missions have been reduced
    significantly, while increasing or maintaining their scientific
    capability. The President's proposed budget for fiscal year 1999 of
    $2.058 billion supports a strong and well-balanced program that will
    enable us to reap the benefits of this revolution.
        NASA's Space Science Enterprise has embraced the philosophy of
    ``faster, better, cheaper,'' and the results have been dramatic. The
    average development time for Space Science missions in 1990-94 was over
    8 years; it is now about 4 years, and we expect the decline to
    continue. The average spacecraft development cost at the beginning of
    the decade was $553 million--compared to the current level of $165
    million, and the projected 2004 level of $50-$75 million. In the early
    1990's, the Space Science Program averaged fewer than 2 launches a
    year. This year, we have 10 launches planned, the first of which--Lunar
    Prospector--lifted off flawlessly in January and has begun its year-
    long, in-depth study of our Moon. Lunar Prospector has already
    fulfilled one of its main objectives by confirming the presence of
    water ice at the Moon's polar regions.
        Perhaps nothing in recent memory embodies the concept of ``doing
    more with less'' better than last year's dramatic July 4 landing of
    Pathfinder on Mars. After more than 20 years, we returned to the Red
    Planet. Once again, we captured the world's attention, but this time we
    did it for a total cost of $266 million and with an operational staff
    of 50. That is NASA's new way of doing business.
        And by no means was Mars Space Science's only success story.
    Discoveries from the Hubble Space Telescope, Galileo, the Compton Gamma
    Ray Observatory, and the Solar and Heliospheric Observatory (SOHO)--to
    name just a few--are broadening our understanding of the Universe and
    our place within the cosmos. For example, Hubble uncovered over 1,000
    bright, young star clusters bursting into life in a brief, intense,
    brilliant ``fireworks show'' at the heart of a nearby pair of colliding
    galaxies. Galileo sent a probe into the heart of Jupiter and returned
    amazing pictures of icebergs on Europa, suggesting the possibility of
    hidden, subsurface oceans.
        The Near-Earth Asteroid Rendezvous spacecraft gave us our first up-
    close look at Asteroid 253 Mathilde, which scientists believe dates
    back to the beginnings of the Solar System. Also in 1997, we realized
    the long-awaited launch of NASA's last ``big'' planetary mission,
    Cassini/Huygens. Cassini, along with its ESA-built Huygens probe, is on
    a 7-year journey to study Saturn, its moons, and its rings. Scientists
    using the NASA-ESA SOHO mission have discovered ``jet streams'' of hot,
    electrically-charged plasma flowing beneath the surface of the Sun.
    These new findings should help scientists understand the famous 11-year
    Sunspot cycle and associated increases in solar activity that can
    disrupt the Earth's power and communications systems. Astronomers using
    NASA's Rossi X-ray Timing Explorer spacecraft have observed a black
    hole that is literally dragging space and time around itself as it
    rotates. This bizarre effect, called ``frame dragging,'' is the first
    evidence to support a prediction made in 1918 using Einstein's theory
    of relativity.
        These successful Space Science missions are having an immense
    impact being felt not only in college lecture halls, but also in
    newspapers, on television, and in the textbooks of tomorrow. We are
    heightening the sense of accomplishment and adventure that is a
    hallmark of our Nation's Space Science program.
        As NASA approaches its 40th birthday, it is an inspiration to look
    back and marvel at all we have learned in the area of Space Science.
    What lies ahead in the next 40 years and beyond are detailed studies of
    the various mysteries we have so far uncovered. A new,
    interdisciplinary approach has been developed to make the next great
    strides possible. In Space Science, we have identified four basic
    themes around which we will operate and organize ourselves. The four
    science themes are: Sun-Earth Connection, Exploration of the Solar
    System, Structure and Evolution of the Universe, and Astronomical
    Search for Origins. In addition to these main themes, the Space Science
    program includes an Astrobiology Initiative, which is a research and
    analysis program that cuts across the four themes. This Initiative will
    focus on the origin and distribution of life in the Universe.
        The President's proposed budget for fiscal year 1999 budget will
    enable continued study of the Sun, the Solar System, and the Universe.
    It maintains support for the Origins Initiative approved by Congress in
    the fiscal year 1998 budget to search for planets around other stars,
    to study galaxies as they are born, and to look for evidence of life
    elsewhere in the Solar System and the Universe. The President's budget
    adds funding to fulfill much of the promise of the new Space Science
    Strategic Plan with new initiatives to investigate the evolution and
    destiny of the Universe, complementing the Origins initiative begun
    last year. Some examples of programs in the new initiatives are:
    continuing the ISTP missions through Solar Maximum in order to obtain a
    comprehensive set of data throughout the 11-year solar cycle;
    continuing Solar-Terrestrial Probes after TIMED, with Solar B and Solar
    Stereo as the next two missions; joining with ESA on the FIRST mission
    to observe the Universe in the far-infrared and submillimeter region of
    the spectrum; building GLAST, a follow-on to the Compton Gamma Ray
    Observatory to observe the highest-energy objects in the Universe; and
    initiating a program to develop technology for the next X-ray mission
    that would follow AXAF. These efforts support a balanced program
    addressing each of the four quests that form the Space Science
    Enterprise mission: Solving Cosmic Mysteries, Exploring the Solar
    System, Searching for Extrasolar Planets, and Searching for Life Beyond
    Earth.
        Through continued exploration, NASA's Space Science Enterprise
    brings the benefits of Space Science to the American public and to the
    worldwide scientific community. The primary products of Space Science
    are knowledge and discoveries about the Universe in which we live. The
    process by which we acquire knowledge and make discoveries is through
    exploration. Whether physical, using space probes and planetary landers
    and orbiters, or remote, using telescopes and other observatories, our
    exploration will continue opening the frontier of space in exciting and
    productive ways. We strive to make the wonders of the Universe
    accessible and relevant for all Americans.
                                 earth science
        This is an exciting time for the Earth Science Enterprise, formerly
    known as Mission to Planet Earth, because we soon begin the Earth
    Observing System or ``EOS'' era. With launches of EOS-AM-1 and Landsat-
    7, we will begin to collect the necessary data to answer many critical
    questions about the Earth. We will launch the QuikScat mission late
    this year, using a ``faster, better, cheaper'' development approach to
    replace valuable ocean winds data set lost with the failure of Japan's
    ADEOS spacecraft. With EOS, we seek to understand how land and coastal
    regions are changing over time, how to forecast precipitation a year in
    advance, how to determine the probabilities of floods and droughts, how
    to predict changes in the Earth's climate a decade to a century in
    advance, and monitoring ozone depletion to determine if efforts to
    control harmful chemicals are effective.
        The President's budget request for Earth Science for fiscal year
    1999, $1.372 billion, will also enable the Earth Science Enterprise to
    increase research funding for our Commercial Remote Sensing program and
    grants funding. We will endeavor to form an industry-Government
    collaboration on a low-cost, high-performance radar mission that will
    produce quality science data to enhance understanding of floods,
    earthquakes, and sea level rise while at the same time contributing to
    valuable applications such as managing forests, measuring soil
    moisture, and finding potential oil and coal reserves.
        We are developing a series of light-weight, low-cost science
    missions, Earth System Science Pathfinders: the first will measure the
    three-dimensional structure of the Earth's vegetation cover, and the
    second will provide a new model of the Earth's gravity field which in
    turn will enable more precise studies of ocean circulation and ice
    sheet changes. We are also demonstrating next-generation technologies
    as part of NASA's New Millennium Program, a series of small, rapid
    development missions to flight test promising new instruments. For the
    first mission, which is scheduled to fly in 1999, we are developing an
    advanced land imager and for the second mission we will demonstrate
    technology to improve weather forecasting abilities.
        The success of these small missions is part of the new paradigm of
    the Earth Science Enterprise, which focuses on front-end technology
    development investments that will lead to smaller, lighter, and less
    costly missions which will not compromise the program if a satellite is
    lost. Another component of this paradigm involves a ``catalogue'' of
    procurements of commercial spacecraft buses which will lead to lower
    costs and quicker development. We are in the process of defining the
    next series of Earth Science missions based on this new paradigm: our
    scientists and technologists are working side-by-side to provide the
    science we need using the latest technology.
        While we look forward to the future of NASA's Earth Science
    Enterprise, we are producing valuable data today. While the effects of
    El Nino are apparent to us all, we need to recognize the valuable role
    that a joint NASA-French satellite (TOPEX/Poseidon) played in the
    monitoring of the warm water mass in the tropical Pacific six months
    before it began to affect the weather of the Americas. We launched a
    joint mission with the Japanese (TRMM) a few months ago to make precise
    measurements of rainfall in the tropics, which is critical in the
    understanding of the Earth's climate. Also last year, a private company
    launched a satellite to provide scientific data on life in the oceans
    which NASA will purchase from them--data which this company will also
    sell to the fishing, oil, and shipping industries.
        The critical system required to capture the raw data from these
    missions, process it into geophysical parameters for scientific
    research, and provide the necessary distribution and archival
    functions, is the EOS Data and Information System (EOSDIS). Central to
    the development of this system is the development of the scientific
    algorithms to enable the conversion of the raw data into geophysical
    parameters. The development and delivery of these algorithms is on-
    track, as is the calibration/validation effort that supports it. The
    science data processing aspects of this system are being developed in
    increments, allowing us to better determine the performance of our
    contractors, while also obtaining the approval of the scientific users
    along the way. At the same time, we are opening up the future
    implementation of this system to innovative thinking from experts
    within NASA, academia, and industry across the country. In this way,
    the American people can be assured that we get the maximum use possible
    from the data to be provided from these groundbreaking missions.
        As in all R&D efforts, unexpected events occur which sometimes
    cause delays. There are difficulties with the power supply of Landsat-7
    which will delay the launch until early next year. The Flight
    Operations Segment of EOSDIS for AM-1, which is designed to control
    operations of the major EOS spacecraft, has experienced software
    problems which will delay the launch of AM-1 at least until the end of
    this year. While such setbacks are a disappointment, we have every
    confidence that these problems will be solved quickly and decisively.
    With the launches of these two spacecraft, we will collect the data
    necessary to enable future discoveries and advances in Earth Science.
        In addition to great science, the Earth Science program is
    providing direct, practical benefits to the American people. Farmers
    and commodity traders are able to detect healthy vegetation based on a
    continuously updated ``green report.'' NASA data is also being used to
    demonstrate the beneficial effects of urban forests which lessen the
    impact of ``urban heat islands,'' bubble-like accumulations of hot air,
    that have developed as cities have grown during the past 20 years.
    Sport and commercial fishing fleets are using NASA data to more
    efficiently locate areas with the best fishing potential, such as
    locations with certain temperatures and water clarity characteristics.
        With the help of NASA science data, a private firm is providing
    solar power cheaply and efficiently for people of the world without
    electricity who may spend the entire day searching for fuel. In 1996,
    88,000 wildfires burned over 6 million acres at a cost of over $1
    billion in fire control activities. NASA data has been used to develop
    a series of fire potential maps in the western U.S. to assist
    firefighters in fire planning and assessment. Municipalities across the
    country will soon be able to manage their tax mapping and building
    permit process by comparing current digital aerial photography and high
    resolution satellite imagery with that from prior years, using
    sophisticated computer ``change detection'' software. NASA data is also
    being used to create ``Nowcast'' weather forecasts to assist drilling
    in the Gulf of Mexico. Drilling activities cannot proceed in currents
    stronger than 2 knots, because of the difficulty in dynamic position-
    keeping as well as the stresses imposed on the drill itself as it
    extends through the water column. Accurate, localized weather
    forecasting reduces the cost of drilling operations.
        But this is just the beginning of a growing commercial remote
    sensing industry that will grow and mature in the next century. Earth
    Science data from future NASA missions will not only allow us to answer
    critical questions such as climate change and natural hazards, but will
    also spur the development of commercial uses of scientific data. This
    data will assist farmers in measuring crop yields and assessing soil
    conditions. Foresters will be able to measure timber health and assess
    fire hazards. The fishing industry will be able to monitor ocean winds
    and determine ocean plant and sediment concentrations. Insurers will be
    able to assess damage caused by floods, droughts, landslides, and beach
    erosion as well as use improved weather forecasting to mitigate damage.
        We are proud that we can provide these types of benefits to the
    global community while achieving our mission to collect and analyze
    scientific data concerning the Earth. With the start of the EOS era, we
    will begin to more comprehensively address critical questions about the
    Earth that will benefit us all.
                aeronautics and space transportation technology
        NASA's Aeronautics and Space Transportation Technology Enterprise
    is revolutionizing the science and technology that sustain global U.S.
    leadership in civil aeronautics and space transportation. Our program
    is focused on three ``Pillars'' for success--Global Civil Aviation,
    Revolutionary Technology Leaps, and Access to Space--and a set of ten
    enabling technology goals to address current and future National needs.
    By developing pre-competitive, long-term, high technical risk
    technologies, we contribute to market growth, safety, increasing air
    system capacity, consumer affordability, environmental compatibility,
    and opening new opportunities in space. Because our work must be
    transferred to industry and other Government agencies to meet these
    National goals, we work in close partnership with these groups in
    formulating and implementing our programs. The Enterprise includes
    three major program areas: aeronautics, space transportation technology
    and commercial technology. The President's budget request for
    Aeronautics and Space Transportation Technology for fiscal year 1999 of
    $1.305 billion will enable us to aggressively pursue our technology
    goals in space and aeronautics.
        The Aeronautics program focuses on the long-term safety,
    efficiency, and environmental compatibility of aircraft and the systems
    in which they operate.
        We have restructured the Advanced Subsonic Technology (AST) program
    in order to aggressively address the goals of the ``Global Civil
    Aviation'' and ``Revolutionary Technology Leaps'' pillars. We have
    realigned the previous eight program elements into five: safety;
    environment; capacity; affordability; and general aviation. By working
    in partnership with the FAA and the U.S. aeronautics industry, we
    ensure that the high-payoff technologies we develop will be used to
    enable a safe, highly productive global air transportation system that
    includes a new generation of environmentally compatible, operationally
    efficient U.S. subsonic aircraft. In 1997, we successfully demonstrated
    cockpit systems for landing and aircraft rollout and taxiing at Atlanta
    Hartsfield Airport. These systems aid pilots in viewing the runway and
    taxiways during night or adverse weather, improving airport safety and
    capacity. We also tested advanced fuel injectors, which in laboratory
    tests demonstrate a greater than 70 percent reduction in nitrogen oxide
    pollutants. Other tests showed three-decibel fan and jet noise
    reduction and a 25 percent nacelle acoustic liner improvement; combined
    with additional NASA research in airframe noise reduction these
    advances may result in future technologies that could reduce perceived
    noise levels at the nation's busiest airports by 50 percent.
        The High-Speed Research (HSR) program, a key contributor to
    ``Revolutionary Technology Leaps,'' is making tremendous progress in
    addressing the high-risk, make-or-break environmental and economic
    ``barrier issues'' associated with any future High Speed Civil
    Transport (HSCT). Successful U.S. leadership in this next-century
    market could mean a difference of $200 billion in sales and 140,000
    high-quality jobs for domestic aircraft manufacturers. In 1997, we
    completed initial External Vision System flight tests, including 90
    approaches and landings in day and night on the NASA 737 research
    vehicle. These tests are important in developing future synthetic
    vision technologies for pilots so that a future HSCT would not require
    a drooped nose such as today's Concorde. Synthetic vision technologies
    may also have a safety benefit to subsonic commercial pilots by
    providing additional visibility in adverse weather, and may find
    application in a future reusable launch vehicle. In another advance,
    HSR researchers fabricated advanced titanium 4 and 5 sheet Superplastic
    Forming and Diffusion Bonding panels. If this technology is applied to
    a future HSCT, it will dramatically reduce aircraft weight, increasing
    performance and affordability.
        Building on the successful results in the existing HSR program, we
    are proposing an extension beyond Phase II, Phase IIA. Beginning in
    fiscal year 1999, HSR Phase IIA will focus on answering some of the
    remaining technology questions for a viable, economical and
    environmentally sound HSCT. Our first priority is propulsion, but as
    our confidence grows in that area, we will pursue additional airframe
    work as well.
        We continue to invest in the Aeronautics Research and Technology
    (R&T) Base, which is the vital foundation of expertise and facilities
    that meets a wide range of aeronautical technology challenges. By
    providing a high-technology, diverse-discipline environment, we enable
    the development of new, even revolutionary, aerospace concepts and
    methodologies for applications in industry. We are doing exciting
    things in the R&T Base. In 1997, NASA's solar-powered aircraft
    Pathfinder set an altitude record for propeller-driven flight of over
    71,500 feet. This type of technology will enable high-altitude, long-
    endurance for affordable, unpiloted science missions. Also in 1997, we
    successfully completed a critical design review of the Hyper-X launch
    vehicle, which will begin flight testing in January, 2000 and is the
    essential next-step for airbreathing hypersonic flight. Work within the
    R&T Base also lays the foundation for future focused programs to
    address the long term goals of the Enterprise's three pillars. For
    example, in fiscal year 1998 and fiscal year 1999, NASA's efforts to
    achieve the goals of the Administration's Aviation Safety Initiative
    are supported from reinvestments made within the R&T Base. We
    anticipate that in fiscal year 2000, as technologies for safety
    advance, a new focused program for safety will emerge.
        NASA is an integral part of the multi-agency Large-Scale Networking
    and High-End Computing and Computation (LSN/HECC) program, aiming to
    boost supercomputer speeds one thousand-fold to at least one trillion
    arithmetic operations per second--one teraflop--and communications
    capabilities one hundred-fold. As part of this program, NASA is one of
    several agencies making contributions to the Next Generation Internet
    (NGI). NGI allows NASA essentially to ``live in the future'' in
    emerging applications such as advanced aerospace design and test,
    telemedicine, earth sciences, astrobiology, astrophysics and space
    exploration. This effort is also funded in the Space Science, Earth
    Science and Education programs.
        The Advanced Space Transportation Technology program supports our
    ``Access to Space'' pillar. Our goal is to completely revitalize access
    to space by reducing launch costs dramatically over the next decade,
    increasing the safety and reliability of current and next generation
    launch vehicles, and establishing new plateaus of performance for in-
    space propulsion while reducing cost and weight.
        NASA is taking the lead in developing the technology for next
    generation reusable space transportation systems. The fiscal year 1999
    Reusable Launch Vehicle (RLV) Program includes both ground-based
    technology development and flight demonstrators--the X-34 small
    reusable demonstrator and the X-33 large-scale Advanced Technology
    Demonstrator. Each portion of this program contributes to the process
    of validating key component technologies, proving that the technologies
    can be integrated into a functional vehicle, and demonstrating the
    required operability to make low-cost access to space a reality. We are
    requesting funds to initiate the Future-X ``Pathfinder'' flight
    experiments for demonstrations of technologies which can further reduce
    the cost and increase the reliability of reusable space launch and
    orbital transportation systems.
        The Advanced Space Transportation Program (ASTP) focuses on
    technological advances with the potential to reduce costs beyond RLV
    goals, as well as technology development required to support NASA
    strategic needs not addressed by RLV. The ASTP includes a base of
    technology investments which, like the Aeronautics R&T Base, lays the
    foundation for future focused programs. Each element of the ASTP
    addresses a recognized need for near- and long-term reductions in space
    transportation costs by taking bold steps forward in innovative
    technologies and vehicle configurations. The Advanced Space
    Transportation Program also includes funding for industry-led trade
    studies of options for the next-generation launch decision at the end
    of the decade. We want smart people outside the Agency to help us make
    the right decision, because America's future in space is at stake.
        An important part of the Aeronautics and Space Transportation
    Technology Enterprise is the Commercial Technology program, which
    serves the entire Agency. Since its inception in 1958, NASA has been
    charged with ensuring that NASA-developed technology is transferred to
    the U.S. industrial community to improve its competitive position in
    the world community. Our commercialization effort encompasses all
    technologies created at NASA centers by civil servants as well as
    innovations from NASA contractors. The technology commercialization
    program consists of conducting a continuous inventory of newly
    developed NASA technologies, maintaining a searchable database of this
    inventory, assessing the commercial value of each technology,
    establishing R&D partnerships with industry for dual use of the
    technology, disseminating knowledge of these NASA technology
    opportunities to the private sector, and supporting an efficient system
    for licensing NASA technologies to private companies. The amount
    requested for NASA commercialization efforts includes $100 million to
    carry out the provisions of the Small Business Innovation Research
    (SBIR) Act, which requires a set-aside of 2.5 percent of NASA's total
    extramural R&D spending for small business research grants, along with
    an additional set-aside for the Small Business Technology Transfer
    (STTR) Program of 0.15 percent of NASA's total extramural R&D spending.
    The NASA SBIR program has contributed to the U.S. economy by fostering
    the establishment and growth of over 1,100 small, high technology
    businesses.
        Taken together, this Enterprise provides powerful fuel for advances
    in aeronautics and space transportation, leading the Nation in a
    position of strength into the next century.
                                   conclusion
        Mr. Chairman, NASA's vision statement begins ``NASA is an
    investment in America's future.'' For 40 years we have provided our
    country and the world with startling scientific discoveries and ground-
    breaking new technologies that have enriched our lives, expanded our
    horizons and fueled our imaginations. NASA is committed to upholding
    this tradition in the next 40 years.
        We will explore new worlds as well as gaining a better
    understanding of our own fragile planet. We will help make air travel
    safer and faster. We will reduce the cost of access to space, and open
    new doors of opportunity for research and technology in Earth orbit. We
    cannot predict exactly what we will learn and accomplish in the next 40
    years, but we know from past experience it will exceed our
    expectations.
        The future begins now. This year, we will all have the opportunity
    to stand together as proud Americans, along with our Russian, Japanese,
    European, and Canadian friends, as the conceivers and managers of the
    largest international science and technology program ever attempted,
    and look into the night sky at a tiny speck of light streaking from
    west to east at some 17,000 miles per hour. This will be the awesome
    sight of the first elements of the International Space Station. I look
    forward to that night as I hope you do.

                        NATIONAL AERONAUTICS AND SPACE ADMINISTRATION--FISCAL YEAR 1999 ESTIMATES
                                           [In millions of real year dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                       1998       1999
                                         1997 past   current     budget      2000       2001       2002       2003
                                            year       year       year
    ----------------------------------------------------------------------------------------------------------------
    SPACE STATION......................    2,148.6    2,501.3    2,270.0    2,134.0    1,933.0    1,766.0    1,546.0
    US/RUSSIAN COOPERATIVE PROGRAM.....      300.0       50.0  .........  .........  .........  .........  .........
    SPACE SHUTTLE......................    2,960.9    2,922.8    3,059.0    2,998.0    3,049.0    2,989.0    2,989.0
    PAYLOAD UTILIZATION AND OPERATIONS.      265.3      205.4      182.0      180.0      174.0      175.0      180.0
                                        ----------------------------------------------------------------------------
          HUMAN SPACE FLIGHT...........    5,674.8    5,679.5    5,511.0    5,312.0    5,156.0    4,930.0    4,715.0
                                        ============================================================================
    SPACE SCIENCE......................    1,969.3    1,983.8    2,058.4    2,207.4    2,308.4    2,387.4    2,568.4
    LIFE AND MICROGRAVITY SCIENCES AND       243.7      214.2      242.0      257.0      266.0      264.0      264.0
     APPLICATIONS......................
    EARTH SCIENCE......................    1,361.6    1,367.3    1,372.0    1,492.0    1,494.0    1,449.0    1,407.0
    AERONAUTICS AND SPACE                  1,339.5    1,470.9    1,305.0    1,092.0    1,026.0    1,057.0    1,071 0
     TRANSPORTATION TECHNOLOGY.........
    MISSION COMMUNICATION SERVICES.....      418.6      395.8      380.0      382.0      382.0      380.0      380.0
    ACADEMIC PROGRAMS..................      120.4      120.0      100.0      100.0      100.0      100.0      100.0
    FUTURE PLANNING (SPACE LAUNCH).....  .........  .........  .........  .........      150.0      280.0      330.0
                                        ----------------------------------------------------------------------------
          SCIENCE, AERONAUTICS AND         5,453.1    5,552.0    5,457.4    5,530.4    5,726.4    5,917.4    6,120.4
           TECHNOLOGY..................
                                        ============================================================================
    SAFETY, MISSION ASSURANCE,                38.8       37.8       35.6       35.6       35.6       39.6       39.6
     ENGINEERING AND ADVANCED CONCEPTS.
    SPACE COMMUNICATION SERVICES.......      291.4      194.2      177.0      136.0      125.0      151.0      121.0
    RESEARCH AND PROGRAM MANAGEMENT....    2,078.5    2,033.8    2,099.0    2,079.0    2,087.0    2,171.0    2,254 0
    CONSTRUCTION OF FACILITIES.........      155.3      122.4      165.0      165.0      165.0      165.0      165.0
                                        ----------------------------------------------------------------------------
          MISSION SUPPORT..............    2,564.0    2,388.2    2,476.6    2,415.6    2,412.6    2,526.6    2,579.6
                                        ============================================================================
    INSPECTOR GENERAL..................       16.8       18.3       20.0       20.0       20.0       20.0       20.0
                                        ============================================================================
          TOTAL........................   13,708.7   13,638.0   13,465.0   13,278.0   13,315.0   13,394.0   13,435.0
    ----------------------------------------------------------------------------------------------------------------

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                            space station total cost

        Senator Bond. Thank you very much, Mr. Goldin.
        According to NASA, the space station is to go from a total
    cost of $17.9 billion to $21.3 billion at completion. In
    addition, according to press reports on the Chabrow independent
    cost assessment, costs could go to some $24 billion and take 10
    to 38 months longer than NASA anticipates. There has long been
    a symbolic cap on the space station program, a total
    development spending of $17.4 billion, with annual expenditures
    of $2.1 billion.
        Now, assuming that Congress and the administration were to
    enforce the yearly cost cap, how many more years would it take
    to complete the space station and what will be the total cost
    at the end of the development phase? What would be the impact
    on our international partners?
        Mr. Goldin. I do not know that I could answer it off the
    cuff, but I would say that there would be a significant impact
    in schedule measured to the tune of 1 to 2 years.
        In terms of impact on our international partners, the
    partners in Canada, Japan, and Europe have already expended
    almost $5 billion, and they are on track to deliver their
    hardware on time. In fact, the Canadian arm is almost done and
    it will be ready for delivery pretty soon. So, it would have a
    significant impact.
        With regards to the Russians, I think it would even have an
    impact on the Russians too because it would stretch it so far
    downstream.
        Senator Bond. Can you tell us today definitively that
    except for contingencies that may be introduced by Russian
    performance slippage or nonperformance, the space station can
    be completely built for $21.3 billion, including all hardware,
    software, scientific facilities, outfitting flights, and
    utilization flights that now appear in your last year's
    September 30, 1997 assembly sequence?
        In other words, does NASA's fiscal year 1999 budget request
    anticipate the new $21.3 billion funding target for the space
    station, or do you expect to restructure these funding targets
    over the next 5 years and request additional funding?
        Mr. Goldin. First let me say in response to issues raised
    by this committee in last year's hearings, we talked to the
    administration. We did an internal review and we found that we
    saw a cost growth of about $1.6 billion, which was included in
    the fiscal year 1999 budget.
        That cost growth was broken up into two parts: $900 million
    in overrun, which was lack of performance by our contractor,
    and that was about 5 percent of the total value of the program.
    And then we made a decision to add about $700 million for a
    crew return vehicle because we had experiences with the Shuttle
    Mir that indicated our approach to crew return using Russian
    vehicles would not be adequately safe. So, we added that to the
    program in a conscious effort because we felt safety was
    important.
        We, with the exception of the Russians, are on track to
    have six-person occupancy of the space station by November
    2002. At that time, we will have 80 percent of our research
    equipment and we will be ready to really start the operational
    phase. In fact, at that point in time, only 20 percent of the
    space station budget will be associated with development and 80
    percent will be operations. So, in our minds, we have a very
    good chance of doing it. The issue and the variable is what
    will the Russians do.
        If you use that point with a six-person habitability,
    because we added a third node and that gives us the habitation,
    we believe, for the most part, development will be done by
    then. In fact, by the end of 1998, we expect 80 percent of our
    hardware work to be done. In fact, at the Cape, we will be
    ready to launch the node and the payload mating adapters on
    time. We are within 6 weeks of the laboratory schedule and all
    the other hardware appears on time.
        The number of $21.3 billion is a number that we have talked
    to the GAO about. That assumes that there is no research done
    between November 2002 and December 2003, so there is an
    additional amount of money put in for that schedule time,
    giving no credit for the research that is being done.
        But those are the numbers that we believe and the big
    variable to us is the Russian activity. However, I have had 14
    hours to review the Chabrow report. We take it very seriously,
    and within 30 days, we will get back to this committee on what
    we believe. And if we believe we need more resources, we will
    so state.

                           status of boeing contract

        Senator Bond. Let me just ask before I turn to my ranking
    member. You have mentioned the Russian problems. What is the
    status of the Boeing contract with regard to the development of
    the space station? We have heard about cost overruns, $600
    million, $800 million. How will these costs be covered and is
    Boeing required to absorb these costs?
        Mr. Goldin. We have seen substantial improvement by Boeing,
    in part, as the result of these hearings that we had last year.
    They have made major restructuring to their organization. They
    have brought in outstanding people, and for the last 6 months,
    we have been very, very pleased with the progress they have
    been making.
        I did not get the second part of the question.
        Senator Bond. The cost overruns.
        Mr. Goldin. Yes; Boeing estimated last year at this time
    about a $600 million overrun. We were concerned that it was too
    low, so our reserves carry up to $817 million for a Boeing
    overrun.
        Senator Bond. And will they be required to absorb any of
    those costs?
        Mr. Goldin. It is a cost type contract, but their overrun
    is reflected in the profit that they will make. If you will
    recollect, last year at this time, they received a zero award
    fee, and I think they responded in a very professional manner
    to that rating.
        Senator Bond. Thank you, Mr. Goldin.
        Senator Mikulski.

                              russian commitments

        Senator Mikulski. Thank you, Mr. Chairman.
        Mr. Goldin, I would like to pick up on the issue related to
    the space station. I am sure Senator Bumpers will ask
    additional funding questions. Mine goes directly to the
    Russians: No. 1, their ability to keep their commitment in this
    post-Chernomyrdin era; and also, No. 2, what they are doing to
    really honor their commitment that they are not continuing a
    relationship with Iran to spread the technology ability to
    manufacture--the missile technology to deliver weapons of mass
    destruction.
        Now, when the Russians and the United States got involved
    together in the space station--and I was the prime mover of
    that--it was in a post-cold war atmosphere to make best use of
    the Soviet space technical ability, which is considerable, and,
    at the same time, show that it was a new world order in terms
    of this.
        Now, where are we? Where we are is the Russians do not pay
    the bill internally, and No. 2, we have to continue to develop
    a duplicate system for them. This is not good.
        And here is my question. Based on space news reports that
    the Russians--that you have a 10-week delay in terms of the
    station launch because of the Russian problem. The Russian
    problem seems to stem from the fact that the Russian Government
    still has not paid the contractors building the country's space
    station hardware and that most of the $79.5 million allocated
    by the Russian parliament has not been delivered.
        I understand that you were told that that money would be
    paid to those contractors by mid-April. It is now near the end
    of April.
        My question to you, has the Russian government actually
    paid their bills internally and kept their commitment to us,
    and do you believe the Russian government will continue to do
    that or, as is reported, that they will continue to face, No.
    1, unpaid bills internally, No. 2, that they are going to cut
    their own budget, and No. 3, they ultimately will continue to
    fall behind? And should we then begin to develop other
    strategies both diplomatic and in terms of space science?
        Mr. Goldin. Let me start with the last part of your
    question. Mr. Rothenberg and a team is going to leave tomorrow
    for Russia to review exactly what the status is technically and
    financially. Sometime mid-to-late next month, I will be having
    a meeting with the leadership of the Russian space community.
    We will then meet with our international partners at the end of
    May, confer with the administration, and we will have a very
    specific position on what direction we ought to go based on
    that information. That is the process.
        Second, where are they? At the Gore-Chernomyrdin meeting,
    we felt we had a resolution of the funding situation and then
    Mr. Chernomyrdin was fired from his position and the Russian
    government fell apart. In the vacuum of not having a new
    government, I do not believe we made progress with but one
    exception. They have sent $15 million more since the time I had
    talked to you, but that is woefully inadequate from our
    position, that they should have completed the funding of the
    full $79.5 million.
        The Russian government will either form or not form on
    Friday of this week. There is very significant communication at
    the highest levels of our Government and the Russian government
    on this issue. In fact, last week the State Department brought
    a very significant message to President Yeltsin. Within 1 to 2
    weeks of the formation of the new government, within this
    timeframe of our process, I believe we will be able to answer
    your question.
        With regards to missile technology, there has been an
    intense----
        Senator Mikulski. Would--well, go ahead. Go on with the
    missile technology because that is all part of the same story
    here.
        Mr. Goldin. Yes; there has been an intense effort during
    this past year at the highest levels of government to
    strengthen our position with the Russians. The Russians took
    action and the Russian government strengthened their approach
    with a new export control process that is very, very good. We
    like it.
        Now, while NASA is not directly involved in these important
    discussions, I have frequently and continually emphasized to
    Mr. Yuri Koptev how crucial it is that his agency adhere to the
    missile technology control regime and their support
    contractors. There are new discussions going on right now in
    Russia and I understand they are going well and I am hopeful
    they will be resolved. But at this point in time, further
    discussion needs to be referred to the National Security
    Council and the State Department, as NASA is not a player in
    this.
        Senator Mikulski. Well, Dr. Goldin, I know that I raise the
    issues that are at a very serious level at the highest
    diplomatic levels of our Government. I would like to just
    comment about the station and then about the Iranian missile
    technology issue.

                    russians honoring their space commitment

        First of all, I really want to insist that the crisis that
    now is maturing and even deepening over the Russians honoring
    their space commitment needs to be not only addressed through
    an evaluation. We continue to go talk to the Russians to see
    where we are. Then we find out where we are, and then that is
    where we are. We need to talk about the progress.
        What I think the committee will look forward to hearing is
    the assessment led by Mr. Rothenberg, what will happen to the
    Russian government on Friday. But Secretary Albright and the
    National Security Council, as well as Cohen, need to know the
    results of this because this is now moving beyond a space
    station problem, though it is very difficult to ask the
    American taxpayer to pay double dutch, one in paying for a
    duplicative system and then paying and being involved with the
    Russians in terms of being able to deliver on their part of the
    bargain. We can only pay for the space station once. We cannot
    pay for it twice and then not get what we are paying for.
        Now, it is my observation with my colleagues and with
    myself we are running out of patience here. There is always one
    more promise and then there is one more crisis and one more
    promise. I think that we are really now--quickly in this
    appropriations, we could move to a crisis. I do not want to see
    a crisis either related to diplomacy, the ability of the space
    station to continue, and the leaching that is going on in our
    own budget.

                           iranian missile technology

        Second, in terms of the Iranian missile technology, I know
    that this is not the forum to go into that in detail. But this
    then must be addressed at the highest level. One of the reasons
    we encouraged the Russians to work with us is that the future
    belongs to the West. If they then want to fund enemies of the
    United States of America, be duplicitous in really providing
    direct and specific information to build enhanced capability of
    weapons of mass destruction, we have got a major diplomatic
    crisis on our hands.
        I look forward to hearing more about that in another forum,
    but if the Russians do not deliver on the station, how in the
    hell can we believe that they are going to deliver on Iranian
    missile technology?
        Now, I know the Secretary of State talks with the Prime
    Minister of Russia--talks with the Russian government about
    three times a week. She assured us that at a democratic crisis.
    I am going to put this on the agenda. When you come back, we
    are going to put this on the agenda, when Joe comes back,
    because this could sink the space station.
        Mr. Goldin. I understand.
        Senator Mikulski. This could sink the space station and it
    could also create a very serious diplomatic situation. I would
    like to play a constructive role in both. I think there has to
    be a real sense of urgency and a real acknowledgement of what
    the stakes are, and I know you have it.
        So, anyway, I know my time is up, and I have other
    questions.
        Senator Bond. Thank you very much, Senator Mikulski, for
    raising the questions which trouble all of us. I think you are
    right on point in raising those questions. We do have serious
    concerns about it.
        Now, it is my pleasure to turn to Senator Bumpers for his
    questions.

                                 chabrow report

        Senator Bumpers. Mr. Chairman, let me say, first of all,
    yours and Senator Mikulski's questions are very thoughtful. You
    have obviously tuned in to the same information I have and are
    concerned about it, and I appreciate that very much.
        Mr. Goldin, did I understand you to say that you have only
    had the Chabrow report 14 hours?
        Mr. Goldin. Yes, sir.
        Senator Bumpers. We got most of that off the Internet a
    month ago.
        Mr. Goldin. This is the final report and I was waiting for
    the final report----
        Senator Bumpers. You have not seen the charts that were on
    the Internet?
        Mr. Goldin. I looked at the final report. I was waiting for
    the NASA Advisory Council to review it, comment on it, and then
    I reviewed the final report last night.
        Senator Bumpers. On page 1 of that report, this is what the
    Chabrow report says, ``The program's size, complexity, and
    ambitious schedule goals were beyond that which could
    reasonably be achieved within the $2.1 billion annual cap, or
    $17.4 billion.'' So, they start off saying the $17.4 billion
    was never realistic.
        Let me also say, Mr. Goldin, this report has some
    exculpatory information in it too. They say there are no show
    stoppers. All these programs are subject to overruns. They are
    immensely complex. And they are not blaming anybody in
    particular. There is certainly no malfeasance, none of that.
    That is not what we are talking about. But they say that the
    promises were not realistic in the first place.
        Then they say, ``The fiscal year 1999 budget submission to
    Congress is not adequate to execute the baseline ISS program to
    cover normal program growth and address the known critical
    risk. Additional annual funding of between $130 million and
    $250 million will be needed. Completion''--and this is really
    key. ``Completion of the international space station assembly
    is likely to be delayed from 1 to 3 years beyond December
    2003.'' If the Chabrow report turns out to be correct, we could
    be looking at a 2006 completion date. I assume that you saw
    that in your perusal of the report.
        Mr. Goldin. Yes; I did.
        Senator Bumpers. And then I am sure you also saw their cost
    projections, which are at such considerable variance from the
    figures we have always been given by NASA--Senator Bond alluded
    to this earlier. The $17.4 billion never was realistic, and you
    have heard me on the Senate floor screeching about that for
    some time.
        But in any event, you have asked for budgeting now in
    contemplation of a $21 billion completion, not $17.4 billion,
    but $21.3 billion. Now, the Chabrow report says $21.3 billion
    is not realistic. As a matter of fact, they say the figure
    should be $24.756 billion.
        Now, we are still looking at a 2005-6 completion timeframe.
    We are looking at over $7 billion, or a 30-percent cost
    overrun, to complete the assembly of the ISS, and Lord only
    knows what will happen between now and then.
        What is your comment for this additional cost overrun? We
    heard about $3 billion not too long ago. The Los Angeles Times
    I think wrote the story and then everybody began to talk about
    it. And now we have the Chabrow report which adds another $3
    billion plus, and we are looking at cost overruns of well over
    $7 billion.
        Mr. Goldin. First, I want to say that I think there was an
    outstanding team on the Chabrow group. They worked very, very
    hard, and they were very, very thorough. I also want to point
    out that when we noted the problems last spring, I personally
    asked that this be done. The next point I would like to make is
    the vest committee, when we went forward with the redesigned
    space station, we believed that the $17.4 billion number was
    real, and I do not take issue with this panel's makeup looking
    backward. But I do not want to give you the impression that we
    did not believe in that $17.4 billion number when we went
    forward. In fact, some of the members of the Chabrow panel were
    also members of the vest committee when we went forward with
    the $17.4 billion. Now, there could be disagreements, but the
    important thing for you to understand is we really believed it.
        The next point I would like to make. We have had issues and
    problems with the Russians, and one of the major issues that we
    have had is that we assume we get a $2 billion savings from the
    Russians and because they have not paid their bills, we have
    been impacted by almost $2 billion which ate up a significant
    portion of our reserves.
        Senator Bumpers. If you will pardon me for interrupting,
    you ain't seen nothing yet.
        Mr. Goldin. When we look at the overall program, we have
    made great progress. I have confidence to a high level on our
    part.
        Now, Mr. Chabrow has suggested we put in additional
    reserves above those we have. Based upon what I saw last night,
    I have directed Mr. Rothenberg to look at what level reserves
    we should have, if our reserves were adequate. Mr. Chabrow's
    main concern was if you do not spend the money that is needed
    now, it could lead to much bigger problems downstream with
    regards to cost and schedule. We are going to evaluate that,
    and as I indicated, in 30 days we will be ready to report out
    to this committee.

                       proceeding with the space station

        Senator Bumpers. Mr. Goldin, let me interrupt you. My time
    is almost up and I have a couple of questions I want to ask
    you.
        Do you have a figure in mind beyond which you think we
    should not proceed with the space station? Is there any cost
    figure that to you would make it really unwise to proceed with
    it? Any figure that would make it implausible to continue with
    it, $50 billion, $100 billion,?
        Mr. Goldin. I do not feel at the present time I could
    answer that question off the cuff.
        Senator Bumpers. Let me ask another question with your
    indulgence, Mr. Chairman.
        Senator Bond. Senator Bumpers, after conferring with my
    distinguished ranking member, we have decided to give you a
    special dispensation. [Laughter.]

                             space station launches

        Senator Bumpers. Well, I would have pursued those others a
    little longer if I had known that.
        But let me ask you this. How many launches is it going to
    take to deploy the space station?
        Mr. Goldin. I believe 47. That is correct.
        Senator Bumpers. 47?
        Mr. Goldin. Yes.
        Senator Bumpers. How many of those are Russian?
        Mr. Goldin. I think about 13 to 15.
        Senator Bumpers. I am talking about assembly and logistics
    flights in deploying the space station. How many flights is
    that going to take?
        Mr. Goldin. 47.
        Senator Bumpers. And how many of those are Russian?
        Mr. Goldin. I believe 13 to 15. They are trying to validate
    that number now.
        Senator Bumpers. What kind of degree of confidence do you
    have that they will be able to do that?
        Mr. Goldin. The Russians have an outstanding capability,
    and, in fact, had we not had the Shuttle Mir, we could not do
    what we are doing. The only issue is will the Russians fund the
    Russian Space Agency, and that issue is being taken up by the
    senior levels of this administration. If the Russians commit to
    that funding, I believe we will be able to do it with a very
    high degree of probability.

                     russian delays increases cost overruns

        Senator Bumpers. You would agree that every time the
    Russians delay, every time the timeframe on completing ISS is
    moved back because of Russian delays, that increases the cost
    overruns, does it not?
        Mr. Goldin. Yes; it does.
        Senator Bumpers. Now, here is a press release where the
    House Science Committee, chaired by James Sensenbrenner and his
    ranking member, met with Russian officials on this, and the
    Russian officials told him--and incidentally, we are talking
    with the Minister of Finance, the head of the Russian Space
    Agency, the Duma, and President Yeltsin's Space Advisor, whose
    name I cannot pronounce.
        Mr. Goldin. Shaponikov.
        Senator Bumpers. But in any event, those officials told the
    House Science Committee that there will be likely delays on the
    launch of the first two space station elements. Now, we already
    knew--this was April 9. We have known since the last
    appropriation period that they were going to be late, but we
    were looking at a different timeframe. In June of last year,
    NASA put out a publication saying that the functional cargo
    block would be up by June 1998. We are now looking at August.
    Is that realistic, or do you know?
        Mr. Goldin. I will not take a position on what that date
    is. The August date is not a date that is official that came
    out of our offices. We are going to review where they are and
    understand what the schedule is going to be. It could be
    delayed, yes.

                                 service module

        Senator Bumpers. On node one, the launch vehicle. Of
    course, that is the U.S. orbiter.
        But let's see, on the service module, which is also
    Russian----
        Mr. Goldin. That is the key element.
        Senator Bumpers. They are building it.
        Now, last year we were told that that would be ready for
    deployment by December of this year. We are now looking at
    March 1999 apparently.
        Mr. Goldin. We at NASA are carrying a 4-month pad on the
    service module delivery. So, if they are as late as 4 months,
    we can accommodate it within our program we believe. We are
    going to review this, and at the end of May/beginning of June,
    we will be able to take a firm position.
        But I want to come back and go through what we have done so
    far. First, the Russians have performed very well when they had
    the funding. They are transitioning from communism to
    democracy, and they are having a very tough time, a very tough
    time. We are trying to work with them.
        This is an issue of international leadership. The United
    States of America was asked by 16 nations to step up and lead
    this international group. I have been to Europe, Japan, and
    Canada, talked to our partners, and they are looking for United
    States leadership. This is a very, very tough problem, but we
    need to look very hard at this.
        Another point I want to make is that in the midst of
    building the Mars Pathfinder, NASA selected Jim Martin, who was
    the biggest critic of the program, to oversee it and he said it
    could never be done. It would be impossible. We would have all
    these problems. And at the landing on Mars of that Mars
    Pathfinder, Jim Martin walked over to me and said, Dan, you did
    something at a tenth the cost and a quarter of the time. I did
    not believe it and I have to tell you you pulled it off. Now,
    we take on really tough stuff.
        Another point I want to make to you is we have downsized
    this agency and turned back $25 billion to the American
    taxpayer already. We have trouble here. We are going to figure
    out how to work our way through it, and we are going to deliver
    a space station to the people of America and the world in a
    very responsible fashion.

                          space station cost overruns

        Senator Bumpers. Mr. Goldin, I could not agree more with
    you on the last statement. Not to denigrate the U.S. Congress,
    I can tell you that you will fund the space station, but I can
    also tell you that the $7.3 billion cost overrun we are looking
    at right now is just the tip of the iceberg. But I can tell you
    we are not going to kill the space station. You have absolutely
    nothing to fear. I have been at this now for 7 or 8 years and
    this is my swan song. I am sure you hate to see me retire.
    [Laughter.]
        Mr. Goldin. No; I would like to make a comment to you which
    I told you in the Senate at one point in time. Senator Bumpers,
    you make us operate better because you press into us and hold
    us accountable. I thank you----
        Senator Bumpers. I remember that conversation and I thank
    you very much. It is a compliment and I take it as one.
        But on this I obviously believe that NASA and Congress are
    intent on building this space station regardless of the cost.
    My position all along is I have no objection to the space
    station. The Russians have had one-half dozen, maybe seven, up
    there from time to time. In my opinion they have got nothing
    out of it. We are not going to get anything out of this to
    speak of.
        For example, you could hire 5,000 scientists at the average
    rate that NIH hires scientists. You could hire 5,000 for the
    annual cost of operating the space station, and in my opinion
    you will get a hell of a lot more medical research out of that
    than you will out of the space station. That is my whole point.
    We all have some obligation to the taxpayers.
        The Russians cannot afford this, Mr. Goldin. This is not
    just a temporary thing in Russia. They are struggling. They are
    having a terrible time. They are broke. They cannot do this. If
    they could do it, they would be doing it. They cannot do it and
    I see nothing on the horizon that says they are going to find
    the money to do it. I am not demeaning or denigrating their
    technical expertise. They obviously have some. I do not think
    it is nearly as sophisticated as ours, and I do not think you
    do either. All I am saying is we are putting an awful lot of
    faith in the Russians' ability to pay their share. It is not
    going to happen, and every time they default--and they are
    going to default a lot--the cost overruns go up and the
    American taxpayers are going to pick up the tab.
        Mr. Goldin. I would just like to respond to a number of
    those points. First, I do not acknowledge or accept a $7
    billion overrun at this point.
        Senator Bumpers. That is what the Chabrow report says. I do
    not know whether that is good or not.
        Mr. Goldin. I do not know whether I want to accept that or
    not, and I will take time personally to take a position on
    that.
        This is a team that was told by the President to cut its
    budget by 30 percent and our productivity went up 40 percent.
    We do what is impossible and I am not ready to give up or
    concede because I have such a pride in the people that work at
    NASA and our contractors.
        Second, contrary to belief, when I came onto this program,
    I was a cold warrior and for 25 years I designed weapons aimed
    against Russia, and I thought they had nothing. I could
    testify, as one of the experts in space technology in the
    world, that the Russians have taught us more in the 3 years of
    the Shuttle Mir program in extended duration space flight than
    we have developed over a 20-year period, and that if not for
    the Shuttle Mir flights, we would not be able to do the things
    we are doing.
        Finally, I will accept the fact that we cannot justify the
    space station on science alone. One of the main purposes of the
    space station is for exploration to extend beyond Earth orbit
    and explore worlds like Mars and the Moon and perhaps Europa,
    to involve commerce, to involve education.
        And the last point I want to make is that every time there
    is new science, there is always a reluctance to take a look at
    the new science. There was reluctance to build the Hubble space
    telescope because people were accustomed to going to the top of
    a mountain. The same kind of arguments that we see today on the
    space station from well-meaning people in the science community
    we saw in Hubble, and we have the Space Telescope Institute
    sitting there in Baltimore bringing back data that has enriched
    us and no one could have believed.
        These are the things that NASA is about and we have got to
    go on and we have got to go on and we have got to take risks
    and we have got to press forward. So far, with the exception of
    $100 million, we have been able to reprogram our own funds and
    not come back to the American people. And we have been at this
    now for 5 years and we are going to look even tighter at that.
        I would like to see one other agency that has had their
    budget continuously go down that tripled the number of
    spacecraft they are building, and while all this is going on,
    we have built a research community that was almost zero and we
    are going to have 900 principal investigator grants in
    microgravity and life sciences. That has continued.
        There are Nobel Laureates that are working with us on this
    space station. I was just down there at Cape Kennedy with
    Professor Sam Ting of MIT who told me without the space
    station, he will not be able to explore whether there are
    antimatter galaxies or dark matter in our universe. These are
    important things.
        Now, some researchers could say, well, let us use the
    existing approach. It is something that this Nation has
    committed to and this is a question of U.S. leadership. I want
    to once again assure you we manage tough. I do not win
    popularity contests at NASA. We have downsized by tens of
    thousands of people, and we will continue to do the right
    thing. But what I ask you to consider is we are not ignoring
    the issues and we take them head on.
        And the final point I want to make is the Russian people
    are struggling for democracy. This will not happen overnight.
    The one major thing they have left that separates them from
    developing countries is the pride in their space program. They
    have statues all over their country. They wanted to join
    America. They canceled their own space station to join an
    American-led program. The implications of our saying we want to
    be a partner only in good times and dropping them--I would be
    concerned that we are going to go back to a situation that will
    feed the fears of the hate mongers in Russia.
        These are very considerable, significant issues and we
    focus on the problem areas. But I am very committed. I am
    convinced that the team we have is the best team in the world
    and somehow, some way we will make it work. And I will be back
    to this committee within 30 days with our assessment of where
    we think we ought to go and how we ought to address your
    concerns, Senator Mikulski's concerns, and Senator Bond's
    concerns.

                        senator bumpers support for nasa

        Senator Bumpers. Mr. Goldin, let me just say I could not
    agree with you more. You are preaching to the choir. I am not
    going to vote for NATO for the very reasons you just set out.
    The Russians have got plenty of problems over there and I do
    not want to debate NATO here today, but I am certainly going to
    speak loudly and clearly on the floor of the Senate on why I am
    opposed to expanding NATO, because I am convinced doing so will
    hurt our relations with Russia.
        We want Russia to democratize. We would like for Russia to
    be able to participate in this in a timely manner, and I do not
    want to pursue that.
        Mr. Chairman, you have been most kind.
        I want to conclude with this, Mr. Goldin. I am a NASA
    supporter. I would vote for money and did vote for money for
    the Hubble space telescope. I think Rover and Pathfinder was an
    absolute scientific coup. I applauded it. I applaud most
    everything NASA has done. They discovered the hole in the ozone
    layer in the Antarctic 9 years after I tried to stop the
    manufacture of chlorofluorocarbons in this country and could
    not do it because people said this is just a wild theory. Nine
    years later the National Academy of Sciences and NASA
    discovered the ozone hole was there already. So, NASA plays a
    major role in future science, discovering other galaxies, all
    of those things.
        That is not what we are talking about. We are talking about
    the space station and what we get out of it. And the Chabrow
    report says, No. 1, that we are looking at a $24 billion plus
    cost to assemble it. That is a $7.3 billion cost overrun, a
    flat 43 percent. That is just today. They further say that it
    will take 1 to 3 years longer than you say it is going to take,
    and the cost overrun is obviously going to be much greater if
    that turns out to be true.
        Now, those are my final remarks, Mr. Chairman. Thank you
    very much for your indulgence.

                             space station science

        Senator Bond. Thank you very much, Senator Bumpers.
        Let me run through a couple of things. We have got a lot to
    cover here. We have a vote coming up before noon. Obviously, we
    will keep the record open and submit further questions, and
    some of our other members may have those questions. Thank you
    very much, Senator Bumpers for joining us.
        NASA has moved $819 million into the construction of the
    space station between 1996 and 1998, and of that $819 million,
    some $416 million was already part of the space station program
    allocated for science activity. Does NASA intend to reinvest an
    additional $819 million into space station science, and if so,
    how and where are the funds coming from?
        Mr. Goldin. Let me start off, Mal, and then you can jump
    in. Recognizing the change in the assembly sequence, we felt to
    go build some of that research equipment and have it sitting
    there, while we are trying to get the space station built would
    not be appropriate. However, we are continuing to fund all the
    scientists and build up the capability.
        The second issue that we had is when we took a look at that
    research equipment, it was 10, 15 year old vintage technology
    and there was a significant amount of time to build it. So, we
    restructured it and now we have much better equipment, much
    higher performance, much wider band. The researchers will be
    able to do virtual presence from any place in the country.
        We are committed to deliver every single thing we said we
    would do in terms of research facilities plus some, and for the
    record, I will submit all the additional things we are doing.
        In terms of total dollars, as part of some of the offsets
    we have negotiated with some of our international partners,
    they are going to supply some of the equipment so the U.S.
    taxpayer does not have to cover that equipment. But we will be
    pleased to submit for the record what we promised to deliver
    and everything we will deliver and the schedule for that
    delivery.

                               transfer authority

        Senator Bond. With respect to transfer authority, I am
    concerned about upsetting the balance, as we have discussed, in
    NASA between manned space flight and the space science. I am
    also concerned that the administration's rhetoric of support
    for the station is questionable when they do not actually step
    up to the plate to ensure that the ISS is adequately funded.
        With respect to the transfer authority, the administration
    requested $200 million: $173 million from science and mission,
    $27 million from within human space flight. How much is
    actually needed this year as opposed to requirements for
    funding that will occur in fiscal year 1999?
        Mr. Goldin. The $200 million figure is an assessment made
    by the space station program office that they felt their
    reserves were short to that level. It is not money designed for
    any specific activity. In all probability, the lion's share of
    that money would be expended in 1999.
        Senator Bond. So, this is really something that we could
    and should be dealing with in the fiscal year 1999 budget. We
    ought to be finding that money. If we are going to spend it in
    1999, then we need to have some truth in budgeting and say this
    is the 1999 expenditure, should we not?
        Mr. Goldin. Well, there could be some expenditure this
    year. We are not through the year, and it is very difficult to
    keep track of exactly where we are. But I would say that a good
    portion of the money would be spent in 1999 and in candor I
    wanted to tell you that as a fact. The budget process gets
    complex, and if we start the fiscal year and we do not have
    these resources and people have to commit things and the
    Congress does not reconvene until the following year, we are
    afraid we may have some problems.
        But I cannot honestly tell you specifically what they may
    be, only the concern that the reserves are not adequate. When
    Mr. Chabrow talked about the reserves that we needed, it was
    assumed in the baseline that we had that $200 million. The
    timing of it we are prepared to work with you on.

                    useful life expendency of space station

        Senator Bond. I understand latest indications are that the
    space station will have a useful life of 8 and a half years. At
    $21.3 billion and counting, that makes it rather expensive. How
    did you come up with an 8 and a half year useful life and what
    does that mean?
        Mr. Goldin. I did not come up with 8 and a half years. The
    space station has--let me go back to tell you how the program
    was designed. The President put a sunset clause on the station
    as a result of the redesign process and said at the end of 10
    years of operation, we would have a national peer review to see
    if the space station was meeting its exploration, commercial,
    scientific, and educational goals, and if it did, it would
    continue for a further time. So, in terms of life of the
    station, it is well beyond 10 years.
        I do not yet acknowledge the $21.3 billion because to get
    to $21.3 billion, you assume that between November 2002 and
    December 2004, you are doing no research.
        If you go to the charts that I have supplied and go to the
    fourth chart which looks like this and the fifth chart which
    looks like this. In fact, let me stick with the fifth chart for
    1 minute.
        Senator Bond. OK.
        Mr. Goldin. When you look at that chart, you will see that
    there is a point which says three-person capability, cum cost
    through January 1999, $12 billion. That is in 1999. Again, this
    assumes the Russians will deliver the service module within 4
    months of when they said.
        Then you see development, complete six-person capacity,
    $19.7 billion. We added a one-third node to the program. It is
    additional hardware that we added so we could get the six-
    person capability as early as possible. This is because the
    Italians are delivering this for us. We will have 80 percent of
    the research capability there.
        Now, when you go from November 2002 to December 2003 to get
    to $21.3 billion, it assumes no research is going on and you
    charge the operational costs to the space station.
        If you go back to this chart over here, you will see that
    we are already on the down slope in purple of the development
    activity, and the operational activity is already beginning.
        So, it is a question of how we are approaching this, but we
    do not feel it is appropriate, if we get it up by 2003 with a
    six-person capability and have research ability to do 80
    percent of the research, to say that all the money is being
    charged to development. So, right now we believe if the
    Russians will be able to get their hardware to us in time,
    November 2002, we think we have a good chance of doing that.
        Now, if that slips, then the course will begin approaching
    this $21.3 billion. The GAO felt that $21.3 billion was the
    right number and we are at $19.7 billion. And I just wanted to
    point that out.
        Senator Bond. Thank you, Mr. Goldin.
        Senator Mikulski.

                             effects of downsizing

        Senator Mikulski. Mr. Goldin, I am not going to continue
    the conversations on the space station. I am going to move to a
    few others.
        First of all, I do want to acknowledge that the agency was
    asked to really bring enormous disciplines into its system and
    that when you say how proud you are of the workers and that
    they have done the impossible, I want to agree with you. I have
    seen it in my own State at Goddard not only because Mr.
    Rothenberg is here, and I know that at every other facility
    that has been so.
        What I am concerned about, though, is now impossible cannot
    continue as a management practice. Impossibility cannot
    continue as a management practice. So, I want to acknowledge
    everything that you said, and I share your pride too and a
    certain amount of even amazement.
        But I feel that NASA in some ways is like where Defense is.
    We better be real careful about what we are doing because we
    could reach a point where in downsizing and so on, we could
    downgrade and not have readiness, modernization, and other
    things that we need to do. So, just know that is why we are
    raising these concerns.
        Mr. Goldin. Can I respond to that? I agree with you. I
    agree with you, and let me assure you if we had additional
    funds, we would know how to spend it.
        I also want to make you aware of the point at some point in
    time NASA is going to require additional funds because we
    cannot go for 10 years without any increases.

                             future funding of nasa

        Senator Mikulski. That goes to my next point. When you
    talked about Hubble took everyone out of the box, if you will,
    in thinking about the telescope, but Hubble could have been a
    major disaster because of the mirror, the dysfunctional nature
    of the Hubble mirror, where we got the Congress to agree to the
    greatest contact lens in world history.
        Now, but we cannot afford this. There is less and less
    elasticity in the budget. We cannot underestimate what the
    significance of the balanced budget agreement was. We are not
    going to keep going into debt to compensate for mistakes. This
    is a leader in the balanced budget amendment. I am a Janey-
    come-lately to it, but I voted for it. OK? And now that is
    where we are. So, this is why we are talking about the prudent
    nature of it.
        I do worry about the future funding of NASA and I worry
    about NASA in relationship to other scientific programs. We
    could go through how EPA is to get more money. The National
    Science Foundation is being discussed, doubling the NIH budget,
    all of which I think we would like to support presuming the
    finding of a revenue stream. But I am concerned that NASA is
    never on that list, and we got to get it on that list. I think
    we need to hear the thoughts about you and then really a
    conversation with the administration on this and then how to
    accommodate that within our current balanced budget
    environment.

                                  y2k problem

        Now, but let me go to something else. I was really troubled
    to read that a report commissioned by the House on the Y2K
    problem in which there was an evaluation done like a report
    card that Congressman Steve Horn asked for and that NASA got a
    D and that NASA got a D in saying that of the 459 mission
    critical systems, the agency had identified 40 percent as
    compliant, 60 percent as noncompliant. Of the 218 systems that
    were out of compliance, only 214 had been renovated.
        I do not want to go through all the numbers here, but my
    gosh, you are the high tech agency. You are one of the flagship
    high tech agencies, and if you are getting a D for being ready
    for Y2K, that is troublesome. In what areas? Is it on
    management and procurement and personnel? Is it Y2K problems in
    computer technology with the shuttle with integration with
    other international agencies, even western European? Let us put
    the Russians aside. Do you want to comment on that?
        Mr. Goldin. To be quite candid, Senator Mikulski, I am
    flabbergasted that we have such a score----
        Senator Mikulski. I was too.
        Mr. Goldin [continuing]. Because I met with the President's
    special advisor on Y2K and he saw what we were doing. I
    believe--and I am not sure--that part of the----
        Senator Mikulski. Go ahead. Just keep talking.
        Senator Bond. Do not worry about us.
        Senator Mikulski. I have got a Y2K beeper. [Laughter.]
        Mr. Goldin. I believe the way the scoring system goes is
    they take a look at the rate at which you are achieving things
    and in the November to February timeframe, I think we closed
    out seven critical systems. So, they extended that rate out and
    it went beyond the March 1999 timeframe. But that is working to
    our plan. We have the whole agency at battle stations and have
    been that way for a number of years. We believe we are doing
    all the right things.
        In fact, we have taken further steps. I am sending letters
    to 3,500 of our suppliers. We are renegotiating our contracts
    with our suppliers, and in house and contractor-wise, we think
    we are on track. We have a plan that beats or exceeds the Y2K
    problem, and we will communicate with Mr. Horn. I expect that
    we are going to be there.
        There are two concerns that we have. One is our
    international partners. Only 2 of our 16 international partners
    are really focusing and addressing this issue, and I do have
    some concern about some of our contractors.
        But with those two exceptions, I believe we are right on
    track, and for the record, I will submit the plan we are on,
    the accomplishments we have made, and why I believe we are
    doing the right thing.
        Senator Mikulski. Well, I think this is critical and I
    think what we are committed to is making sure that you are on
    target and that you have the resources to be on target.
        Senator Bond. This is a prime concern of this subcommittee
    and all of the agencies. I would certainly hate to be on an
    airplane when the year 2000 arrives if all the computers think
    that it is 1900.
        Senator Mikulski. That is exactly right.
        Now, you will be interested to know Agriculture and EPA get
    a B. They're your pals, and FEMA gets a D minus. I know they
    are all your friends, but some are more friendly than others.
        But, Mr. Goldin, what I would like to do is share with you
    what I have been working off of as I raise this issue. May I
    give this to one of your staff so that then you know the paper
    that I looked at that really raised my eyebrows when I saw
    NASA. You know, the Department of Ed gets a D.
        Mr. Goldin. I saw that and I will get you material that I
    think will build your confidence that we are doing the right
    thing.
        Senator Mikulski. Thank you very much.

                              uncosted carryovers

        Senator Bond. Mr. Goldin, I am going to try to hurry
    through a couple of things that are important enough that I
    want to mention here before we leave for the vote, and I do not
    expect that we will come back. We will have to submit the rest
    for the record.
        But the uncosted carryovers are of grave concern. It seems
    to be the answer to everything. We have got an uncosted
    carryover. What troubles me, if we appropriate the funds
    through the Congress for an intended purpose, can the agency
    spend them for another purpose because they have not been
    costed or actually spent?
        I would like you to explain the use of uncosted carryovers.
    What happens to the programs when the funds are shifted from
    their intended purpose, and why do some programs, such as space
    science and earth science, carry such large uncosted
    carryovers? Are these funds we need for the programs? How will
    they affect future funding and how will the deficit be made up?
        Mr. Goldin. Thank you, Mr. Chairman. First, let me say that
    NASA itself brought this issue forward. I raised this issue a
    year and a half ago.
        Let me tell you the reason that it occurred. NASA underwent
    more change than most Federal agencies and contractors, and let
    me give you an example of Mission to Planet Earth. When I took
    over, for the 1990's Mission to Planet Earth had $11.4 billion.
    That was appropriated by the Congress. We went in there and
    over the last 5 years we brought that number down to $6.8
    billion. We have been slashing budgets and making changes.
        Our people rightfully held up procurements so the money
    would not get spent. So, I give them an A for good management,
    but they did not recognize the buildup of the backlog in cash.
        Senator Bond. Backlog in actually budget authority.
        Mr. Goldin. Budget authority.
        So, when we identified the problem, we had $4.8 billion of
    carryover funds. We are now down to $3.5 billion, and within 1
    year we will be at $2.8 billion which we believe is the
    carrying level necessary for an agency like NASA.
        We have put this into the goals of our executives. They
    earn their bonuses based upon not just managing efficiently,
    but being cognizant of the cash flow.
        There was another problem that came out as a result of this
    carryover issue and that was that our grants process and our
    working with the universities needed reinvention. And this is
    in the earth science and the space science area. We put the
    responsibility at NASA Goddard. They have a terrific person
    leading that activity. We work with the universities, and we
    think within 1 year we will be able to be much more efficient
    in how the money is delivered to the universities.
        So, we found efficiencies in our own system. We are one of
    the few agencies who manages the uncosted because we are
    concerned about this issue, but I can assure you we have
    reduced it by $1.3 billion and within 1 year we will be at the
    running level of $2.8 billion.
        Senator Bond. Are you saying that because you have made
    efficiencies and economies, you are not going to need this
    money, that you are going to be able to accomplish what the
    money was appropriated for without the money?
        Mr. Goldin. We just reprogrammed the money for a variety of
    resources.
        Senator Bond. Yes; but I mean when you take it out of one
    area, it is an uncosted obligation. Does that mean you are just
    not ready to spend the money? You are not ready to have the
    cash flow go out this year and you will need it next year? Or
    does it mean that because of better, cheaper, smaller, you are
    not going to need it?
        Mr. Goldin. The people did not want to prerelease RFP's so
    we would get the wrong response. For example, the common
    spacecraft buy was delayed because we changed the whole
    approach based upon our advisory committee structure. So, they
    rightfully held up because of all the change going on, and then
    we released the RFP and we have the resources to do it.
        Senator Bond. Are you going to need to replenish those
    funds?
        Mr. Goldin. Malcolm?
        Mr. Peterson. Sir, if I may. What is being reflected in the
    drawdown of uncosted is materializing in outlays. This is
    spending, of course, that we are in excess of our budget
    authority levels. Our future plans assume that we will stay
    about at the end of the 1998 level and continue on from there.
    We do not have any surpluses in this account.
        Senator Bond. Are you going to have to come back to the
    areas where you found uncosted carryovers and seek additional
    appropriations in the future?
        Mr. Peterson. I believe not, sir.
        Senator Bond. OK.

                              subcommittee recess

        With that, Mr. Goldin, we will look forward to continuing
    our discussions. I thank you very much for an informative
    hearing, and the hearing is recessed.
        [Whereupon, at 11:54 a.m., Thursday, April 23, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

     DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
            INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1999

                                  ----------

                            THURSDAY, APRIL 30, 1998

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 9:38 a.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Christopher S. Bond (chairman)
    presiding.
        Present: Senators Bond, Burns, Campbell, Mikulski, Leahy,
    and Lautenberg.

                        ENVIRONMENTAL PROTECTION AGENCY

    STATEMENT OF CAROL BROWNER, ADMINISTRATOR
    ACCOMPANIED BY:
            FRED HANSEN, DEPUTY ADMINISTRATOR
            SALLYANNE HARPER, ACTING CHIEF FINANCIAL OFFICER

                    OPENING STATEMENT OF CHRISTOPHER S. BOND

        Senator Bond. Good morning.
        The Subcommittee on VA, HUD, and Independent Agencies of
    the Appropriations Committee will come to order.
        This morning we are going to take the testimony on the
    fiscal year 1999 budget request for the Environmental
    Protection Agency. We welcome Administrator Browner, Deputy
    Administrator Fred Hansen, Ms. Harper, and other EPA officials.
        EPA is requesting a fiscal year 1999 budget of $7.8
    billion, an increase of $400 million or 6 percent. Major
    increases are proposed for Superfund, which would rise by $600
    million; the climate change technology initiative, which would
    increase $116 million, or 130 percent; and particulate matter,
    or PM-2.5, monitoring, which would receive an increase of $29
    million for a total of $65 million.
        While clean water activities as part of the new Clean Water
    Action Plan would increase $150 million, the State revolving
    fund for clean water in the President's request decreases by
    $275 million, for a net decrease of $125 million for water
    quality activities.
        The President's budget proposes to fund much of EPA through
    the extension of the Superfund tax. Specifically, the
    Environmental Resources Fund would fund $4.6 billion of EPA's
    budget request and would be funded in part by Superfund taxes.
    The budget would also be funded in part by the proposed tobacco
    settlement.
        Clearly, the extension of the Superfund tax this year is
    unlikely at best. The committees have worked on Superfund, but
    the progress has not been good. Moreover, Superfund taxes
    should not be used to fund programs other than Superfund, and
    revenues accruing from the proposed tobacco settlement
    undoubtedly will not be funding discretionary spending.
        These are but a few of the unrealistic assumptions included
    in the President's budget proposal for fiscal year 1999. To put
    it in context, the President's fiscal year 1999 budget exceeds
    the discretionary spending caps by nearly $12 billion in
    outlays, according to the Congressional Budget Office.
    Therefore, we have to say the expectations raised by the
    President's budget request simply are not realistic.
        I would note that EPA's budget has been reformatted
    consistent with the Government Performance and Results Act. It
    includes, for the first time, performance goals and measures
    and in many instances focused on results. These changes are
    encouraging. I commend EPA for its work in this area.
        However, there are a number of concerns.
        First, there continues to be a strong emphasis in some
    areas on outputs, rather than outcomes. In the enforcement
    area--a goal in and of itself which is puzzling, since
    enforcement should be a tool for environmental results rather
    than a goal--virtually all of the performance measures are
    traditional inputs, such as the number of inspections to be
    conducted.
        To comply with the intent and spirit of the Results Act,
    the emphasis should be squarely on outcomes--protection of and
    improvements to the environment and public health.
        Second, the inspector general earlier this year provided a
    list of the top 10 areas of concern within EPA. According to
    the inspector general, ``an overarching issue that relates to
    many of EPA's problems is a lack of accountability.''
        The GPRA's focus is on accountability for results. Yet
    accountability has been among EPA's weakest areas, as the
    inspector general, the National Academy of Public
    Administration, and others have pointed out in the past.
        According to the inspector general,

        One of the most significant challenges EPA faces in
    implementing the Results Act is developing an accurate baseline
    of environmental data for planning, budgeting, implementing,
    and evaluating EPA's programs. Without accurate data, EPA's
    managers cannot assess EPA's progress in carrying out its
    environmental mission.

        While EPA has paid lip service to the issue of
    environmental data quality and information gaps, it simply has
    not risen to the top of the priority list. In its September
    1997 report, NAPA said, ``The agency has not yet established
    the institutions it will need to ensure that data are reliable,
    objective, credible, and consistent across programs and
    media.'' While NAPA called for a one-stop shop for
    environmental information, EPA has ignored this recommendation.
    There continue to be too many offices involved without real
    accountability in any one place.
        EPA's budget cites again and again the agency's intended
    reliance on its environmental data systems to determine whether
    goals are being met. This makes imperative the need to improve
    the quality of EPA data. We must have accurate information in
    order to know whether programs are working, whether dollars are
    being invested wisely, and to hold EPA accountable for meeting
    the goals it has set forth.
        Furthermore, the issue of data quality is critical in view
    of EPA's emphasis on so-called right to know activities. The
    information EPA provides to the public absolutely must be
    accurate and reliable, and presented in an appropriate and
    meaningful context.
        Finally, despite the new budget format for fiscal year
    1999, we do not see a new budget discipline in which EPA has
    made hard choices, disinvested in lower priority activities,
    and made budget priorities based on the greatest opportunities
    for risk reduction.
        In a letter to me dated April 23, which I ask to be
    included at the end of my statement, GAO indicates that a key
    management issue facing EPA is the need to improve its
    performance in establishing priorities that better reflect the
    risks to human health and the environment and that compare
    risks and risk reduction strategies across programs and
    pollution problems.
        The most significant reduction proposed by EPA is the clean
    water State revolving fund, despite the fact that the
    administration has claimed clean water is a top priority. This
    program, as I believe we both agree, Ms. Browner, is one which
    works well. It leverages Federal resources significantly and
    helps meet a $130 billion national need for water
    infrastructure financing, including nonpoint source pollution
    controls.
        In addition, EPA proposes to cut its research and
    development office despite the critical importance of adequate
    scientific research for sound environmental decisionmaking. In
    particular, EPA proposes to cut in half its particulate matter
    research program, despite the fact that this is a top human
    health concern about which there are many questions.
        Significant additional research on particulate matter is
    needed in the next few years to ensure that we understand which
    components of particulate matter are affecting human health, in
    essence, which constituent particles of particulate matter are
    the ones which are the most problematic, and the mechanisms by
    which human health may be impacted.
        The most significant increase in EPA's proposed budget
    would go to Superfund. But this is an area which clearly does
    not provide the greatest opportunities for risk reduction. This
    is a program which is badly flawed and seriously in need of
    revision.
        As we discussed last year, I do not believe a $650 million
    increase is warranted for Superfund, given that reauthorization
    is not expected to occur in time for fiscal year 1999
    implementation. This is despite a major effort by the
    authorizing committees. I would say that Senator Chafee, whose
    credentials are solid in this area, has worked long and hard to
    bring to the floor a Superfund reauthorization vehicle. There
    may be questions and there may be alternatives. The
    administration may have views on it. But we have been blocked
    from moving forward on it.
        Superfund, let us emphasize, continues to be designated as
    a high risk program by the General Accounting Office; and the
    funds invested in Superfund afford little reduction in actual
    human risk, environmental risk, compared to investments in
    other environmental problems.
        GAO indicated in its April 23 letter that it considers
    cleanup of hazardous waste sites a key management concern at
    EPA.
        GAO says, and I quote again,

        Our work has identified several management problems in the
    program, including that EPA has not allocated cleanup resources
    to the most significant threats to health and the environment,
    has recovered only a small percentage of its costs from the
    parties responsible for the pollution, has had difficulties in
    controlling the costs for contractors, and has not established
    performance goals needed to monitor the success of the agency's
    efforts to reduce the time cleanups take and to control the
    amount of funds for activities besides the actual cleanups,
    such as the expenses for legal fees.

        GAO found in an October 1997 report that EPA's fiscal year
    1998 Superfund budget was potentially overstated by $205
    million because EPA used historical cost data as the basis for
    its request, rather than the more recent cost information that
    was available to the agency when it prepared its budget
    request.
        This report confirmed our suspicion that the budget request
    for Superfund may have been inflated and represented political
    ``one-upmanship'' rather than an analytical, risk based
    approach to an environmental problem.
        The Superfund budget has become mired in politics rather
    than reality. When scrutinized objectively, it clearly does not
    merit the increase which is being proposed.
        As an example of where our Superfund dollars are going and
    just how broken this program is, a recent inspector general
    report found that at the Austin Avenue radiation site in
    Pennsylvania EPA spent, on average, over $650,000 to replace
    houses that had an average market value of $147,000.
        In one case, EPA spent more than $900,000 to custom build a
    house while the appraised market value of the original house
    was $200,000.
        I find it difficult to understand why EPA is in the
    business of building houses. I am appalled at the findings of
    the inspector general's report. Madam Administrator, this
    report suggests an outrageous example and exemplifies why many
    of us have no confidence in the program until it is reformed.
        I ask the agency to provide us for the record a full and
    detailed accounting for the record of the abuse and misuse of
    taxpayer dollars which occurred at the Austin Avenue site.
        The concerns I have raised with the budget generally are
    not dissimilar to concerns I have raised in previous years. I
    would hope we could work together to make more rational the
    allocation of EPA resources, establish accurate baselines
    against which EPA progress can be measured, and improve the
    agency's accountability for results.
        On a positive note, EPA seems to have made progress in the
    last year in its common sense initiative, particularly in the
    metal finishing sector. I understand that the administration
    finally has come around to the need for alternative compliance
    legislation, essentially the codification of Project XL which
    we have discussed in this committee previously. This is
    significant progress in and of itself and I thank you for those
    efforts.
        While there continue to be some concerns with the pace of
    progress in both CSI and XL, we have seen improvements.
    However, last fall's NAPA report found that much of the
    progress in the so-called reinvention area in the last few
    years has been of only marginal importance. EPA has not made an
    explicit effort to learn from these initiatives and then change
    core operations accordingly.
        As you move forward with the reinvention efforts, I
    strongly encourage the Agency to evaluate carefully the
    successes and failures of efforts under the commonsense
    initiative and other programs and incorporate the lessons
    learned into the Agency's programs.
        As you know, we commissioned NAPA in the fiscal year 1998
    appropriations bill to work with EPA in this area, including
    developing mechanisms for evaluating Agency activities.
    Incidentally, it is my understanding that EPA still has not
    signed a contract with NAPA despite the fact that NAPA has
    submitted a detailed work plan several months ago. I would hope
    EPA would get off the dime on this important work so that the
    work could get underway. I would be interested in hearing what
    the status is.
        With respect to issues concerning EPA's relationship with
    the States, I would note that some progress has been made in
    the National Environmental Performance Partnership System. More
    than 40 States now have performance partnership agreements with
    EPA.
        In addition, an agreement was finally signed with the
    States which provides the framework for approving innovative
    regulatory projects. I hope EPA will move expeditiously to
    review and approve State reinvention projects when they are
    submitted.
        In the past, States have raised concerns that they are
    consulted too little and too late, all too often.
    Unfortunately, we are still seeing instances of this. For
    example, EPA announced the Sector Facility Indexing project
    without consulting the States despite the important
    implications for the States, and EPA announced the title VI
    interim guidance without any involvement by the States.
        I hope the agreement on regulatory innovations is a signal
    that the EPA-State relationship is evolving into more of a
    partnership. And I encourage EPA to keep the concerns of the
    States front and center because it is at the State level where
    implementation of environmental programs in most cases takes
    place and to focus on environmental results rather than
    programmatic bean counting of inputs.
        Let me acknowledge, before I turn to my ranking member,
    that the Enterprise for the Environment (E4E) project recently
    concluded after 18 months of work at developing a proposal to
    improve the environmental protection system. This project
    involved a large and diverse group of highly qualified,
    experienced individuals, headed up by Bill Ruckelshaus and
    including former EPA administrators, industry executives,
    leaders of environmental organizations, State environmental
    commissioners, community activists and others.
        We acknowledge the significant contributions made by EPA's
    deputy, Fred Hansen, who put in substantial time and energy on
    the project.
        The report did not prescribe a very specific set of
    recommendations for change, but it did set some very important
    principles which all participants agree on. These principles
    included adapting policies, strategies, and systems based on
    experience and new information; generating, disseminating, and
    relying on the best available scientific information; offering
    flexibility of means coupled with clarity of responsibility,
    accountability for performance, and transparency of results;
    and placing authority, responsibility, and accountability at
    the appropriate level of Government.
        E4E called for a performance-based, information rich,
    flexible, and accountable system. I believe these principles
    are at the core of some of the issues we will discuss today.
        I might also note that E4E calls for a ceasefire to the
    fear, divisiveness, and lack of trust that characterize the
    national debate about environmental policy. I have to say that
    when I saw some of the press releases handed out by the
    administration on Earth Day, which talk about Republican
    leadership ``dirty deals,'' a whole stack of scatological
    political fingerpointing, it does very little to raise the
    level of debate to the high ground.
        I hope that the EPA appropriations and personnel are not
    expended in support of this form of partisan nonsense.
        This concludes my opening statement and I now turn to my
    ranking member, Senator Mikulski.
        Senator Mikulski. Thank you very much, Mr. Chairman. I am
    going to yield my time so that Senator Leahy may make his
    statement. Then I will follow on Senator Burns. Senator Leahy
    has other appropriations responsibilities.
        Senator Bond. Thank you very much, Senator Mikulski.
        We are delighted to hear from Senator Leahy.

                         STATEMENT OF PATRICK J. LEAHY

        Senator Leahy. Thank you, Mr. Chairman and thank you,
    Senator Mikulski, for your usual courtesy. I appreciate it. I
    will be very brief.
        I do want to welcome the Administrator. You have survived a
    lot of battles over the past year, battles that I think have
    helped us move our country forward. You did not rest on your
    environmental laurels and I compliment you and your Agency for
    that. We are very proud of that.
        I also want to thank you for including Lake Champlain
    within the budget request this year. In the past few weeks,
    Lake Champlain has received a great deal of attention and I
    think this is just one more chance to explain one of the
    threats we face with toxic pollutants.
        The mercury report to Congress that you released is very,
    very important. The steps that you take to address mercury and
    other coal-fired power plants will not only protect Lake
    Champlain but will protect the Chesapeake Bay, will protect the
    five Great Lakes, will protect the Everglades, and will protect
    everything east of those plants.
        As I look at it, I can see why a lot of people had worked
    to keep the report from coming out. I have long been worried
    about the impact mercury pollution from sources outside of
    Vermont is having on our land, rivers, and lakes.
        This year, I introduced comprehensive legislation to
    eliminate mercury from our environment.
        The more I read about it, the more I am convinced that we
    have to address some loopholes in the Clean Air Act that allow
    some of these older plants to spew out pollutants with little
    control.
        We had assumed they would retire, like the older fleets of
    cars and a lot of the tailpipe emissions we have seen have
    disappeared. But newer, cleaner, more efficient plants are not
    replacing the older ones. Some in the administration are saying
    that they expect utility deregulation actually to reduce
    emissions from power plants.
        I do not take that same conclusion. I would encourage the
    administration to take a much harder and I believe more
    realistic look at the environmental impacts of deregulation.
        Vermont has been the dumping ground from these power plants
    for decades. It is time to face the issue headon. I think if we
    are going to have utility deregulation, we also should use it
    as an opportunity to clean up theses older plants.
        So I would look very, very closely at this because if we
    are going to continue to face these older plants spewing out
    pollutants, none of us will benefit from it in the East.
        Mr. Chairman, as I mentioned to the ranking member, I will
    be brief. I would put my whole statement in the record and
    would also ask the permission of the committee to submit some
    questions for the record.
        Senator Bond. Thank you very much, Senator Leahy. Your full
    statement will be made a part of the record. We will keep the
    record open for additional questions and this looks like it is
    going to be quite a series of questions.
        I ask unanimous consent that a statement submitted by
    Senator Hagel be included as part of the record. We will make
    that available. He has questions that he wishes to submit.

                               prepared statement

        Also Senator Craig cannot be here but said he would submit
    questions for the record. Senator Campbell had to chair another
    hearing and he, too, will be submitting questions for the
    record, along with his prepared statement.
        [The statement follows:]

             Prepared Statement of Senator Ben Nighthorse Campbell

                         epa's fiscal year 1999 budget
        Thank you, Mr. Chairman, I would like to welcome Ms. Browner for
    appearing before the Subcommittee today. I know that back in my home
    state of Colorado some of the EPA's proposals and workings have roused
    some concern. From regional haze to Colorado's environmental self-audit
    program, all have come under fire from numerous groups, and I would
    like to address these and other EPA issues at the appropriate time.
        Colorado and many other Western states have unique situations when
    it comes to the environment. One size fits all cannot take precedence
    any longer. Local and state environmental problems need to be remedied
    at that level, not from Washington. It is difficult to correct local
    problems from here, when the remedies are out there.
        Also, when it comes to the environment, education is the key. Our
    children need to be taught that hard work, science and technology can
    help fix our environmental problems, but all sides need to be addressed
    in this crucial field. Apparently, this does not seem to be the case
    and I hope that this discrepancy can be addressed here today.
        There are some other issues that I will pursue during our time for
    questions. Thank you, Mr. Chairman.

                           STATEMENT OF CONRAD BURNS

        Senator Bond. Now I turn to Senator Burns.
        Senator Burns. Thank you very much, Mr. Chairman.
        Ms. Browner, welcome now that we got your chair this
    morning adjusted so that you can comfortably answer all of the
    questions that most of us have for you today.
        I am going to submit my statement, Mr. Chairman. But there
    are a couple of areas that I want to talk about just a little
    bit this morning.

                                  food quality

        As we try to find money to do those things that are high on
    our priority list, and environment has to be on that list, I am
    wondering about this. Between you and the FDA and the
    Department of Agriculture, do you all carry collision
    insurance? I'll bet you run over one another out there.
        You have 18,000 folks running around out there. And I
    notice in your statement this morning, which I just read, you
    mentioned children so many times it is a wonder any of us ever
    got to adulthood before there was an EPA. I am really concerned
    about the redundancy, especially in the area of food quality.
        You place a lot of emphasis on this, on food quality, and
    we have an FDA that does the same thing, a USDA that does the
    same thing. I am wondering if you have ever assessed how many
    people we have running around in this Federal Government where
    all of them are doing the same thing and are reaching,
    sometimes, different conclusions. This leaves us up here to be
    a little bit cynical and, of course, also the American public
    about coming up with $7.771 billion just to do something that
    somebody else already is doing.
        Also, I want to dwell this morning on this--and when I
    mentioned the fact down there that you have a hard time getting
    that John Deere tractor running with the direction in which you
    are running as far as air and particulates, we may outlaw John
    Deere tractors. Then I will want to know where you are going to
    get your bread. But we have already figured that out, too.
        I also want to dwell on haze a little bit this morning. But
    I am more concerned with redundancy than I am with anything
    else. We just absolutely waste money. This Austin Avenue thing
    in Pennsylvania, has that person that did that, that made that
    decision, is he still working for the agency? If he is, why is
    that? If not, has he been branded or tagged so that he does not
    get another job somewhere else? But that will come later
    because I want to hear the statement of the ranking member.

                               prepared statement

        I want to submit my statement and will thank you for coming
    this morning.
        [The statement follows:]

                   Prepared Statement of Senator Conrad Burns

        Thank you, Mr. Chairman. I would like to thank the Chairman for
    calling this hearing today, as Administrator Browner comes before this
    committee to explain the budget for fiscal year 1999 for the
    Environmental Protection Agency. Like most appropriations hearings I
    have been to this year, I am not sure that we will see eye to eye with
    the Administration on the number of dollars and the use of the dollars
    in the budget for this agency. I honestly don't understand the way that
    the Administration put together the budget for the coming year, and I
    have yet to hear any real good defense of the proposed budget in any
    hearing yet. I would like to think this one might be different, but in
    reviewing what is there so far, I can't honestly say that I believe I
    will see any radical departure from what has occurred so far.
        I am as concerned with this budget as I am in all that I have seen
    come down from the Administration this year. I am worried about where
    the money is coming from the number of new projects and the amount that
    is being spent on them. In addition to that I am very concern about how
    and where all the money in the EPA budget is being allocated. This does
    not reflect the needs of all the people, only those categories which
    this Administration has determined to place in a role of importance.
    This is a great concern, for like in many things that this
    Administration is doing the dollars are going in areas that Congress
    has had little or in many cases no input on.
        On those issues where Congress has had a say, the work is not
    proceeding in an expeditious manner. Take the implementation of the
    Food Quality Protection Act, as an example. There are a number of
    products out there that could and should be approved by the EPA, but
    you and your agency have not come to grips with meeting with these
    folks. They are still waiting to hear from you as instructed by the
    Vice President.
        The concern among both the user groups and the manufacturers in
    this instance is that unrealistic assumptions are being made in
    relation to EPA decisions. It also appears that EPA has reduced work on
    experimental use permits and Section 3 registrations. Which requires a
    dependence on Section 18 emergency use permits.
        Basically if EPA does not get off the dime here, the FQPA will not
    serve the needs and concerns of Congress and the people. Added to this
    it will fail to serve its important public health mission and may
    seriously harm U.S. Agricultural production. This at a time when our
    producers are experiencing extremely difficult times in the market
    place.
        On another issue of great importance to me, Regional Haze rules. It
    once again appears that EPA has gone the long hard route instead of
    working within the guidelines established by Congress. It appears you
    have done everything you could possibly do to make this a western
    regional issue. Not only neglecting the will of Congress, but also
    ignoring the work of the individual states and Governors in the western
    states.
        This is again another case of the arrogance of this Administration
    in dealing with states and Governors on issues related to their economy
    and public safety. You have ignored and overridden both state, local
    and federal statutes in proposing the rules and regulations we are
    seeing today. I cannot and will not tolerate this any more. As long as
    things are going your way, life is fine and dandy, but the minute it
    appears to be creating an obstacle you either swerve around the issue
    or completely ignore the law.
        Ms. Browner, Mr. Chairman. I could continue you on here forever,
    but it is important that we hear from the Administrator and have time
    to ask the serious questions we need answers to. Thank you, Mr.
    Chairman.

                        STATEMENT OF BARBARA A. MIKULSKI

        Senator Bond. Thank you very much, Senator Burns.
        Senator Mikulski.
        Senator Mikulski. Thank you very much, Mr. Chairman. I want
    to welcome EPA Administrator Carol Browner and her very able
    team.
        This is Ms. Browner's sixth appearance before this
    subcommittee and I want to thank her for her efforts and her
    leadership over the last 6 years.
        Administrator's Browner tenure has been neither boring nor
    uneventful. Budget cuts and Government shutdowns have made Ms.
    Browner's job and the jobs of EPA employees often quite
    challenging.
        In addition, there has often been a very prickly climate
    toward environmental protection in the Congress as a whole, and
    I think sometimes the authorizing committees have sometimes not
    been as helpful as they could be to create the climate of
    dealing with environmental problems and then often leave it to
    the Appropriations Committee to iron out the details, one of
    which, of course, is the Superfund reauthorization, for which
    this committee has been waiting even now for a number of years.
        This has not always been the most constructive climate to
    move an agenda.
        But to move on, as we move forward in today's hearing, let
    me note a few things that I am pleased to see in EPA's fiscal
    year 1999 budget. I am pleased to note that the President has
    requested an increase of $400 million for EPA, much needed and
    a rather prudent request. This is in line with the President's
    commitments, one of which I have advocated for years, to ensure
    that we do have a safe and healthy environment, not only for
    our own Nation but for the planet as we move forward to the
    year 2000.
        The question is how will we focus on the coming millennium
    and what will be the very constructive role that the EPA and
    the Congress, working with EPA, will have.
        I believe that supporting EPA could be one of our most
    important millennium projects along with doubling the NIH
    budget in terms of investment, public investment in science and
    technology.
        I am pleased to see that the President has requested nearly
    $200 million for an increase for the Environmental Programs and
    Management Account, an increase also that includes $38 million
    for clean water action plan activities. This is on top of the
    large increase in other accounts for the clean water action
    plan.
        I believe that the clean water action plan is absolutely
    significant to improving water quality to those of not only
    coastal States with estuaries but to those of us with rivers
    and lakes.
        I would like to thank you, Ms. Browner, and then the very
    able responsiveness of Mr. Hansen and, particularly, Mr.
    Perciasepe, for the very quickstep way EPA responded to our
    Governor and delegation's bipartisan 911 call when pfiesteria
    hit the Chesapeake Bay and the Pocomoke River. Whether it was
    Representative Wayne Gilchrist or Senator Barbara Mikulski, you
    responded on a very quick and collegial way and we are very
    appreciative.
        In the hearing, I will want to probe in more deep detail a
    plan for not only pfiesteria, which hit my State, the marine
    biotoxins, which I believe are a national problem, even a
    global problem.
        In addition to that, while we are talking about the
    interagency cooperation, I want to raise another issue related
    to shipbreaking. It is something that I want my colleagues to
    become aware of.
        This came to Maryland's attention and to national attention
    due to a Pulitzer Prize winning series done by the Baltimore
    Sun on what we did with wonderful ships from the U.S. Navy that
    had served the Nation with honor and that now were being
    dismantled in very environmentally dangerous situations and
    also were being shipped abroad in a way that really did not
    bring honor to the United States of America.
        I would like to discuss that with you because I believe
    that our ships are floating military bases and I believe they
    should be retired with honor and with dignity, and at the same
    time in a environmentally safe way both within our own country
    and abroad.
        Mr. Chairman, I am deeply concerned about this issue. I
    will go into this in more detail as this conversation goes
    forward.
        I want to insure that materials being disposed of after
    shipbreaking in this country, like asbestos, PCB's, oil and
    lead, are done in an environmentally safe way and that it is
    safe for both the worker as well as for the environment.
        Also, Ms. Browner, I would like to hear your plans for
    shipbreaking.
        Also, this is a year of followup on the Brownfields
    program. I know the chairman shares my concern about the need
    to revitalize brownfields. My own home town of Baltimore has
    over 3,000 acres of brownfields and I want to hear this morning
    what progress EPA has made with its brownfields initiative if
    we have time.
        I want to work with the chairman to stand sentry that we
    will have a brownfields program that works both for the
    taxpayer and works for the communities that receive
    brownfields, and that the brownfields project does not become a
    fiscal Superfund site. OK.
        I believe that environmental protection goes hand in hand
    with economic growth and job creation. Protecting our
    environment can create jobs and not destroy them.
        The chairman has also raised the question about the NAPA
    report. I won't go into that.
        I just want to wrap up my opening statement and close by
    noting my concern with the requested $275 million reduction in
    the very effective and popular Clean Water State Revolving Fund
    Program. This is a program that the States and local
    communities feel very passionately about and it meets a
    compelling human and local need. So we look forward to talking
    about that.
        Mr. Chairman, I ask unanimous consent that my full opening
    statement be included in the record. But in the interest of
    time I won't have several opening statements, meaning this one
    and each time I go to ask a question. I am willing to
    consolidate. I am in the process of reinventing opening
    statements.

                           statement of carol browner

        Senator Bond. Senator Mikulski, if you absolutely insist,
    we will accept it for the record. We would rather hear your
    statements in full, but I will accede to your request and
    include all of your opening statement and your subsequent
    opening statements for the record.
        I guess the time has finally come for the Administrator.
        Madam Administrator, if you would proceed, we will, of
    course, make your full statements and any attachments thereto
    or additions you wish to be made part of the record and would
    invite you to make such comments as you feel appropriate.
        Ms. Browner. Thank you, Mr. Chairman, Senator Mikulski, and
    members of this subcommittee for the opportunity to testify
    today on the President's 1999 budget request for the United
    States Environmental Protection Agency.
        The budget we present today is an important investment in
    the American people and I think it advances a goal that we all
    share, Mr. Chairman, which is protecting the Nation's air,
    water, the food we eat, the land on which we live. It is based
    on a very simple premise, the premise being that protecting the
    environment, protecting our health, are good for the economy,
    that we do not have to choose between a healthy economy and a
    healthy environment. It is a proposition that I think has been
    borne out over the past 5 years, particularly when we have seen
    both the economy grow and our commitment to public health and
    environmental protections strengthened.
        Just this year we have seen that it is possible to
    eliminate the deficit while strengthening our investment in a
    safer, cleaner, and healthier environment.
        Getting results is obviously another important cornerstone
    of what we do. Mr. Chairman, as you noted, this budget is the
    first ever to reflect EPA's new approach of goal-based
    budgeting. Linking our resources to real, environmental results
    will require a several year effort. We appreciate your comments
    as we will continue to make adjustments to our new goal-
    structured approach.
        We do believe that a goal-oriented approach is helping us
    better allocate our resources, better measure our successes,
    and better allow us to stay in sync with our strategic plan.
    But it is a fundamental change in how we have attempted to
    manage our budget, and we would ask you to work with us as we
    understand where we have been successful in this effort and
    where we might make additional improvements.
        I think this is what Congress envisioned when it passed the
    GPRA, the Government Performance and Results Act.
        I think as we look to the environmental challenges of the
    21st century, this approach to budgeting will be particularly
    helpful.
        One of the greatest challenges we face both as a Nation and
    as a world is the challenge of global warming. As you noted,
    Mr. Chairman, this budget does reflect the President's
    determination that America shall lead the world in meeting the
    challenge of global warming by reducing greenhouse gases in a
    way that allows the economy to grow.
        New data show that 1997 was the hottest year ever recorded.
    Nine of the hottest years on record have occurred since 1987.
    The vast majority of the world's scientists have warned us that
    if we don't begin to tackle this problem now, we will leave a
    legacy of climate change and environmental damage that will
    greatly burden future generations and perhaps we will not be
    able to reverse them.
        The proposal that we bring before you builds on very
    successful efforts that have been underway for a long period of
    time, including many which were started by my predecessor, Bill
    Reilly. The point is to forge partnerships with the business
    community, to find common sense, cost-effective ways to meet
    the challenge of global warming.
        The President has put forward a $6.3 billion package that
    would include technology, tax incentives, research and
    development to encourage the next generation to innovative,
    antipollution solutions.
        We believe that in this way we can reduce the pollution
    that causes global warming and continue to build our economy.
        Mr. Chairman, I know there are some in Congress who have
    suggested that the administration's budget request is a back-
    door ratification of Kyoto. I want to be very, very clear about
    this matter. We fully respect the very important role that
    Congress must play in reviewing the Kyoto Treaty for
    ratification, and in no way does this budget request undermine
    that role. It is in keeping with what the President has said
    for many years now: We can, we must, take prudent steps to
    address this very real and dangerous threat.
        As I said, it builds on successful programs that are
    already in place.
        While global warming is a top priority of this
    administration, so is finishing the job of cleaning up the
    pollution in our rivers, lakes, and coastal waters. The
    President has put forth a clean water action plan which seeks
    funding for a number of agencies. The Department of Agriculture
    and EPA are two of the largest.
        The purpose of these dollars is to address what we all
    believe is today's greatest threat to our Nation's waters
    across the country, and that is the threat of polluted run-off.
    Mr. Chairman, you have spoken very eloquently to this issue.
    Senator Mikulski is familiar with this issue as it relates to
    pfiesteria. We are also concerned about the loss of wetlands
    and, ultimately, the restoration of our waterways.
        The clean water action plan is designed to foster a spirit
    of cooperation, bringing together all of the various agencies
    and departments. With respect to the EPA's clean water action
    plan budget request, all but $25 million dollars goes to the
    States to allow them to develop the kind of plans they need to
    take on this remaining pollution challenge.
        The budget we present also speaks to our efforts to protect
    the most vulnerable among us, frequently our children. Giving
    children a healthier start in life is one of this
    administration's highest priorities. The fiscal year 1999
    President's budget requests an additional $8 million to further
    assist us in addressing the unique vulnerability of children to
    environmental threats, specifically, our efforts to ensure that
    public health regulations recognize their very special needs.
    We are working in partnership with the Department of Health and
    Human Services to establish the five or six research centers
    for children's environmental health.
        When we first announced this program in partnership with
    HHS, we anticipated that we might only hear from a relatively
    small number of interested parties. We received over 60
    inquiries, and 31 proposals from which these centers will be
    chosen. I think this demonstrates the kind of work that is
    already going on out there, and the very real sense in the
    scientific and public health community that we need to be
    looking at these problems. We need to expand our understanding
    of how environmental issues may be affecting the health of our
    children.
        The budget will also help us ensure that our neighborhoods
    are free from toxic waste sites. We are requesting an increase
    in Superfund funding. This is designed to help us deal with an
    increasing number of sites that are approaching the final phase
    of cleanup.
        We can have our disagreements about what Superfund
    reauthorization should entail. I have personally worked very
    hard to achieve reauthorization. I have been up to the Hill on
    this issue more frequently than on any other issue in the last
    5 years, including meetings that have gone well into the
    evening, and I continue to be available to do that.
        But while we are engaged in those discussions and while we
    seek common ground, we have made some progress. Where we have
    had the discussions, we have made progress. Then,
    unfortunately, the discussions do not continue and that leaves
    an area where we have disagreement.
        We have changed the day to day operation of the program and
    we continue to change the day to day operation of the program.
    The truth of the matter is that we now have a large number of
    sites. We have provided your staff with a list of those sites
    that we can take into the final phase of cleanup.
        Despite whatever our disagreements may be about the
    program, let's not say to those neighborhoods, let's not say to
    those communities that you've waited 10, 12, or 13 years, and
    you are now going to have to wait again as we don't have the
    dollars to finally get the job done.
        Mr. Chairman, you also spoke to the issue of air pollution
    and the budget that we present today will help us clean our
    air. We do request $75 million. It builds on last year's
    congressional appropriations to implement the new public health
    air standards, particularly the PM standard.
        As you are very aware, the National Academy of Sciences,
    per your instructions, has worked with us to develop short-term
    research agenda and a long-term research agenda which is almost
    complete. The funding that they recommended for a 2-year period
    is in keeping with the funding that we request here.
        Congress was generous in providing some additional money
    last year. When you combine last year's money with our request
    this year, we would be a little bit over what the National
    Academy of Sciences has recommended for a research agenda at
    this point in time. Regarding the long-term research agenda, we
    will complete the work with NAS later this year.
        You spoke to the issue of data and our responsibility to
    both honor the public's right-to-know, giving them access to
    information, and ensuring that information is of a quality that
    represents both the problems we may face as well as the
    progress we have made.
        We are engaged in a number of activities. Mr. Hansen can
    speak to those during the question and answer period. But, in
    particular this budget reflects our commitment to a new Center
    for Environmental Information and Statistics. The Center is
    designed, for the first time ever, to bring it all together.
        We collect data in a number of ways. The States collect the
    information. What we have to do is create a whole. We have to
    put it together in a cohesive manner.
        It is not a small challenge and it is one to which we are
    committed.
        The budget request stands for sound science--to continue to
    build within EPA the world's best program for environmental
    science and research. This budget requests funding for programs
    that will insure that we have the quality science needed to
    engage in peer review, so we can look to the best and brightest
    scientists across the country to assist us in the work that we
    do.
        I know there is some concern, that in some way, the science
    or the research and development request is a reduction. The
    only way in which there is a change in the number is that we
    did not carry forward congressional adds. We believe many of
    those projects were well funded in the additions that Congress
    made last year. So we don't carry them forward.
        We have maintained our funding for those programs that we
    have been committed to. We certainly honor what Congress has
    asked us to do and if some of those are appropriate for
    additional funding, that is a conversation we can engage in.
    But that is the only change embodied in our research and
    development commitment.
        Finally, Mr. Chairman, you spoke to the need to build
    partnerships, whether it be with State government, local
    governments, the private sector. This budget request includes
    funding to allow us to continue the work with the States.
        I have said on many occasions that it is a relationship
    that takes constant work. It is a little bit like a marriage.
    You have to work on it each and every day.
        We are making progress. We will continue at times to have
    our disagreements. But we are committed to making the
    partnerships with the States work.
        You are exactly right. They are out there, doing a lot of
    this work on a day-to-day basis.
        There are some things we can do better; there are things
    that they can do better. It is finding that relationship and
    strengthening it each and every day that is important.
        Similarly, we are working with the private sector. Through
    projects like XL, and the common sense initiative, we are
    really changing how we go about doing this job. Mr. Chairman,
    you may not be aware that we have actually brought in an
    outside consultant to evaluate these programs, to evaluate the
    common sense initiative. The consultant is talking to us about
    what was successful, what was not successful, identifying areas
    we need to change, constantly trying to improve this system.
        I would say that we were very pleased, as I think you are,
    with the E4E report. The report noted that the activities we
    currently have underway follow the appropriate path and at this
    point in time, wholesale change would not necessarily be the
    most productive. We have to constantly look at new tools,
    integrate them into the system, evaluate their effectiveness
    and make appropriate adjustments. That is what we are committed
    to doing.

                               prepared statement

        With that, Mr. Chairman, we are, again, very pleased to be
    here today and more than happy to answer any questions that you
    may have about the request.
        [The statement follows:]

                     Prepared Statement of Carol M. Browner

        Mr. Chairman, I am delighted to be here today to testify on the
    President's 1999 budget for the Environmental Protection Agency. The
    Agency's budget request for this year is $7.771 billion and support for
    18,375 FTE. The 1999 budget request is a six percent increase over the
    enacted level for fiscal year 1998. This budget clearly demonstrates
    the Administration's abiding commitment to protecting the air we
    breathe, the water we drink, the food we eat, and the land on which we
    live.
        A commitment to environmental protection and economic progress is
    the foundation for the President's 1999 budget request. As the
    President has said, this time of prosperity is not a time to rest, but
    a time to build a better future for our children. The budget increase
    the Administration requests for EPA is the embodiment of that spirit.
        Like previous budgets submitted by the President, this one is based
    on the premise that protecting the environment and protecting public
    health are good for the economy. That proposition has been borne out
    over the past quarter century, and particularly during the recent years
    of unprecedented economic growth. We can all agree that the nation's
    economic health is closely linked with the health of the environment.
        We can grow the economy while moving forward with the strong,
    effective environmental and public health measures that the American
    people want and deserve. Just this year, we've seen that it is possible
    to eliminate the deficit while strengthening our commitment to a safer,
    cleaner, and healthier environment.
        This budget meets that commitment by expanding the opportunities
    for Americans to know about pollution in their communities. It meets
    that commitment by taking measures to improve protections for our
    children. It meets that commitment by speeding up toxic waste cleanup,
    redeveloping ``brownfields'' sites, and toughening enforcement against
    criminal polluters. And it meets that commitment by funding a plan to
    help States protect their most endangered watersheds.
        I'd like to address some of the specific ways this budget addresses
    the critical, emerging environmental challenges of the 21st Century.
        This budget reflects the President's determination that through the
    Research Fund for America the U.S. will lead the world in meeting the
    challenge of global warming by reducing greenhouse gases and doing so
    in a way that grows the economy. The ``Climate Change Technology
    Initiative (CCTI),'' a multi-Agency initiative including EPA, DOE,
    USDA, DOC, and HUD will enable us to meet that challenge. EPA's share
    of the initiative, funded in the 1999 budget at $205 million, will help
    America meet its global responsibility to reduce greenhouse gas
    emissions through market forces, new technology, and energy efficiency.
    EPA will work with industry to find sensible, cost-effective ways to
    meet the global warming challenge, all the while continuing on a path
    of economic growth.
        Another major environmental challenge facing America is the
    continued environmental and public health threats related to the
    pollution of our rivers, lakes, and coastal waters. Clean water keeps
    both our communities and ecosystems healthy and thriving. EPA's 1999
    budget includes $145 million, through the Environmental Resources Fund
    for America for the President's Clean Water Initiative. This
    initiative, which involves a number of agencies and departments
    government-wide, is designed to address today's greatest threats to our
    nation's waters including polluted runoff from urban and agricultural
    areas, industrial toxics, and the loss of wetlands. The States will
    play a key role in this initiative, as most of this new funding will go
    directly to the States so that we can protect our critical watersheds
    in the most effective way we know: community by community.
        To further strengthen our partnership with communities, and to
    leverage federal tax dollars in the most effective way, the
    Administration supports continued capitalization of the State Revolving
    Funds. These funds make available low-interest loans to help
    communities meet the requirements of the Safe Drinking Water Act and
    The Clean Water Act. The Safe Drinking Water State Revolving Funds will
    help ensure that Americans have a safe, clean drinking water supply--
    our first line of defense in protecting public health. The Clean Water
    State Revolving Funds will help communities keep their waterways safe
    and clean and reduce beach closures. The President's proposed
    capitalization levels for these two funds will make progress toward the
    Administration goal of providing sufficient capital for the funds to
    offer $2.5 billion per year in financial assistance to communities over
    the long run.
        Protecting the health of our children is one of this
    Administration's highest priorities, and protecting our environment is
    critical to our children's health. This budget adds $8 million to EPA's
    budget for implementing the Agency's children's health agenda. This
    money will support the activities of EPA's Office of Children's Health
    to make sure environmental protection efforts address the unique
    vulnerability of children to environmental health threats. Major
    activities include working with the Department of Health and Human
    Services to establish six Children's Environmental Research Centers,
    ensuring that EPA's public health regulations recognize children's
    health, and providing information to parents to better protect their
    children from environmental hazards.
        To ensure that no child should have to grow up near a toxic waste
    dump, we will continue our accelerated cleanup of the nation's worst
    hazardous waste sites under Superfund. This budget request includes
    $2.1 billion for Superfund. This funding, along with continuing
    administrative reforms, will ensure that we meet the Administration's
    commitment to clean up 900 of the nation's worst toxic waste sites by
    the end of the year 2001.
        EPA will also continue to expand and strengthen our Brownfields
    partnership with states, cities, and communities. This year's budget
    request for Brownfields is $91 million. This program has a proven
    record of revitalizing communities by helping them return abandoned
    industrial sites to productive use.
        This Administration is committed to ensuring that our nation's air
    quality standards are strong enough to protect the public health. This
    budget request supports an investment of $75 million to implement the
    new, stronger clean air standards. This investment level honors the
    President's commitment to States to fund the costs of deploying a new
    fine particulate monitoring network and to provide them the tools
    necessary to carry out their monitoring efforts. This effort is crucial
    to ensuring cleaner, safer air for all Americans.
        This budget provides an increase of $19 million to broaden
    citizens' right to know about pollutants in their communities. Examples
    of the action we will take include enhancing and improving the public's
    ability to gain access to information through the internet and through
    EPA's new Center for Environmental Information and Statistics.
        We all agree that sound science is the key to sound environmental
    policies. This budget includes $527 million for EPA's Office of
    Research and Development (ORD), primarily funded through the
    Environmental Resources Funds for America, to ensure that we have a
    scientific basis to develop cost-effective environmental policies and
    to enable new and better approaches to environmental protection.
        Finally, it is important to note that this is the first budget that
    reflects EPA's new approach of goal-based budgeting linking resources
    to environmental results. With this new approach, we are committed to
    carrying out the reforms envisioned by the Government Performance and
    Results Act. We are confident that this new approach will help us
    allocate our resources and measure our successes.
        Mr. Chairman, I look forward to discussing the Administration's
    1999 budget with you and the Committee. I know that you share the
    Administration's commitment to protect the environment while continuing
    on the Nation's path of unprecedented economic growth. We at the Agency
    are working to strengthen our relationships with the public, the
    regulated community, and its governmental partners to provide a more
    effective and efficient system of environmental protection. Together we
    can lay the groundwork for a new era of environmental protection, and
    leave our children and grandchildren with a cleaner, safer environment.

                                  data quality

        Senator Bond. Thank you very much, Madam Administrator.
        Let me turn first to the data quality, the GPRA, and the
    right to know issues. We have agreed that there is unanimous
    support for a performance based environmental protection system
    as called for by the E4E and the GPRA. The E4E report says,
    ``Improved environmental protection must be rich with high
    quality information if it is to succeed.'' The inspector
    general identified data quality as one of the top 10 concerns
    at EPA.
        They tell us that EPA has about 500 national information
    systems. According to a 1995 GAO report, ``Despite EPA's
    efforts to improve the quality of its data, these data are
    often unreliable and the agency's many disparate information
    systems are not integrated.''
        Given that right-to-know is one of the 10 goals of your
    strategic plan, are you concerned about the quality of
    information provided to the public? If so, why has this not
    been a higher priority when it has been raised by the GAO, the
    inspector general, and NAPA for many years? What plans, if any,
    do you have for improving the quality and the reliability of
    the data system and how much do you have in the budget for it?
        Ms. Browner. We agree with the need to ensure that all of
    our data collection is better integrated.
        Part of the problem we face is the variety or the large
    number of laws under which we function. The Agency is required
    to hold 13 major environmental statutes, and they each direct
    us to collect information in a different way. They either
    direct the States to do things, as well as direct us to direct
    the States to do things.
        It is only in the last several years that there has been
    this recognition both on the part of EPA, industry, and the
    States that integrating these systems would make a lot of
    sense. But it is not easily done.
        You have 20 years of information collected in very
    different ways that now has to be brought into a whole.
        We have embraced what I think is a very ambitious program,
    our reinventing environmental information initiative, REI, is
    designed to take each of the data sets, to look at the quality
    of the data being collected, and to decide how it might be
    integrated with other data collection.
        We have also established a very strong data standardization
    program that centralizes review of data collection, and
    centralizes how we integrate these systems. We are working with
    the States to establish specific data standards. The Agency is
    also developing a program for electronic reporting. We have
    already begun to receive some information via computers and are
    in the process of establishing a support structure for a
    national systems reengineering effort. The budget request for
    these integration efforts is $18.4 million.
        Each of the program areas continues to handle the
    responsibility in terms of budgeting for the actual collection.
        With respect to the public's right-to-know, we have sought
    to honor that right-to-know and expand those efforts. We have
    concentrated our efforts within programs where there is a
    history of public access. So, for example, the toxic release
    inventory has a long track record of how information is made
    available to the public. We have sought to improve that.
        We are concluding an effort on the Sector Facility Indexing
    Project, to make that available to the public and to do it in a
    way that ensures the quality of the data.
        I might just say, in closing, that it is important to
    understand where this data largely comes from. It comes from
    facilities. It comes from industry, from those who are required
    to meet particular environmental standards. And as important as
    it will be for us to ensure the quality of that data, it is
    equally important that they do their part.
        So we have been engaged through Mr. Hansen and others, in
    an effort to ensure that the collection of data is done by the
    reporting facilities in an accurate and thorough manner.

                  data quality: chief information officer role

        Senator Bond. I know that there are many things going on.
    We have the February 4 memo, I gather from you to assistant
    administrators and everybody else, about the reinventing
    environmental action plan. At the bottom of the second page it
    addresses ensuring data quality. All it says is we are
    directing the CEIS in close consultation with EPA program
    offices and the CEIS counsel to study this issue and report.
        Why has the Center for Environmental Information and
    Statistics been charged with it rather than the Chief
    Information Officer? I really think you have a whole lot of
    systems. But as I read the information from the inspector
    general, all of this sharing and all of the information going
    back and forth does not seem to have a reliable underlying
    quality. I think this is one of the problems.
        We may ask the inspector general, the acting inspector
    general to address this. But I don't feel that we have an
    indication that you are focusing on what has been identified as
    a major problem, and that is bad information getting into the
    system.
        Ms. Browner. Mr. Chairman, we do have a number of efforts
    underway. The memo that you made reference to, the February 4
    memo, has been updated with a subsequent memo this week which
    we are happy to provide to you. It says to the Agency that the
    Chief Information Officer, the CIO, should actually be
    responsible for developing the plans to ensure the quality of
    data.
        CEIS will make the data public. The CIO will be responsible
    for how to ensure the quality of that data before it is made
    public. This is an effort, in part, to respond to the kind of
    questions that you are raising. We think they are legitimate
    questions. As I said before, this is not a small undertaking.
    It is going to take the entire agency to make it work well.
        This is absolutely essential to the GPRA. We have to get
    this piece right to be able to get to the next part of GPRA,
    which is to give you the outcomes, to give you the results, to
    be able to say the air is this much cleaner, the water is that
    much safer. And getting this data piece fixed is extremely
    important to that effort. That is why we are continuing and
    expanding that work.
        Senator Bond. I will come back to related questions in my
    next round of questioning. I would only say that we would like
    to see the most recent memorandum. Also, the committee would
    invite the comments of the acting inspector general to give us
    your comments on the progress because we are concerned about
    this.
        Ms. Browner. Would you like for her to come up to the
    table?
        Senator Bond. Let's get through some things here first. We
    have no shortage of questions and we could be here till next
    Tuesday. But we will try to go on a priority basis. I
    appreciate that.
        Senator Burns. I haven't got anything planned.

                                 ship breaking

        Senator Bond. Senator Mikulski.
        Senator Mikulski. Thank you, Mr. Chairman.
        Senator Burns said he didn't have other plans. But I will
    be moving to the Senate floor for the NATO debate.
        Ms. Browner, I am going to ask you to shift gears for a
    moment and focus on an issue related, really, to both domestic
    and foreign policy. That is the issue of ship breaking.
        I would like to just inform my colleagues that the
    Baltimore Sun did a Pulitzer Prize winning series on what we do
    in the United States of America to deal with 130 ships that are
    no longer fit for duty or fit for any other recycling, other
    than to be scrapped.
        Looking at both the Coral Sea, which was being dismantled
    in Baltimore, taking it through Texas and even on to India and
    other countries, they found terrible situations. In our own
    country, ships were being dismantled where old ships have
    asbestos, lead, PCB's, all of the problems we know went into
    World War II through Vietnam era ships. They found that the
    workers were dismantling ships with no environmental protection
    to themselves nor to the surrounding community. We then had
    PCB's leaking into water supplies and other types of issues.
        Then they also found that these ships were being sent to
    India where more than 30,000 laborers cut ships apart with
    torches and often with their bare hands.
        As a result of that, I, and members of the House like
    Congressmen George Miller and George Brown, asked the Navy for
    a report. You were part of that report.
        Could you tell us, then, what is the status of EPA's role
    to ensure that when Navy ships are retired, they are retired
    with honor and in a way that is environmentally safe to the
    worker and to the community both here and abroad?
        Ms. Browner. The report, which, as you are well aware, was
    provided to Congress last week, has a number of recommendations
    that would affect EPA. This includes a recommendation that EPA,
    OSHA, the Defense Logistics Agency, the Navy, and others,
    develop guidance for testing, removal, and disposal of the
    nonliquid PCB's in accordance with other existing rules.
        You raise a very valid point about the fact that there were
    not the kind of safety requirements in place. There was also no
    notification to EPA or other Government agencies when one of
    these ships was to be----
        Senator Mikulski. No notification by the Navy?
        Ms. Browner. No; we did not necessarily know.
        One of the recommendations is that the Navy should enter
    into an agreement, which we will do, to provide notification to
    EPA when a ship scrapping contract is let. The Agency will also
    be provided with the location of where that proposed scrapping
    operation will occur, and a program whereby EPA and OSHA would
    conduct joint compliance inspections of these activities.
        Senator Mikulski. And that would be in the United States?
        Ms. Browner. Yes; that would be for the operations here in
    the United States.
        Senator Mikulski. Now abroad, as I understand it, the
    committee recommended to my dismay the continual export of
    these ships overseas and said that they could be done in an
    environmentally safe way and charged you with the international
    monitoring to do that.
        No. 1, do you agree with that recommendation?
        No. 2, do you think you have the resources to go into
    another country to see whether these ships would be scrapped in
    situations are adequate? I don't think you can.
        I am about to introduce a bill prohibiting the export of
    those ships, have them done in American shipyards. God knows
    that the shipyards are foraging for work, and many of the
    shipyards, like Bethlehem Shipyard in my own State, that have
    the technical capability to build ships under some pilot
    projects might have the technical capability to dismantle and,
    therefore, treat these ships like a base closing, which they
    were. They were floating military bases. And then they can
    retire them in a way that they are safe and cleaned up.
        Ms. Browner. We share, as do other parts of the Federal
    Government, your concern about selling of these vessels to
    foreign scrappers. Included in the report is a recommendation
    that EPA, with the Navy and others, look at how to expand
    notification to other countries on when these ships are going
    to be moved, and a list of the hazardous kind of materials that
    are commonly found on these ships.
        We also think it would be helpful to revise the
    notification to other countries to include what we would refer
    to as tacit agreement. A country would have 30 days to object
    to the movement of the vessel.
        Senator Mikulski. Do you think that is a good policy or are
    we dumping our environmental problems with ship scrapping,
    which is a complex and expensive issue? Do you think that that
    is a good policy, to export these overseas?
        Ms. Browner. I don't think there is a simple yes or no
    answer.
        I think that we all are concerned, particularly at EPA,
    that when these vessels are shipped to other countries, that it
    be done in a way that does not endanger any individual's health
    or the environment. In the report to Congress, the question is
    raised about endangering the public health and the environment
    and there are specific recommendations about how to improve
    that. This includes such things as the Navy exploring the use
    of performance bonds and enforceable contracts at firms.
        Senator Mikulski. Overseas?
        Ms. Browner. That is what they are looking at.
        The question for everybody is: What are the tools that
    should be brought to bear when it is appropriate for one of
    these ships to leave the United States?
        Senator Mikulski. Madam Administrator, I am going to be
    introducing a bill later on this week--later on this month --
    that will deal with ship scrapping both in the United States
    and abroad. My bill will prohibit ship scrapping abroad and
    then see how we can, in the most constructive way, be able to
    scrap these in the United States that would provide jobs and,
    at the same time, protect the environment and the worker, and
    do it in a way that I think helps the U.S. Navy.
        There are 115 ships waiting to be scrapped at tremendous
    expense to the United States and because we do not have a
    reliable, safe policy, it is ultimately costing us more. It is
    like keeping military bases open that have no utility but,
    again, I will repeat, should be retired with honor.
        So we look forward to working with you on this.
        Ms. Browner. Likewise. We would like to work with you and
    we certainly share a number of your concerns.
        Senator Bond. Thank you very much, Senator Mikulski.
        Senator Burns.
        Senator Burns. Thank you very much.

                      base realignment and closure [BRAC]

        Following up on the thought that Senator Mikulski has, how
    much does the EPA get involved with environmental cleanup as a
    result of base closings, as a result of BRAC?
        Ms. Browner. We have an interagency agreement with the
    Department of Defense with respect to fast tract cleanup
    military base closures. There are 110 military base closures
    that involve some amount of cleanup activities. EPA worked with
    the military services and the Department to ensure that the
    cleanups are done in accordance with public health and
    environmental standards and laws.
        One of the things we did do when we started working on base
    closures was try to address local communities' concerns. I went
    out to some of these bases. What I heard from people was that
    under prior rules and guidance, if any of the base had
    contamination--and I don't know why this was done--the entire
    base would not be available for transfer to the community. And
    so, based on that concern, it did not seem like a logical way
    to do business to me.
        We actually went in and we adjusted our requirements so
    that just the area of contamination is fenced off and
    addressed, and the remainder of the base can actually be
    transferred despite this limited area of contamination. It has
    been very successful.
        We have done this now in a number of closing military
    bases.
        [The information follows:]

        Congress, the Department of Defense, and EPA amended the
    Comprehensive Environmental Response, Compensation and Liability Act
    (CERCLA) by the Community Environmental Response Facilitation Act
    (CERFA) in October 1992, which allows for the transfer of parcels
    designated as ``uncontaminated'' prior to the cleanup of an entire
    military installation. This allowed the Department of Defense to
    transfer this property in an expedited manner, which in some cases
    hastened reuse.

        Senator Burns. This is no little figure because I chair the
    Military Construction Appropriations. From between now and
    2002, we will spend over $10 billion in environmental cleanup.
        Ms. Browner. Yes.
        Senator Burns. I am going to hold oversight hearings on
    this because I have the same concerns that you have. There are
    just certain areas of a military installation that would
    probably have some contamination. We do have some contamination
    and we want to clean them up. That is not the point. But I just
    wondered how much.
        Ms. Browner. If I might just continue, Senator----
        Senator Burns. Yes; but I am going to run out of time.
        Ms. Browner. EPA has approximately 140 FTE's or workyears
    who work on these bases and we are reimbursed by the Department
    of Defense for those employees.

                   regional haze: particulate matter monitors

        Senator Burns. That is what scares me to death.
        Anyway, let's talk about haze, particularly as it got
    started, as you know in the West and the Grand Canyon. That is
    kind of where it got started, and all of this.
        I see where the President's budget request is for $67.5
    million to develop a national monitoring network for fine
    particulate matter. I am getting feedback from the States
    saying that the program would probably cost closer to $90
    million.
        Ms. Browner. We are carrying approximately $90 million for
    the monitors. You are just looking, I think, at this year's
    budget request. We had some money last year. There is this
    year's request and there will be a modest amount next year.
        Senator Burns. Tell me how adequate is the existing
    monitoring network for measuring visibility in all Class I
    areas.
        Ms. Browner. Mr. Chairman, if I might have a little extra
    time here. I would like to walk through the monitoring system
    because it is a complicated issue that includes both the Class
    I haze issue and the fine particles for which this committee
    has been very helpful in terms of providing resources. It will
    take me a minute to do that, if that is agreeable to you.
        Senator Burns. How much are you requesting this year for
    monitoring?
        Ms. Browner. We are requesting, this year, the total dollar
    amount of $65 million, to purchase the monitors. That is added
    to an amount that was provided last year. We have already
    notified the committee that we would be seeking a small amount
    next year.
        We buy these monitors over an extended period of time. That
    is No. 1. No. 2, we are paying the States' cost share.
        Historically, under the Clean Air Act, when new monitors
    are installed, the States pay about 40 percent of the costs and
    we are covering 100 percent in this budget.
        Senator Burns. I am told now that this is more in the area
    of particulate rather than in haze. Is that so?
        Ms. Browner. Included in the monitoring request are 100 of
    what we call improve monitors, which support the regional haze
    efforts in Class I areas and the PM-2.5 transport issues. These
    included in the total monitoring sites.
        Senator Burns. OK. Now going along those lines, the States
    are concerned that if there is an underfunding, more of that
    responsibility is going to fall on the States. Is that
    accurate?
        Ms. Browner. I will tell you that we have made adjustments
    in this President's budget specifically at the request of the
    States. We increased the number of PM monitors at the request
    of the States to the tune of 200 more monitors.
        We think we have been responsive. If you are aware of
    something that we were not responsive to on the part of the
    States, we are more than happy to sit down with them and figure
    this out.
        This was not something we arrived at on our own. We took it
    to an external peer review panel and did not include those
    additional monitors.
        The States came to us. They asked us for the additional
    monitors, and we have incorporated that into this budget
    request.

                       regional haze: visibility research

        Senator Burns. OK. In 1990, the Congress required the EPA
    to undertake the research before it conducted the rulemaking to
    impose regional haze requirements on the country. Congress
    authorized $40 million for EPA's visibility research, but your
    budget for visibility research was not very much. The Clean Air
    Act required the administrator to report on its research
    findings and assessment results.
        Now, with that in mind, after a court ordered EPA to
    produce its report, did EPA prepare a paper on visibility
    research?
        Ms. Browner. This is earmarked from 1990? I apologize, but
    I did not understand the beginning of your question.
        Senator Burns. Well, in 1990, the Congress said you are
    required to make these reports before you conduct the
    rulemaking on haze.
        Ms. Browner. We have engaged in the scientific evaluation
    of haze for almost 15 years now through the Grand Canyon
    Visibility Commission and other activities. I guess what you
    are citing is the Clean Air Act Amendments of 1990 and a
    requirement that we make reports to Congress. To the best of my
    knowledge, we are up to date on those reports.
        Senator Burns. Well, we can't find them, it seems.
        Ms. Browner. We would be more than happy to provide the
    reports to you and if there is a problem, we will remedy it. I
    am not aware of a problem.
        [Clerk's note.--Per the direction of Subcommittee staff,
    the Agency has provided reports on Regional Haze and Visibility
    Research directly to Senator Burns.]
        Senator Burns. What my concern is, really quickly, is this.
    The States got together and spent about 2 years gathering
    information on haze. None of that information, when it was
    submitted to you, was even used or considered. I am hearing
    this from every Governor without exception in that particular
    area. We are concerned about that. And there are certain tasks
    that you were required to do before you start promulgating
    rules.
        I am going to lay this out in a little better order because
    we are concerned about the best available retrofit technology,
    because we have coal powered plants out there, and we have more
    than 1, 2, or 3 States involved. Also I am concerned about
    Federal agencies that may be exempt from contributing to haze
    because we have controlled burns from the Forest Service.
        Are we going to put extra rules on the private sector in
    order to make up for what is happening in that area? It is
    those areas that I am very concerned about.
        By the way, this fellow who built those houses up there at
    Austin, is he still with the EPA?
        Ms. Browner. We are not allowed publicly to comment on
    personnel matters. There have been personnel changes in that
    region.
        Senator Burns. OK. We will leave it right there, then.
        Ms. Browner. It is in the Privacy Act.
        Senator Burns. Funny, that never occurred to me in private
    business. I'll tell you that he would be gone very quickly
    there. It's unbelievable.
        Ms. Browner. Senator Burns, you raised two points that I
    want to be responsive to.
        First of all, on the regional haze issue, it is a proposed
    rule and we are continuing the dialog with the States. For
    example, we really appreciate the work we have been able to do
    with Utah and the work we have been doing with Colorado on the
    situation. We have not made a final decision.
        No. 2--and this is extremely important because there is a
    lot of confusion about this--controlled burns/forest fires, the
    day those things occur are the days that they occur. Those data
    points, those pollution levels are tossed out. They are not
    part of how you determine whether or not an area needs to take
    steps to reduce their pollution.
        We all recognize the importance of controlled burns. We all
    recognize that forest fires will occur. So those are not part
    of the database.
        Senator Bond. Senator Burns, I believe your time has
    expired.
        Senator Burns. One more question and then I have to go, and
    you will get rid of me.
        How many more commissions have been put in place, these
    regional commissions, to monitor haze?
        Ms. Browner. The Grand Canyon is the only one at this time.
        Senator Burns. How come the rest of them have not been
    done?
        Ms. Browner. It is up to the States to make decisions as to
    whether or not they want to do that. They may well decide that.
    I am not privy to their thinking on that.
        Senator Bond. Senator Burns, thank you. We would be happy
    to work with you in getting your questions in the record if you
    have additional questions.
        Senator Burns. I'll get the questions to you.
        Ms. Browner. Apparently, the western Governors may be
    thinking about doing something like that. We have heard some
    information from their association.
        Senator Bond. Thank you, Madam Administrator.
        We will go now to Senator Lautenberg.
        Senator Lautenberg. Thank you, Mr. Chairman. I was hoping
    that other discussion would just continue on.
        Senator Bond. Actually, I do some controlled burning
    myself. I almost lost a wood fence when the wind turned into
    the wrong direction. [Laughter.]

                      fiscal year 1999 president's budget

        Senator Lautenberg. I am pleased, Mr. Chairman, that we are
    holding this hearing and that we have the EPA administrator
    here to discuss the budget for 1999. I want to take this
    opportunity to thank her for the terrific job that she has done
    at EPA.
        I know that you, Mr. Chairman, and the ranking member
    support environmental cleanup and this is one of the friendlier
    places for the Administrator to show up. I have seen her having
    to withstand some pretty tough fire and continue to pursue the
    objectives for which she has been appointed. She does it very
    well and the department functions well.
        I want to tell you that, with the uncertainties that
    constantly seem to surround EPA in terms of whether or not
    there will be funding, et cetera, whether there is support for
    their mission, the folks who staff EPA do a wonderful job. I
    think over the years we are beginning to see this in the rate
    of progress in things like Superfund cleanup and some of the
    fights that we have been engaged in to clean up the water.
        And yet, so many things are in suspension right now because
    we are not funding them.
        I am, as is the chairman, a member of the Budget Committee,
    and we are committed to a balanced budget. As a consequence of
    that, the reins are very tight on expenditures, much of which I
    think is kind of short-changing really important projects, like
    clean water, clean air, and Superfund.
        I would ask, Madam Administrator, what is going to be the
    impact on EPA and the environment if we do not fund the
    increases that the President requested?
        Ms. Browner. I don't think it is as much a question of what
    the impact is on EPA. I think the question is, what is the
    impact on the American people?
        The funding increases that we seek are largely within three
    separate areas. One is toxic waste cleanup. Without this
    increase there will be literally dozens of communities where
    sites are ready for their final cleanup and they will be asked
    to wait another 1, 2, 3, however many years, before the money
    is there. These are communities that have already waited 8, 9,
    10 years. They want these sites cleaned up and want the
    redevelopment to occur. Without the one-time, additional
    funding we seek, it is just not going to happen.
        In terms of clean water, the most pressing problem we now
    face is polluted runoff. We have asked Congress to strengthen
    the Clean Water Act. We have asked them to rewrite it to give
    the States and to give EPA better tools to do that. We have not
    been able to find agreement on such a proposal. But this budget
    request would allow the States additional dollars to develop
    the kind of plans they will need. Many State legislatures are
    already embracing this. Maryland and others have started to say
    we have to look at this polluted runoff issue. We have to think
    more broadly about how we address these problems.
        The EPA budget request is $145 million for the President's
    plan, of which $120 million essentially goes to the States. Of
    the $145 million, $120 million goes directly to the States to
    address or begin the process of addressing polluted runoff.
        The final budget request is for climate change. This is an
    effort to do what many on this committee and many in the
    Congress have repeatedly requested that we do, which is to work
    in partnership with the private sector to develop the
    technologies to reduce energy use. These are very successful
    programs. The return on the investment is quite remarkable. We
    fear that if we cannot continue these efforts reaching out to
    the business community and reducing our energy use, the
    consequences for future generations will be quite significant,
    and the costs of fixing the problems will be far greater than
    what we seek here.

                            slowed superfund cleanup

        Senator Lautenberg. You mentioned the fact that many of the
    cleanups will have to wait. Are we talking about cleanups where
    EPA has arrived at the remedy----
        Ms. Browner. Yes.
        Senator Lautenberg [continuing]. And has all of the
    technical stuff pretty much done?
        Ms. Browner. Yes.
        Senator Lautenberg. Is there a guess as to how many sites
    might be affected?

                         sites ready for final cleanup

        Ms. Browner. You are exactly right. These sites are in the
    final stage. Everything is done. We know what we need to do out
    there. The community knows what we are going to do. Everyone is
    in agreement and it is simply a matter of doing that final work
    at the site, which may be a 1, 2, or 3 year effort.
        We have provided the committee with the universe of sites
    out of which there may be particular sites affected. We cannot
    tell you which particular sites because, at this committee's
    direction and others, we do a risk ranking on an annual basis.
        The most important thing to understand is that at the end
    of September, 1998, which is the end of this fiscal year, we
    will have 30 sites ready for final cleanup that we will not
    have money for. We will not be able to do what those
    communities want.
        At the end of September 1999, there will be an additional
    50 sites ready for final cleanup.
        The other problem that happens is that we are not able to
    move everyone else through the pipeline as quickly now as we
    would with these additional resources. So it causes two
    problems.
        One, our communities are asked to wait where everything is
    done but the cleanup, and another set of communities does not
    get advanced as quickly as they could be.

                                   edison lab

        Senator Lautenberg. EPA Region II has a laboratory function
    housed in a converted 1917 military warehouse in Edison, NJ.
    That is not a very conducive environment for scientists to be
    working in and the work that they do is pretty important.
        Last year I had asked a question for the record and you
    responded by saying that the Edison laboratory was a high
    priority. But there is no request in the budget for fiscal year
    1999 for this. What do we have to do to get this facility
    modernized so that the work efficiency factor can be improved
    significantly?
        Ms. Browner. Senator Lautenberg, we do share your concern.
    We do not include this in our budget request this year because
    we had to make some difficult decisions.
        We are building a state of the art science facility in
    North Carolina. The ground is broken and we are moving ahead.
    But it has not yet been fully funded. We believe at this point
    in time that we must complete that state of the art science
    facility. We don't have our own science facility down at RTP. I
    think we occupy 11 different buildings. We made a difficult
    decision to close out the funding request on that so that we
    could get it done in a timely manner. Then we would look to
    issues like the Edison laboratory.
        It in no way suggests that we don't share the concerns you
    have about that facility. But a budget means some tough
    decisions and this was one of those tough decisions.
        Senator Lautenberg. So if the funding were there, you would
    do these things concurrently? You would do the development of
    the North Carolina facility and the Edison laboratory as well?
        Ms. Browner. If additional funding were provided, we would
    follow the wishes of Congress.
        Senator Lautenberg. But you have acknowledged that the
    Edison facility is an important one and that you would like to
    see it retained and improved, if we could do so.
        Ms. Browner. Yes.
        Senator Lautenberg. Mr. Chairman, I have several other
    questions which I will submit. I thank you for the time that I
    have had.
        Senator Bond. Thank you very much, Senator Lautenberg.
        Now that we have Mr. Hansen's April 29 memorandum, I gather
    that the EPA's Chief Information Officer is going to lead the
    effort. Does this mean he will be held accountable for all data
    quality information management and we can set him up and if
    next year it is still inadequate, we will string him up on the
    dunking booth at the county fair?
        Ms. Browner. I just wanted to find him. [Laughter.]
        Senator Bond. Is he hiding back there?
        Ms. Browner. He's here.

                            sector facility indexing

        Senator Bond. One of the things that troubles us and that
    has troubled the others is the quality of information which is
    dispersed. I am not going to get into it. I will have questions
    for the record on the sector facility indexing project [SFIP]
    that you mentioned, which is being run by the enforcement
    office. It is not their job. There are questions which have
    been raised that EPA's ranking under the SFIP does not provide
    any meaningful information on the enforcement actions or
    noncompliance. So a paperwork violation would appear as
    significant as a violation with public health risks, one
    instance of noncompliance would be counted the same as many,
    and an instance of noncompliance lasting 1 day would be counted
    the same as one lasting many weeks.
        The Michigan Director of Environmental Quality wrote the
    EPA: ``We will have to expend our limited agency resources
    chasing issues that may rank high on the scale of public
    perception but will have no basis in fact and may relate to
    facilities in substantial compliance.'' That is why we
    understand that the States oppose the project.
        So we would like to leave those questions for you to
    respond to because I do want to get to the Clean Water Action
    Plan.
        Ms. Browner. Mr. Chairman, in the interest of having a full
    discussion, we have made adjustments in the sector facilities
    indexing in keeping with a number of the issues you raised.
        Senator Bond. I know. EPA decided not to include the
    hazardous toxicity ranking.
        Ms. Browner. Right. But I want to be certain you know that
    we have been engaged in that process. It is an ongoing process.
    Tomorrow we intend to release part of the information.
        Senator Bond. Will you have addressed the objections by the
    States?
        Ms. Browner. We believe we have. I want to say that we
    worked very closely with the States. There are some in the
    States who are comfortable but there will always be some who
    are not. There will always be some amount of disagreement over
    what is a paper violation, with some people saying it more is
    purely a paper violation and others saying it is significant.
    That is the nature of the thing.

                 Clean Water State Revolving fund funding level

        Senator Bond. We want to move on in whatever time we have
    left to the Clean Water Action Program. This is something I
    mentioned before.
        I believe very strongly that clean water is essential to
    dealing with environmental problems and with many public health
    problems. That is why I am very much concerned that the
    administration is proposing a $275 million cut to clean water
    State revolving funds when the administration places such a
    high priority on clean water and there is a $139 billion need
    nationally for clean water infrastructure financing according
    to EPA's September 1997 needs survey and in view of the fact
    that this money, at the States' behest, can be used for
    nonpoint source controls.
        Would you tell us why the cut is proposed?
        Ms. Browner. We are honoring the commitment we made at the
    beginning of this administration to see the State clean water
    funds revolve at $2 billion as a long-term goal. What we said
    to the States was that this fund will revolve at $2 billion
    annually. This funding request honors that commitment.
        We made a decision to ensure that the largest amount of
    dollars went into the drinking water fund because for the first
    time the States can move money between the two funds. They have
    never had that opportunity before. And the amount of money they
    can move is capped based on how much goes to drinking water.
        So in an effort to bump up the cap, we wanted to fully fund
    drinking water to give the States the greatest flexibility.

                            clean water action plan

        Senator Bond. When you are looking at a $139 billion need,
    I have real questions whether $2 billion a year is adequate. It
    is going to take many years for the revolving funds to meet the
    need and I just frankly don't think that there are adequate
    resources going in to the State revolving funds.
        Let me say that with respect to the Clean Water Action
    Plan, we are going to do everything we can to provide the
    funds. We provided an increase of $5 million above the
    President's request last year for nonpoint source grants.
        Ms. Browner. Yes.
        Senator Bond. In addition, you will recall that the
    committee added funds for research on agro-forestry, which I
    believe affords us a non-Governmentally funded way of
    determining whether farmers, land owners, ranchers, by planting
    shrubs and trees on buffer strips along the waterways can
    generate economic returns and clean up the water by using the
    root systems to trap the nutrients, the pollutants, the
    chemicals, the livestock waste and everything else in a manner
    that is environmentally beneficial and economically sound.
        Much of the plan, the Clean Water Action Plan, that I have
    seen seems to be about interagency coordination and a stronger
    focus on nonpoint sources, and I question whether this will
    require additional resources. I have worked in other committees
    with other hats on with USDA and the Soil and Water
    Conservation people, the NRSC--NRCS, or whatever you call the
    Soil Conservation Service these days, and I can't keep up with
    the name changes. Aren't the actions necessary to achieve many
    of these goals carried out in cooperation with the private
    sector, with USDA agencies, and other agencies rather than as a
    result directly of EPA activities?
        Ms. Browner. EPA has the major responsibility for the care
    and safeguarding of our water in the United States. We are the
    keeper, per congressional direction, of the Clean Water Act.
        I think that while you are exactly right that the Clean
    Water Action Plan involves a number of other agencies, as we
    have done this work we have realized the important role they
    can bring to the task--to exclude EPA from these efforts.
        Senator Bond. We are not saying to exclude EPA.
        Ms. Browner. Oh, I know.
        Senator Bond. I am saying that where you are going to get
    the most bang for your buck in nonpoint source pollution
    solutions is going to be through modifications, enhancements,
    livestock, and other farming operations.
        Ms. Browner. That is, in part, true. The States have the
    resources to actually develop the plans. States will determine
    that the most important thing they can do along the Missouri
    River is replant here; the most important thing they can do is
    to restore this wetland over there; the most important thing
    they can do is to reach out and work with these farmers. That
    is what the EPA money goes to.
        As I said earlier, our request is $145 million for the
    President's Clean Water Action Plan of which $120 million goes
    out to the States to let them develop the plans. This then
    allows USDA and others more effectively to target their
    resources.
        But we have to have these watershed plans. It is really at
    the basis of all of this.
        Senator Bond. I would conclude and turn this over to my
    ranking member after noting, No. 1, as you pointed out, the SRF
    money can be used to address nonpoint source pollution
    problems. A small amount of it can.
        You are talking about working with farmers. To be quite
    frank, EPA is not going to understand, work with, or be
    accepted by agriculture----
        Ms. Browner. We're not talking about EPA.
        Senator Bond [continuing]. To the extent that the Soil
    Conservation Services will.
        I am just saying that we need to move forward on this.
    Realistically, the agencies that are going to have to do it are
    going to be the agencies within the USDA.
        Ms. Browner. Mr. Chairman, again, we are not talking about
    EPA. We are talking about the States getting the money and then
    working through the farming organizations.
        I agree with you that the best way in many instances to
    reach farmers is through organizations where they have a
    longstanding relationship. It is one of the reasons why we
    entered into a memorandum of agreement on wetlands on
    farmlands. We appreciate that.
        I just hope the committee can give serious consideration to
    our modest funding request because I do think it is important
    for the States to be able to do that.
        Senator Bond. We have already said we have, we do, we will,
    we are doing it.
        Ms. Browner. Thank you.
        Senator Bond. And it is also being done in agriculture and
    other areas.
        Ms. Browner. Yes.
        Senator Bond. Senator Mikulski.

                     water quality: federal agencies' roles

        Senator Mikulski. Thank you, again, Mr. Chairman. I think
    your line of questioning has pretty much the same direction I
    am going to go in because I am going to raise the issue of
    pfiesteria as well as other marine biotoxins.
        Your point about the tree planting along the waterbeds, if
    you will, or water shorelines, is exactly what Senator Sarbanes
    advocated. So we really have a bipartisan consensus. The Vice
    President came to the Chesapeake Bay to actually support that
    particular endeavor.
        I think what we don't have clear in our minds, because it
    is in different committees, is literally to say take a look at
    Maryland, if I could, or Missouri, or North Carolina, which
    also have a pfiesteria problem and then have almost a chart
    saying EPA will do this, USDA resources will do that, Soil
    Conservation will be doing such and such.
        I agree with you, Mr. Chairman, that the Soil Conservation
    people, the land grant college approach, the Maryland Extension
    Agents are the ones that work with our farmers. When pfiesteria
    hit Maryland--and I will soon get to my question--we were
    really scared. We were scared about the consequences to public
    health. We were scared about the consequences to the Maryland
    seafood economy. Then, in our action, while looking out for the
    protection of seafood, we didn't want to destroy the Maryland
    poultry industry which, literally, has been one of the forces
    in saving jobs on the Eastern Shore.
        Now we are trying to work through all of that. Again, I
    want to thank you and Mr. Perciasepe for really doing that.
        Perhaps in describing where we are in the Maryland
    situation and what resources are needed both by EPA, you could
    describe that model because I think it is important for the
    chairman to get a sense that there is a model. Then it is
    important for me to see if you've got those resources for not
    only my State but then what we are going to do in other States
    so that if a State like Maryland takes positive, constructive
    action, we are not economically penalized by States that drag
    their heels or refuse to accept the problem.
        Do you follow me?
        Ms. Browner. Yes.
        Senator Mikulski. My question here is what are we doing, do
    you have the money to do it, and are we accomplishing what I
    think both Senator Bond and I are saying?
        Ms. Browner. The President's Clean Water Action Plan is the
    first Governmentwide effort to address polluted runoff. It
    details what each of the participating departments and agencies
    will do. The entire budget request for all of the agencies is
    about $568 million, of which only $145 million comes to EPA.
    There is a recognition that the Department of Agriculture needs
    to receive more funding because of the role it has to play in
    addressing this problem.
        But it takes participation by each part of the Government.
        In terms of the State of Maryland, we are including in this
    budget request $2 million for pfiesteria research and State
    aid. It would not all be for Maryland. As you point out, other
    States have experienced a pfiesteria problem. We have also
    proposed increases in State resources to identify watersheds
    that experience an excess nutrient pollution problem, such as
    pfiesteria. This would be in the form of the 106 grants. We are
    requesting a $20 million increase for grants which the States
    can apply for. States with particular problems obviously are
    the ones that we are targeting with that increase in funding.
        It is extremely important, as we all think about polluted
    runoff, whether it is agricultural or urban runoff, to
    recognize that the solutions will require a number of Federal
    agencies working together.

                       animal feeding operations [AFO's]

        Senator Mikulski. But then let's go to what has now been
    identified as one of the major areas, which I think gives
    Senator Bond pause and also which we share, which is reducing
    water pollution from animal feeding operations. Then what is
    the best way to do that. As you probably know, Maryland farmers
    were not happy with the action taken by the Maryland General
    Assembly. My position is let's not fingerpoint. Let's pinpoint
    the problem and then see.
        Could you tell us what role you have and intend to have in
    reducing the water pollution from AFO's. Then, also, if a State
    does a plan, what are you doing about regional solutions so
    that, for example, in our case, both the Maryland poultry
    industry is not disadvantaged by another State or by another
    country?
        Ms. Browner. There has been increasing interest in this
    issue and we are working on how best to have a national focus,
    in part because of the competitive issues that you raise. We
    are now, through Bob Perciasepe and others, engaged in public
    outreach to determine what sized facilities might be
    appropriate for national standards and to determine what States
    would do relative to those national standards.
        We do recognize, as is true in almost all of our programs,
    that once you have a national program, there may be the need
    for an individual State, given particular problems and
    challenges, to have perhaps a more rigorous or some additional
    components to the program.
        But we are now working in partnership with the USDA to
    develop a unified national strategy for animal feeding
    operations. We are talking about large numbers of animals, a
    large amount of waste.
        Senator Mikulski. But specific industries--Mr. Chairman, if
    I could just have your indulgence to pursue this----
        Senator Bond. Please.
        Senator Mikulski [continuing]. In my State it is poultry
    and in other States it could be cattle, dairy, et cetera.
        Ms. Browner. Right.
        Senator Mikulski. My listening to the debate in my own
    State and then in the excellent hearing that Senator Harkin and
    Senator Lugar had on this issue, tells me that we have to be
    sure that the agricultural interests feel that they are at the
    table with those also involved in environmental protection and
    in public health.
        Now are you all going to have some type of advisory board
    where you are going to bring the industries to participate
    where you hear what they have to say and then the practical as
    well as the fiscal implications to them in implementing it, and
    that we then try to work in a national consensus? I don't want
    another Clean Air Act problem where we then say the science is
    not good enough, it is not sound, and then we all argue about
    the science.
        I think if they could really be brought in----
        Ms. Browner. We are doing that.
        Senator Mikulski [continuing]. That is important.
    Ordinarily, I do not single out a particular company. But Mr.
    Jim Perdue--not Frank, but Jim, the one who has taken over the
    Perdue chicken venture--has a doctorate in marine biology. He
    is a very unusual person to be involved in this. He has a Ph.D.
    in marine biology. That was going to be his life's work, but he
    has taken over the family poultry business.
        I would really hope you would include him and then others
    who have both the industry and yet who want to work for
    constructive solutions. Otherwise we are going to be at one
    more finger pointing position, arguing over what sound science
    is, et cetera. I think we all recognize that this is an
    American problem and in some States now it is at crisis
    proportion.
        But we need to work through this. I also think that Senator
    Bond was right. The American farmers, regardless of whether he
    is in animal husbandry or in plantings, is a rugged
    individualist. These farmers do not go for government. But they
    do have confidence in some government agencies, like the
    Extension Service, Soil Conservation, and so on.
        So we need to make best use of them, best use of Government
    thinking, and best use of those agencies that have had
    longstanding ways of communicating, but then you value-add to
    it. So this is really what we are looking for.
        Am I on the right track here, Mr. Chairman, with your
    thinking?
        Senator Bond. I believe so. I think we want to accomplish
    these goals and the question is how best we can do it. I have
    some questions about the emphasis being out on the wrong
    syllable.
        Senator Mikulski. Did you get that? He said the emphasis on
    the wrong syllable. [Laughter.]
        I took Latin in Catholic girls' school, so I can understand
    wrongly accented syllables. [Laughter.]

               animal feeding operations: stakeholder involvement

        Ms. Browner. As I said earlier, we are working in
    partnership with USDA because we believe that they can help
    bring parties to the table and help facilitate the dialog in an
    honest and forthright manner.
        We have been in a dialog with the pork producers. In fact,
    I just conducted a town hall meeting with pork producers, with
    men and women who farm every day. They held a meeting and I was
    able to join them via satellite for several hours.
        It was very productive and it builds on a 2-year effort
    with the pork producers.
        We have just done that kind of dialog and that kind of
    outreach with the poultry producers. And we are looking to do
    it with other appropriate sectors of the industry where you
    have growth, particularly in the very large animal feeding
    operations. We estimate that there are about 6,600 of these
    very large facilities.
        But please know that we are interested in the dialog. I
    think the dialog with pork producers has been very positive. We
    have not agreed on everything. But we have certainly come to
    understand each other much better and we will certainly take
    your advice on Mr. Perdue and see how we might be able to
    involve him.
        Senator Mikulski. Or at least if not him, then someone who
    comes with the background of both, of the industry and an
    understanding of the science.
        Ms. Browner. We have put out a draft strategy describing
    how we might proceed and have asked people to comment on it. We
    will make sure that both of your offices have copies of that
    because it lays out a many year approach.
        [Clerk's note.--On the request of Subcommittee staff, the
    Agency has provided the Draft Strategy for Animal Feeding
    Operations for the Subcommittee files.]
        Senator Mikulski. Thank you, Ms. Browner.
        Mr. Chairman, I have some other questions on other issues,
    like brownfields, that I will submit for the record. I have to
    get to the floor.
        Senator Bond. Thank you.
        Senator Mikulski. Thank you, Ms. Browner, and thank you,
    Mr. Perciasepe and everybody.

      clean water action plan vs. clean water state revolving fund funding

        Senator Bond. Madam Administrator, to wrap this up, as I
    look at the Clean Water Action Plan, I see that State grant
    assistance essentially goes up by about $115 million--that is,
    $115 million out of the $145 million increase overall. But at
    the same time, you are cutting $275 million out of the Clean
    Water SRF.
        In 1998, we enacted $484 million in this category which you
    have in the clean water and watershed restoration budget
    initiative going to EPA. The recommendation is it goes up to
    $629 million. Of the increase, as I said, $115 million is for
    State grants and $30 million is for water quality program
    management.
        Ms. Browner. I think a chunk of that also goes to the
    States.
        Senator Bond. But that balances against a $275 million cut
    in the SRF for clean water.
        Ms. Browner. Mr. Chairman, we agree with you there is a
    change in the allocation for the States in terms of the water
    money. Part of the differences in the numbers, to make sure we
    understand each other, is we did not carry forward the majority
    of the congressional earmarks, of which there were a large
    number.
        Senator Bond. We understand that. That is not what we are
    talking about.
        Ms. Browner. That is about $200 million.
        Senator Bond. We are talking about the SRF, $275 million.
        Ms. Browner. But that is within the total water budget
    request. I thought you were talking about the total water
    request.
        Senator Bond. No.
        Ms. Browner. OK. I apologize.

                animal feeding operations: authority to regulate

        Senator Bond. I am talking about this.
        Let me just ask a couple of quick questions with respect to
    the clean water initiative.
        Regarding CAFO, the animal feeding operations, everyone
    agrees that we need to ensure that the CAFO's are in
    compliance. You indicated you have been working with the
    States, industry, and interest groups and that your goal is to
    develop a science based, affordable, achievable strategy to
    address these problems.
        Ms. Browner. Yes.
        Senator Bond. And you agree with that. With your AFO
    strategy and Clean Water Action Plan, do you now, under
    existing authorization have adequate authority to confront the
    problems you have identified regarding livestock farms? Are you
    going to be asking for additional legislative authority? Is
    additional authority needed? And what type of regulatory
    requirements could small producers expect from the EPA within
    this area?
        Ms. Browner. We do not believe that we need any amendments
    to the Clean Water Act. In fact, today, about a quarter of the
    largest facilities are carrying some kind of permit. What we
    have said in the CAFO strategy is that we would work with the
    States to fully address the largest CAFOs by the year 2002. A
    permit likely would be the end point.
        Let me back up for a second.

      animal feeding operation regulation: focus on large operation first

        We estimate there are about 450,000 animal feeding
    operations of which approximately 6,000 or 7,000 are the really
    large ones. Our initial focus is on those large operations. We
    do believe, and I think some in the industry would agree with
    this, that there are new technologies, such as waste management
    technologies, runoff controls. You have already seen them put
    in place in some States.
        So our initial focus is on these largest facilities. Some
    of them are carrying some kind of permits. At this time, we
    would look to ensure that all of them are meeting basic
    requirements and protecting the water resources and the
    communities in which they operate.
        One of the first things we are doing--and this may be of
    interest to you--is we are developing a national inventory of
    these types of facilities and a better understanding of the
    pollutant loadings that are associated with these facilities.
        Someone told me recently that in a dairy production, one
    cow can generate up to 80 pounds of waste a day. Some of these
    facilities are actually producing more waste than a very small
    town may be producing. So developing programs to better manage
    that waste is important.
        Senator Bond. That is where milk has come from historically
    and that is what cows do while they are producing milk.
        Ms. Browner. Well, we're for milk, and they do produce a
    lot of waste. [Laughter.]
        Senator Bond. This is not something new. This is something
    we can do.
        Ms. Browner. But what is new is putting thousands of them
    into one spot and confining them.
        When we had open grazing the waste was more distributed.
    But we don't have open grazing in many situations now.

            particulate matter: national academy of sciences report

        Senator Bond. Let me move on to particulate matter.
        I have talked about the National Academy of Sciences March
    31 report. It states, among other things: ``EPA should devote
    more funds to studying the types of particles most likely to be
    harmful to human health, the ways particles cause damage, the
    levels of exposure people actually receive.'' It concludes by
    saying, ``Proceeding in the absence of such information could
    lead policymakers to focus on standards and controls for PM
    that are not of the highest public health priority.''
        My question to you is what are EPA's plans to refocus its
    research both in terms of the fiscal year 1998 budget and the
    fiscal year 1999 request to account for the recommendations of
    the NAS?
        Ms. Browner. We have been working with the NAS--in fact,
    we'll have another meeting with the NAS in June--to make
    adjustments in the short-term research agenda. As explained
    earlier, we have not received the report yet on the long-term
    research agenda from the Academy.
        The easiest way to think about this is that our research
    agenda was more focused on figuring out which smokestacks were
    producing the fine particles. The Academy suggested to us that,
    while that work is important, we needed to increase our focus
    on the biological mechanisms. So that is the adjustment we are
    making.
        Senator Bond. Does it not make sense to find out what the
    problems are so you know how to structure the monitoring? That
    is their whole point.
        Ms. Browner. Yes; and we don't disagree with what the
    Academy has said. We are making adjustments which we will be
    discussing with them in the allocation of our research dollars.
        The research agenda, the research dollars over a 2-year
    period is in this year, 1998, $47.2 million that we will
    actually spend. Then, in 1999, it is $52 million.
        The $8 million difference there is a result of funding the
    centers. I think your staffer is informed about this.
        We are out soliciting for center proposals. You directed us
    to fund centers and we are doing that. But all of the proposals
    have to be peer reviewed. So we are engaged in the peer review
    process. The actual release of the funds won't occur until the
    next fiscal year.
        Senator Bond. I understand and you told me that you are
    waiting to get peer review and all of that. But it seems to me
    that these are very basic questions that we need to answer as
    we move forward.
        Ms. Browner. I agree.
        Senator Bond. I believe that the proposals can go out and
    should go out more rapidly so we know what it is we are dealing
    with. That has been part of the problem that I think the
    National Academy of Sciences has outlined. We are racing down
    the road and we don't know which of the many forks we are
    taking until we get the basic research. That is my point. That
    is why there was the earmark last year.
        We are disappointed that the research grants have not been
    let yet this year because we have a tight timetable to get this
    done.
        Ms. Browner. Mr. Chairman, with all due respect, Congress
    told us to work very rapidly with the Academy. We have met your
    deadlines for working with the Academy on a short-term research
    agenda and we feel that it is appropriate to withhold the
    announcement for the centers until the Academy told us where to
    spend the research money.
        So all we are trying to do is make sure it all fits back
    together, as you have told us to do. So we are now ready to go
    forward with the centers.
        Senator Bond. Will you commit, then, to following the
    National Academy of Sciences recommendations to assure that the
    funds are allocated to the highest priority research needs?
        Ms. Browner. We are in dialog with the Academy and we have
    a full meeting on June 22 and 23 with them on how we are
    allocating our research dollars.
        Senator Bond. Will you advise us----
        Ms. Browner. Certainly.
        Senator Bond [continuing]. If you come to agreement and, if
    not, why you do not and where you do not?
        Ms. Browner. Yes; certainly.
        Senator Bond. We want to follow that up.
        Ms. Browner. Yes.

                      particulate matter: research request

        Senator Bond. We are concerned that EPA's fiscal year 1999
    budget request would actually cut the PM research one-half, and
    NAS has called for about $50 million next year.
        Ms. Browner. It is important to understand that, when you
    look at the NAS report and you look at how our budget is
    allocated, we are talking about 2-years worth of expenditures.
    Essentially, what the NAS recommended over a 2 year period and
    what this budget request represents plus what Congress very
    generously provided last year, we are essentially at the same
    place in terms of total dollar amounts. I think we are at $95
    million and the Academy is at $86 million. So we are actually a
    little bit higher.
        You have to look at this over a 2-year period because that
    is how it is going to be spent.
        Senator Bond. I do not believe that that is accurate. I
    don't think that your Science Advisory Board agrees with that.
    We will have to continue this discussion.
        Ms. Browner. We are more than happy to provide the detailed
    numbers of the money. It was $47.4 million for 1998 and $52
    million for 1999. The $52 million includes the $8 million that
    you appropriated for this year. Because we waited for the
    Academy's recommendations, it will actually be spent in the
    next year.
        [The information follows:]

    Detail Numerical Breakout of the NAS Report vs. Fiscal Year 1999 Budget
                                    Request

        Below is a comparison of the Environmental Protection Agency's
    (EPA's) estimated Fiscal Year 1998 Enacted Budget and Fiscal Year 1999
    President's Budget Request to the National Research Council (NRC)/
    National Academy of Sciences (NAS) recommendations for Particulate
    Matter (PM) Research. To summarize, the NRC recommends $39.6M in fiscal
    year 1998 and $45.7M in fiscal year 1999 be spent on PM research to
    address their highest priority research areas for a total of $85.3M.
    EPA has in its Fiscal Year 1998 Enacted Budget $50.2M for PM research
    (plus an additional $5.2M in certain Congressional ``add-ons'' as
    listed below). For fiscal year 1999, the President's Budget Request
    includes $28.7M for PM research within EPA's Office of Research and
    Development and $15M for monitoring ``super sites'' within EPA's Office
    of Air and Radiation; a total of $43.7M related to PM research needs in
    fiscal year 1999. EPA's combined PM research-related budget for these
    two years is $93.9M (plus an additional $5.2M in certain Congressional
    ``add-ons'').
        However, the $8M funding for five university-based research centers
    focusing on PM-related health effects, as provided for in the fiscal
    year 1998 Appropriations, will be funded in fiscal year 1999. The
    Agency waited for the NRC's recommendation of priority research areas
    before issuing a Request for Applications of grants to focus on these
    priority research areas. Upon receipt of the NRC's recommendations, EPA
    immediately prepared the Request for Applications, which will be
    announced in May, 1998 and will provide a five-month period for
    submitting applications. As a result, grants supporting the centers
    will not be awarded until the beginning of fiscal year 1999. Therefore,
    we expect fiscal year 1998 funding of PM research to be $42.2 plus the
    $5.2M in certain Congressional ``add-ons'' for a total of $47.4M.
    Whereas, the fiscal year 1999 funding for EPA's PM research efforts,
    including the fiscal year 1998 resources for the centers, will be
    $51.7M.

            COMPARISON OF EPA ESTIMATED FISCAL YEAR 1998 AND FISCAL YEAR 1999 BUDGETS TO NRC RECOMMENDATIONS
                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                      NRC recommendation               EPA
                                                                          fiscal year      -------------------------
                                                                   ------------------------  Estimate   Presidential
                                                                                             enactment     budget
                                                                       1998        1999       fiscal     fiscal year
                                                                                             year 1998      1999
    ----------------------------------------------------------------------------------------------------------------
    I. NRC highest priority research areas........................        39.6        45.7        42.7         22.6
    II. Implementation-related research, not identified in NRC      ..........  ..........         7.5          6.1
     report as among highest priorities...........................
                                                                   -------------------------------------------------
          Subtotal of Sections I and II...........................  ..........  ..........        50.2         28.7
                                                                   =================================================
    III. OAR Monitoring ``super sites''...........................  ..........  ..........  ..........         15.0
                                                                   -------------------------------------------------
          Subtotal of Sections I, II, and III.....................  ..........  ..........        50.2         43.7
                                                                   =================================================
    IV. Five University-based Research Centers: Centers (earmarked  ..........  ..........        -8.0          8.0
     in fiscal year 1998; grants awarded in fiscal year 1999).....
                                                                   -------------------------------------------------
          Subtotal of Sections I, II, III, and IV.................  ..........  ..........        42.2         51.7
                                                                   =================================================
    V. Other Fiscal Year 1998 Enacted Congressional ``Add-ons'':
        Lovelace..................................................  ..........  ..........         2.0  ............
        Johns Hopkins.............................................  ..........  ..........         1.5  ............
        Jewish Lung Center........................................  ..........  ..........         1.7  ............
                                                                   -------------------------------------------------
          Total...................................................  ..........  ..........         5.2  ............
                                                                   =================================================
          Total...................................................  ..........  ..........        47.4         51.7
    ----------------------------------------------------------------------------------------------------------------
    Note: The research in the Congressional ``Add-ons'' (section V. above) broadly support Air-related research,
      including PM.

                      particulate matter: monitors request

        Senator Bond. I think the Academy's recommendations assumed
    that that would be spent this year.
        The EPA has requested $65 million for fiscal year 1999 for
    the PM-2.5 monitoring network. According to the National
    Academy of Sciences, ``The agency should consider more fully
    the possibility that future research results might indicate
    that the expensive monitoring program is not measuring the most
    biologically important aspects of particulate matter. Such
    inconsistency would undermine the credibility and effectiveness
    of future control strategies and underprotect vulnerable
    subpopulations.''
        What are EPA's plans to follow NAS's recommendations to
    reevaluate the monitoring network?
        Ms. Browner. There are essentially two categories of
    monitors that make up the monitoring network for which we seek
    funding. One is the category that monitors how much 2.5
    particulate matter is in the air. The other looks at things
    like chemical speciation.
        In the Academy's report, they seem to focus on only those
    monitors that measure gross amounts and not the additional
    category of monitors. We will be meeting with the Academy to
    discuss this other group of monitors which we think are very
    responsive to the questions that they raise.
        That category of monitors has already been subject to some
    peer review through CASAC and the parts of it that have not
    completed peer review will do so in the next several months by
    the CASAC panel. Then we can conclude the discussion with the
    Academy.
        It is important to understand that we are talking about
    1,500 sites at which there may be multiple monitors. The
    Academy appears to have focused on one type or subset of
    monitors and not the other.
        Senator Bond. We will have to pursue this later. But I
    would hope you could get some outside expertise because, as I
    understand it, the National Academy of Sciences is saying that
    we need to learn about chemical composition or speciation and
    how the monitoring network needs to focus.
        I don't care whether it is 100 or 1,500. We need to have
    better information on what it is that we are looking for and
    what the dangers are before we can set up something here. I
    think they said target the culprit before we know what to focus
    on.
        Ms. Browner. We are doing that. We will meet with them.
    When we complete the peer review process, which is extremely
    important, we will work with them. We have already completed it
    on one section of these and will work with them on that. And as
    we conclude the others, we can bring them in.
        In the budget request before you, approximately $26 million
    of the $65.7 million that we seek this year for monitors goes
    to those types of monitors which the Academy addresses in their
    report. So almost one-half of the money goes to the speciation
    monitors, or to the continuous monitors, known as the Super
    Site Monitors.

           food quality protection act [fqpa]: chemical registration

        Senator Bond. Let me move to the Food Quality Protection
    Act because this has raised so many questions. One of my
    important constituents, the Missouri Department of Agriculture,
    has been in my office. They report directly to Governor
    Carnahan. They have raised serious questions about the Food
    Quality Protection Act's implementation by the EPA.
        I note also that a group called the Food Chain Coalition
    has written, challenging the scientific basis for forthcoming
    EPA decisions and said that,

        Approving and making available to growers and other
    pesticide users new and safer pesticides and new uses of
    registered pesticides which meet the new FQPA safety standards
    to replace older pesticides is the most effective means of
    immediately reducing pesticide risks with minimal disruption to
    growers. Yet EPA's review and registration of new compounds and
    new uses for minor crops has ground to a virtual halt.

        Why is this? Why has EPA, if, in fact, it is true, why has
    the review ground to a halt?
        Ms. Browner. If I understand the question, you are
    addressing, it goes to the registration of new chemicals.
        Senator Bond. Yes.
        Ms. Browner. Under the new law we had to put in place the
    guidelines for those new chemical registrations which we have
    now completed. We can provide you more detailed numbers.
        In 1997, for example, 28 new, active ingredients were
    registered, which is above the numbers in prior years. As of
    April 24 of this year, 12 new active ingredients have been
    registered. Six of them are biologicals and one is a reduced
    risk.
        So we are working in this program. We are the first to say
    that once the new law came into existence, it did take us some
    time to get all the rules, the protocols, and the guidance in
    place for how we would manage these as they came into the
    Agency. But the program is up and running now and we believe we
    are on a schedule that is in keeping with what we thought we
    could do.

         food quality protection act: coordination between epa and usda

        Senator Bond. Apparently, the Vice President agreed there
    were problems and issued a memo directing the EPA to ensure the
    implementation of the paramount public health goals and that
    the new law is informed by a sound regulatory approach, by the
    expertise of the USDA, by appropriate input from affected
    members of the public, and by due regard for the need of our
    Nation's agricultural producers.
        I gather that in response to that, a senior level working
    group at EPA and USDA was formed to address the issues,
    ensuring appropriate public participation and transparency.
        Why did it take White House intervention to get the EPA to
    address those critical concerns?
        Ms. Browner. We worked with the White House and with USDA
    on how best to engage in a public dialog. In particular we
    focused on the requirements in the new law, so that we focus on
    categories of chemicals, where they have a shared mode of
    mechanism.
        We welcome the White House direction to EPA and USDA. In
    fact, tomorrow Secretary Glickman and I will announce the
    formation of a new committee made up of farmers, chemical
    companies, grocery stores, State agencies. It is a very large
    committee on how best to proceed particularly with this section
    of the law, and also other parts of the law. It will be
    cochaired by EPA Deputy Administrator Fred Hansen and USDA
    Deputy Secretary Rich Rominger.

                food quality protection act: measurement of risk

        Senator Bond. There are a number of concerns that have been
    presented to us by affected groups which seem to question the
    reliability of the scientific basis. One states that EPA set
    aside water residue data collected by the U.S. Geological
    Survey for more than 4,800 surface water monitoring sites in
    favor of a purely theoretical model that estimated residues 100
    times higher than what was actually determined by sample
    analysis. For pesticide exposure from ground water, EPA
    selected the single highest residue value from over 23,000
    samples collected by the State. EPA averaged only the 151
    samples showing detectible residues for the pesticide to
    determine an average residue level for all sites, disregarding
    the thousands of samples that had no detectible residues.
        Ms. Browner. Mr. Chairman, I apologize, but I am not
    familiar with this.
        Senator Bond. We will provide several of these examples
    that have been raised to us for your response.
        Ms. Browner. That would be helpful.

           food quality protection act: food chain coalition concerns

        Senator Bond. Do you have any specific actions that you are
    taking in response to the concerns raised by the Food Chain
    Coalition in its March 24 letter to you?
        Ms. Browner. I think the formation of this FACA, the
    committee that we are announcing the formation of tomorrow,
    should be very helpful in creating a forum for dialog about the
    kind of issues that they are raising. This is an important
    component to resolving those issues.
        Senator Bond. The other thing I think we are going to be
    very much interested in, based on the questions that have been
    raised, is to see what the EPA is doing and to ensure that it
    is placing the highest priority on ensuring that reliable data
    are obtained on pesticide risk before making decisions on
    tolerance, reassessments and reregistrations. I think that goes
    to the basic questions.
        We all give lip service to sound science. We expect that
    sound science will be utilized and, frankly, certainly those of
    us in the legislative branch have to rely on the best
    scientific information we can get, and we expect that EPA will
    utilize that same scientific evaluation to assure us that the
    best data are being used.
        Ms. Browner. Yes.
        I believe some of the coalition members, what is it
    called----
        Senator Bond. The Food Chain Coalition.
        Ms. Browner [continuing]. Yes; I think some of their
    members are also on the advisory committee that we have
    assembled. So their interests will be represented.

                 national rural water association [nrwa] grant

        Senator Bond. We will watch that with interest.
        A recent inspector general report stated that the National
    Rural Water Association improperly used Federal assistance
    agreements and contracts to support lobbying and that a full-
    time EPA employee detailed to the NRWA inappropriately assisted
    NRWA in its lobbying activities.
        As we both know, EPA has requested funding for NRWA in its
    budget request for several years and the Congress has increased
    funding based on widespread congressional support for rural
    water training and technical assistance to ensure compliance
    with drinking water standards in small systems.
        How these grantees spend their dollars should be a question
    within the direct responsibility and oversight of EPA, would
    you not agree?
        Ms. Browner. Yes; absolutely.
        Senator Bond. What are you doing at EPA to ensure that
    Federal grants are not used for lobbying? How widespread is
    this problem? Are there other instances like this?
        Ms. Browner. We are not aware of other instances. We take
    this matter very, very seriously. There are prohibitions on
    grantees, limitations in terms of how they can spend the money,
    and we are in discussions with the National Rural Water
    Association. These discussions include looking at the records
    they kept and the expenditures they made, which may or may not
    result in some--I don't think I am allowed to say this--
    restitution of the dollars.
        Senator Bond. That would be my point, that if funds have
    been improperly used, they should be restored.
        Ms. Browner. We agree. Absolutely.
        Senator Bond. And if it comes to your attention or if you
    are advised that an EPA detailee is inappropriately engaging in
    something, that is your responsibility to do.
        Ms. Browner. The individual does not work for us anymore.
    He is a full-time employee of the organization. So the
    question--and it is a very appropriate question and is one
    where we are in discussion with them on--is about the
    activities he engaged in while he was an EPA detailee. I think
    that is the term that was used.
        We share the concerns. And, as I said, it may result in
    restitution of funds.
        Maybe I should just say that they have responded to some of
    this. They are currently claiming in their statements that,
    one, he did not engage in these kinds of activities and, two,
    that they did not exceed the prohibition on lobbying.
        One of the problems we are having, quite frankly, is with
    the quality of their records. So the conversation is ongoing.
        Senator Bond. If you would, advise us when you reach a
    conclusion after your examination of that, of the reports and
    the response provided.
        Ms. Browner. Yes.
        We have also changed the funding for this organization in
    our current grant per congressional direction. Funding for this
    organization has consisted of partly money we requested from
    Congress as well as funding that Congress has been generous in
    adding to that request.
        In this year's grant dollars, we are requiring them to
    maintain a set of records that will allow us better to
    understand in the future what they have done.

             national environmental performance partnership system

        Senator Bond. One last area--and we are going to be
    touching on many of these in the questions I submit for the
    record--is, and let me now move to, the National Environmental
    Performance Partnership System.
        EPA signed an agreement 3 years ago with environmental
    commissioners of the States which launched the National
    Environmental Performance Partnership System. It was to
    recognize that States had grown up in the past 25 years and in
    many cases they are able to manage environmental programs with
    less oversight and over the shoulder review from EPA. EPA was
    to provide flexibility to the States and focus on State
    performance, rather than bean counting.
        Later that year, we provided authorization in the EPA
    appropriation for the EPA to provide performance partnership
    grants to the States, allowing States to merge individual grant
    programs and target resources to their highest priorities.
        I understand that more than 40 States have so-called PPG's
    today. According to the September 1997 NAPA report,

        EPA has not used the opportunities presented by NEPPS to
    give States clear incentives for better performance. The agency
    has failed to establish a practice of making formal assessments
    of State performance and using these assessments to link
    performance explicitly to the level of Federal oversight and
    with the flexibility and program design and innovation. Such a
    policy would create strong incentives for improved States'
    performance.

        Do you agree with NAPA's recommendation on the need for
    formal assessments and linking performance with the level of
    oversight and flexibility? If so, do you have plans to follow
    this recommendation?
        Ms. Browner. Mr. Chairman, this program has been hugely
    successful. It is exactly what Congress envisioned, and it
    allows EPA to get out of the business of having every State do
    the identical list of things and allow States to develop their
    own list.
        That was the first step in the process. It was not easy to
    do. I think we should all be proud of the fact that we have 40
    States doing it now.
        The second step in the process, which is not dissimilar
    from the work we are doing under GPRA, is to really go forward
    with an agreement on core measurements. This is a decision on
    how you measure progress. If you think it is difficult for us
    to do at EPA, imagine what it is like when you have 50 States
    trying to participate in it, each of them with a different
    history and a different future.
        I think what NAPA is addressing is precisely that kind of
    accountability, that kind of measurement system. There are some
    States who welcome the opportunity to have a set of
    measurements. There are other States who just think we should
    give them the money and stop coming in to evaluate whether or
    not that money is helping them to achieve a set of objectives
    or core measurements.
        It has been a healthy discussion with the States and it is
    ongoing.
        I would just hope that the statement made by NAPA is valued
    as advice as to how we should go forward. In no way do I think
    it should be interpreted as saying that creating this kind of
    flexibility for the States was a bad idea. It has been a great
    thing.

                    animal feeding operation: draft strategy

        Senator Bond. No; I recognized that in the statement before
    I asked the question.
        I was not sure that I received your answer and I jumped by
    too quickly on the CAFO's. What new requirements can small
    farmers expect from the draft AFO strategy?
        Ms. Browner. The draft strategy does not articulate any
    specific requirements. It lays out a process that we will
    proceed under. It says that the first area of focus will be on
    the largest operations for which we estimate a program will be
    in place by 2002.
        Senator Bond. That was what?
        Ms. Browner. By the year 2002. The smaller ones would not
    be addressed until 2005.
        Senator Bond. The ones that will be addressed are at what
    level?
        Ms. Browner. That is part of the discussion. We are
    deciding where the cutoff should be in terms of number of head
    and whether it is poultry, pork, cattle, and so on.
        Senator Bond. That's a different situation, then.
        Ms. Browner. Yes; we agree.
        Senator Bond. So right now, nothing is in the works for the
    small operator. The big operators can take care of themselves.
    The small operator, at this juncture, is not looking at any new
    EPA regulations on this?
        Ms. Browner. The earliest would be in 2005.
        Now I should caveat this. States are looking at these
    issues.
        Senator Bond. Oh, yes; I realize that. I am just asking
    from you what EPA is looking at.
        Ms. Browner. As part of the strategy we put out, we speak
    to both the large and the small operations. We lay out a
    timeframe in which we will focus on the large operations first,
    putting in place whatever the appropriate program structure is
    by 2002.
        Now the answer you may be trying to get at is what
    distinguishes a big operation from a small one. That is part of
    what we are discussing with people--how many head is a big one,
    how many chickens are a big one. That is an unresolved issue.
        Some States have already defined large and small and we are
    looking at that.
        Senator Bond. All right.
        I think that about concludes the questions that I have for
    the open hearing. We will provide more questions for the
    record. As I said, I believe that our colleagues have those
    questions.
        I thank you very much.
        Ms. Browner, did you have a statement you wanted to make?
        Ms. Browner. I did want to raise one issue in closing. I
    think you and Senator Burns made reference to the inspector
    general's report on Austin Avenue. I want you to know that we
    share your concerns. We are looking into this matter.
        I think that the choices are difficult ones, when you are
    working in residential communities. The decision to rebuild or
    not rebuild is a difficult decision. There were a number of
    meetings about this. There were a number of Senators and House
    members who felt very strongly that rebuilding was the
    appropriate option, given preservation of the integrity of the
    neighborhood.

                         Additional committee questions

        Having said all of that, I don't think any of us believes
    that rebuilding of this nature is appropriate and we will fully
    investigate that and take whatever actions are appropriate.
        Senator Bond. Thank you, Ms. Browner, Mr. Hansen, Ms.
    Harper.
        [The following questions were not asked at the hearing, but
    were submitted to the Agency for response subsequent to the
    hearing:]

                      Questions Submitted by Senator Bond

                      data quality: reliability of systems
        Question. What is planned specifically in the next year to begin
    improving the quality and reliability of EPA data systems, and how much
    is requested in your budget for this purpose?
        Answer. EPA is undertaking a number of activities to improve the
    quality and reliability of its data systems. The Reinventing
    Environmental Information (REI) program provides a framework for many
    of these efforts. Under REI, EPA is developing both data standards and
    electronic reporting standards. Over the next five years all of the
    Agency's major systems will be revised to incorporate these data and
    electronic reporting standards. The Data standards will allow cross-
    media integration of data and improve reliability of the data.
    Electronic reporting will improve the quality and reliability of the
    data by eliminating errors associated with transferring information
    from paper to electronic form and will reduce duplication of data
    collected. In implementing standards and electronic reporting, many of
    the Agency systems will be re-engineered using state-of-the-art
    technology that will also improve reliability.
        Through ECOS, EPA is working closely with the states on REI and
    other data quality issues. The One Stop program provides a framework
    for EPA and states to coordinate their information needs and system
    development activities to reduce duplication and increase reliability.
        EPA has adopted an aggressive strategy to ensure that Agency
    information technology assets will be compliant in a timely fashion.
    The Agency has established a Senior Y2K Council, under the direction of
    the CIO, to review progress, receive early warnings on potential
    problems, and take necessary action to avoid critical delays. An
    independent certification program has been established for mission
    critical systems to ensure compliance. The timetable the Agency has
    adopted conforms to the government-wide milestones established by OMB.
    The critical dates in the time-line include completing renovations for
    mission-critical systems by September 1998; validation by January 1999;
    and implementation by March 1999. This schedule allows for nine months
    of operation in a production environment to identify and fix any bugs.
        The fiscal year 1999 budget request contains $18.15 million for the
    REI program and $6.1 million for Year 2000.
                  data quality, gpra, and right-to-know issues
        Question. According to GAO, the availability of sufficient
    scientific and environmental data is a concern ``critical to the
    credibility and success of the agency's strategic planning process.''
    What is planned for fiscal year 1999 to address concerns about
    information gaps? What are the highest priority areas for filling data
    gaps and how are these reflected in the budget? How will EPA develop
    the baseline data needed to support the Results Act?
        Answer. EPA is working to ensure that its baseline performance
    information is complete, accurate and consistent. Clearly, this is a
    long-term effort; but the agency is making good progress along several
    tracks. The Office of the Chief Financial Officer has recently
    completed a Data Quality/Gaps Evaluation to determine the availability
    of performance data and measures which are of adequate quality to track
    progress toward strategic objectives. By means of an agency-wide
    survey, it was revealed that funding was available to address data gaps
    in several program areas during fiscal year 1999. For example, the
    Office of Water has committed resources to develop measures of non-
    point source loads of nutrients and sediments to rivers and streams.
    This will support its tracking of progress in reducing runoff. In
    addition, the Office of Pollution Prevention and Toxic Substances will
    develop several measures of risk reduction and program effectiveness
    during fiscal year 1999. Other offices are undertaking similar efforts.
        One of the agency's newest organizations, the Center for
    Environmental Information and Statistics (CEIS), is generating
    important information regarding existing EPA information sources and
    various environmental information needs. Specifically, the Center is
    comparing three major environmental data needs (i.e., (1) questions the
    general public asks about the environment, (2) agency performance as
    related to GPRA, and (3) state performance measures under the National
    Environmental Performance Partnerships Systems) and EPA data sources to
    identify and assess major data gaps. The CEIS intends to work with the
    program offices and other information customers to develop options to
    address these data gaps. In the past, funds have been available on a
    competitive basis to support program office efforts to fill data gaps.
        In addition, EPA's Environmental Monitoring Management Council
    (EMMC) is developing a strategy for planning and conducting monitoring
    activities so that they support agency-wide strategic and programmatic
    needs. The strategy will be the foundation for improving the ability to
    accurately track progress toward environmental outcome commitments. The
    EMMC is interested in supporting long-term agency needs for data and
    information and identifying emerging data requirements.
        The EPA recognizes that data quality can be improved and gaps need
    to be filled to effectively ``measure for results.'' Improving the
    ability to measure performance is an Agency priority.
                          data quality: accountability
        Question. Who is held accountable within EPA for ensuring these
    critical issues concerning data quality and information gaps are
    addressed? Why has the Center for Environmental Information and
    Statistics been charged with addressing data quality (according to a
    February 4th memo on Reinventing Environmental Information) rather than
    the Chief Information Officer?
        Answer. EPA's Deputy Administrator has asked the Agency's Chief
    Information Officer (CIO) to lead a new effort to develop a strategic
    action plan to address the issue of environmental quality. However,
    EPA's Center for Information and Statistics (CEIS) is currently staffed
    with experts on the interpretation and use of environmental data and
    information. Their expertise extends beyond the technological factors
    that are the focus of the CIO. For that reason, the CEIS continues to
    lead the effort to assess data gaps and plans for the secondary uses of
    environmental data.
               napa: recommendation on environmental information
        Question. In 1995, NAPA recommended establishment of a separate
    bureau or office of environmental information. Yet EPA ignored NAPA's
    recommendation that a new center for environmental information and
    statistics be established independently of a program office. According
    to NAPA, ``The location (within the Office of Policy, Planning &
    Evaluation) effectively reduces the center's autonomy from the agency's
    regulatory and program activities and thus compromises the center's
    ability to establish itself and its data as credible and objective.''
    Why did EPA ignore the concerns raised by NAPA? What is the purpose of
    this new Center, what is its role in addressing critical issues of data
    quality and availability for decision-making, and why is it not under
    the Chief Information Officer?
        Answer. It is EPA's understanding that creation of a separate,
    independent bureau or office would require legislation. Rather than
    delay the very important work of the Center, and subject its future to
    the uncertainty of legislation, the Administrator created the Center
    through a reorganization of the Office of Policy, Planning and
    Evaluation (OPPE). By establishing standards for data quality and
    suitability for information distributed by the Center, and subjecting
    those standards and Center products to a public, technical peer review
    process, we are confident that the credibility and objectivity of the
    Center's analysis and information products will be established and
    maintained. We have been working with staff of the National Academy of
    Public Administration as we have developed the organization and mission
    of the Center.
        The Administrator chose OPPE as the organization to house the
    Center because the Office is best prepared with the expertise and staff
    to carry out the Center's mission. OPPE has long worked on
    environmental statistics, environmental indicators, and presentation of
    environmental information in the predecessor organizations to the CEIS:
    the Center for Environmental Statistics and the Environmental
    Information Division with the Office of Strategic Planning and
    Environmental Data.
        There are many information-related activities with EPA which do not
    report directly to the Chief Information Officer (CIO), but which are
    coordinated and overseen by the CIO. The Center is working closely with
    the CIO; in particular, the CIO co-chairs the CEIS Steering Committee
    with the Assistant Administrator for Policy. The AA for Policy is also
    a member of the Agency's Executive Steering Committee for Information
    Resource Management, which is chaired by the CIO. The CIO has been
    charged by the Administrator with ensuring the overall quality of the
    Agency's data, and the Center will join the rest of the Agency in
    helping the CIO to develop and implement a data quality plan.
        The Center's mission is to provide the public with information on
    environmental quality, status, and trends. An important component of
    this mission is the Center's work to assess the suitability of EPA's
    databases, and other potential sources of data, for use in providing
    the public with such information. As part of all of its products, the
    Center will provide an explanation of the source and quality of the
    data used to compile the information presented. The Center's
    assessments will also be used by Agency management to inform decisions
    regarding collection, management and use of environmental data.
                    right to know: inventory of information
        Question. Does EPA have a comprehensive inventory of all the
    information resources, public documents and software tools that it has
    produced, endorsed, or funded? Whose responsibility is this? Does EPA
    have a comprehensive inventory of all the information it currently
    collects?
        Answer. EPA has no single inventory of all those resources. They
    are accounted for in separate inventories. Software and data systems
    are inventoried under the Information Systems Inventory managed by the
    Office of Information Resources Management (OIRM). EPA publications are
    inventoried in the National EPA Publications Catalog managed by EPA's
    National Center for Environmental Publications and Information. In
    addition, work is underway for an inventory of EPA regulatory guidance
    materials under an effort managed by the Office of Enforcement and
    Compliance Assurance. OIRM plans to extend this inventory to include
    all public documents available on the EPA Web site. The inventory of
    all information collected by EPA is managed by the Office of Policy,
    Planning and Evaluation as part of EPA's regulatory paperwork burden
    management activities under the Paperwork Reduction Act.
                     right to know: accuracy of information
        Question. In the push to carry out right-to-know activities at the
    program level, what controls do you have in place to ensure that the
    information provided the public is accurate, complete, and put in the
    proper context to avoid raising undue concern or inappropriate use of
    the data? Whose responsibility is this? Have you established any
    standards as to the accuracy, completeness, reliability, or proper
    context that data must meet before it is made available to the public?
    What steps does EPA have in place to correct information errors? Who is
    responsible for this?
        Answer. EPA is committed to improving the accuracy and completeness
    of the information it provides to the public. At the same time, the
    Agency also is committed to making its information publicly available
    unless there is a specific statutory basis for withholding the
    information. To put information into proper context and to enhance
    understanding, EPA is expanding access to and availability of metadata
    on Agency information, that is descriptive information such as
    definitions, origin, source, and any data describing how, why, or when
    the data was collected including indications on the accuracy of the
    data or its precision. The Agency is also striving for continuous
    improvement in quality of information, recognizing that no set of
    information will be completely free of errors and inadequacies.
    Feedback from the public and from regulated entities is an important
    part of the information quality improvement process, as stakeholders
    often are best able to recognize and comment on errors. When
    information is not publicly available, EPA loses the benefits of such
    feedback.
        All stewards of public information in the Agency share
    responsibility for ensuring that the information they manage is as
    accurate and complete as feasible, and that a sound basis is provided
    for others to interpret the information. EPA's Office of Research and
    Development manages the data quality process for scientific data, which
    requires that data managers throughout the Agency develop data quality
    objectives for their data and manage their programs to meet these
    objectives. EPA's Center for Environmental Information and Statistics
    has been meeting with stakeholders and developing programs to provide
    and interpret environmental information for the public.
        Finally, EPA's Deputy Administrator has recognized the need for
    more improvements in this area. By memorandum of 29 April 1998, he
    charged the Chief Information Officer (CIO) to lead an ``effort to
    develop a strategic action plan to implement an Agency-wide approach to
    ensuring the quality of our data.'' This plan is to be submitted for
    approval no later than 30 September 1998. The plan should develop a
    systematic, Agency-wide approach for correcting information errors and
    assign specific accountability for all major tasks. Thus, the Agency
    has acknowledged the need for more focused effort to address
    information and data quality and has initiated a process, led by the
    CIO, to address this issue with a specific action plan.
                  data quality: misuse and mischaracterization
        Question. If EPA is made aware of the misuses or
    mischaracterization of environmental data by third parties, what steps
    is EPA taking to stop such behavior and prevent its recurrence?
        Answer. EPA has no editorial control over the use of publicly
    available environmental data by third parties. If the Agency were made
    aware of a misuse or mischaracterization of EPA environmental data or
    information by a third party, the Agency could request that the third
    party publish a disclaimer or retraction of the misused data so as to
    clarify that EPA does not agree with the third party's use of EPA's
    data. The Agency could also pursue other legal remedies depending on
    the impact of the third party's actions. EPA has standard procedures,
    provided in our authorizing statutes, for pursuing claims where the
    confidentiality of the data provider has been violated, or where there
    is an endangerment of public health or significant environmental
    impact, as a result of the misuse or mischaracterization of the
    Agency's data.
                     right-to-know: information for citizen
        Question. What steps are being taken to obtain an understanding of
    the priority information needs of the average citizen? How much
    research and analysis of public information needs has EPA conducted?
    Have those established the priority needs of the average citizen or
    have they identified the areas of potential interest?
        Answer. In July, 1997, EPA embarked on a national customer survey
    to obtain an understanding of the environmental information needs of
    the average citizen. The Agency started the survey by drafting a peer-
    reviewed, four-year, Customer Survey Plan. The Plan called for four
    phases of survey activity starting with those who are very familiar
    with EPA information resources, and then eventually surveying the needs
    of those who are unfamiliar with the Agency's information resources.
    Phase I and II started with convening meetings with information users
    who are familiar with EPA's existing information resources. Phase III
    involved regional meetings with user groups in each EPA region. Phase
    IV would survey the general public's information needs.
        Participants in Phase II and III, indicated that they needed an
    array of environmental information products, ranging from quality-
    assured, data sets to comprehensive, multi-media reports on
    environmental quality, status and trends at the national, state and
    local level. Many encouraged EPA to make information available via the
    Internet, printed reports and telephone (staffed by knowledgeable
    people, not just voicemail).
        In late March, 1998, EPA announced a plan to undertake a national
    telephone survey to ask ``average American households'' about their
    environmental information needs and their access preferences (Federal
    Register, March 30, 1998) for Phase IV of the customer survey. EPA
    plans to complete these telephone surveys and report our survey
    findings by early 1999.
        The Agency's customer survey also involves an extensive review of
    current literature and findings from other organizations' research in
    this area.
                        right-to-know internet security
        Question. With respect to Right-to-Know concerns, EPA's plans to
    publish on the Internet data about chemical storage sites and ``worst-
    case scenario'' information [e.g., the most devastating potential
    accident and plans to respond to such an incident] has many security
    experts concerned. According to a recent ``USA Today'' article, ``FBI
    agents say putting the data on the Net creates a blueprint for chemical
    mayhem.'' What is the status of EPA's plans to publish Clean Air Act
    ``risk management plans'' on the Internet? Given the sensitive nature
    of this information, what accounts for EPA's enthusiasm for publishing
    the data on the Internet, rather than keeping the information in
    libraries, for example? What is EPA doing to work with the National
    Security Agency, FBI and other relevant agencies on this critical
    issue?
        Answer. In September 1996, EPA established a Subcommittee under the
    Federal Advisory Committee Act to provide stakeholder advice and
    counsel on scientific and technical aspects of CAA 112(r). Since May
    1997, the Subcommittee has been addressing the issue of whether to post
    ``worst case scenario'' data on the Internet. In February 1998, nine of
    ten Subcommittee members recommended that EPA post the worst case
    scenario data on the Internet with several safeguards to begin to
    address potential misuse of the information. This recommendation was
    based on several factors: (1) by law the information must be made
    publicly available; (2) the Internet is the most efficient and cost
    effective method of information dissemination; and (3) under the
    Freedom of Information Act (FOIA) law, anyone can request the RMP data
    in electronic format and post it on the Internet themselves
    (Environmental groups have said they will post the RMP data if EPA does
    not).
        EPA has worked closely with the President's Commission on Critical
    Infrastructure Protection, FBI, DOJ, CIA and DOD to obtain their
    insight into a potential solution. Currently, EPA is working with these
    Federal partners to explore technical options and safeguards that will
    result in minimal risk. A final decision will be made in collaboration
    with other Federal agencies.
                        right to know: security controls
        Question. Considering your efforts to make more data available to
    the public on the Internet, what controls do you have to protect the
    security of the data from intruders or hackers, particularly in view of
    the Sept. 1997 I.G. report which found several cases of hacker
    intrusion?
        Answer. EPA employs multiple security mechanisms to protect data
    from intruders or hackers.
        For the Network.--Physical access to EPA's internal network is
    controlled by requiring that data reside in EPA (leased or owned)
    facilities and we allow only one connection between the Agency's
    internal network and the Internet, and protect this connection with a
    ``firewall''.
        Access to privileged commands on the network infrastructure is
    restricted to a small number of key individuals. EPA's network router
    audits trails daily for activities that could indicate the presence of
    an intruder or a hacker on the Agency network. Suspected problems are
    quickly followed up with the appropriate internal and external security
    groups, the Inspector General, and law enforcement groups, if
    necessary. EPA monitors and implements the appropriate security alerts
    and controls recommended by government and industry security groups. As
    such, EPA has installed direct controls on the Agency firewall router
    which is the single point of connection between EPA and the Internet.
    These targeted controls ward against anti-spoofing, discovery of the
    topology and structure of our network, blocking NetBt and SNMP, and
    other items recommended by national security organizations.
        Finally, the EPA contractor and Federal Network Information
    Technology staff maintain a constant state of training and alert status
    relative to the technical aspects of state-of-the-art networking,
    network security, and damage/waste prevention.
        For the Public Access Server.--EPA controls physical access to the
    computer systems on which the public access data resides. For purposes
    of data update, the Agency also limits network access to the system to
    registered users, coming from registered Internet addresses.
        Access to privileged commands is restricted to system
    administrators on a need-to-use basis. EPA employs Class C2 security on
    all our central systems, in accordance with the Department of Defense
    Trusted Computer System Evaluation Criteria, DOD 5200.28-STD (commonly
    called ``The Orange Book''). All central systems separate user data
    areas from those of the operating system, and maintain separate access
    controls for each user's data. The data for each user and project is
    only modifiable by users and groups authorized by the user owning the
    data.
        The Agency maintains audit trails of significant system events
    (login successes and failures, failed access attempts against system
    level files, and privileged command use), and reviews system audit
    trails routinely to detect potential threats to system, application, or
    data integrity. Further, the Agency records checksums on important
    system files and use automated monitoring for any change to alert us to
    possible tampering.
        Operations staff monitor the public access systems twenty-four
    hours a day, seven days a week, to assure their availability and
    integrity. Security alerts are monitored from government and industry
    security groups. As a result, EPA regularly installs software patches
    and initiate procedures necessary for system and data security.
        Persistent intrusion attempts are detected occasionally, as we did
    in both the incidents reported by the Inspector General and in other
    situations where no actual intrusion occurred. If any intrusion does
    occur as a result of previously unidentified security vulnerabilities
    (e.g., in system software), situation-specific steps are taken to
    contain and then eliminate the intrusion. Its impact is then assessed
    and its effects reversed, restoring data and service as expeditiously
    as due diligence allows. The Agency also maintains backup copies of all
    data, including off-site copies, to prevent data loss for any reason.
                       omb: estimate of paperwork burden
        Question. What is the current OMB estimate of paperwork burden
    imposed by EPA reporting requirements? What steps will be taken to
    reduce the burden as required by the Paperwork Reduction Act? Will
    EPA's burden reduction strategy include efforts to reduce duplication
    between EPA programs? Will it include efforts to adjust reporting
    obligations based on a company's good compliance record?
        Answer. The OMB estimate of EPA paperwork burden hours was
    115,228,215 hours on March 31, 1998. EPA has been engaged in a
    continuing effort to reduce paperwork burden since early in 1995. The
    Paperwork Reduction Act (PRA) sets government-wide reduction targets
    beginning October 1, 1995 of 10 percent each year for two years, and
    then 5 percent each year for the following four years. To date, EPA has
    reduced burden hours from collections included in its October 1995
    baseline by 14.5 million hours. This reduction has been offset by
    burden increases of 25.6 million hours, including over 14 million hours
    of non-rule increases primarily due to adjustments and updated
    estimates of burden numbers. In addition, EPA has identified
    approximately 13 million hours of reductions and 11.4 million hours of
    increases (e.g. PCB Disposal rule: 7.0 million hours, and Lead-based
    Paint Renovations rule: 2.2 million hours) that will occur in the near
    future.
        Additionally, prior to the PRA mandate, EPA began a major burden
    reduction effort. From January 1 through October 1, 1995, the Agency
    eliminated 6.7 million hours from the collections included in its
    January 1, 1995 baseline. These reductions were also offset by
    increases to the baseline of 34.3 million hours, including 9.0 million
    hours in recalculations and 8.7 million due to third-party collections
    required because of definition changes in the PRA of 1995.
        The Agency also has underway a Reinventing Environmental
    Information (REI) Plan that will provide the public with significant
    burden reductions due to universal access to electronic reporting,
    better integration of state and EPA reporting requirements, and use of
    common data standards across EPA programs. This plan is being
    implemented over a five-year period.
        The REI Plan includes a number of steps which will promote the
    identification and elimination of duplicate reporting and record
    keeping across programs. For example, EPA is investigating options for
    the design of a central data receiving function for acceptance of
    status and compliance reports. This effort would include identifying
    and registering each data element required by a program in an
    environmental data registry. This registration process would identify
    unique data element needs, and enable duplicates to be eliminated. For
    many common descriptors regarding facilities and chemicals, EPA will be
    adopting cross-program data standards that all programs will be
    required to use. The central data receiving function would receive all
    data sets, and respond to program office requests for specific subsets
    of data. Reporters would submit each data element only once, but it
    could be retrieved multiple time by programs throughout the Agency. In
    addition, the REI plan identifies steps that EPA is taking to provide
    universal access to electronic reporting, including web-based reporting
    for small businesses. This technology provides recall of previously
    submitted data, and enables simplification and consolidation of old
    reporting formats.
        In 1996 EPA published guidance that allows water quality reporting
    to be scaled back for facilities with proven records of environmental
    performance. When fully implemented by the states, this guidance could
    reduce NPDES monitoring and reporting burden by about 4.5 million
    hours, or 25 percent. EPA has also taken additional steps towards
    rewarding good performance in the Project XL program and in development
    of the Hazardous Organic NESHAP. EPA is now beginning a comprehensive
    review of our major reporting requirements to identify additional
    opportunities for application of this approach. We expect this review
    to be completed by the end of August, 1998.
                             epa's enforcement goal
        Question. Why is enforcement a goal in and of itself? Shouldn't
    enforcement be a policy tool used to achieve environmental results,
    rather than a goal in and of itself? Why are the number of inspections
    a measure of success?
        Answer. Enforcement is not the goal. The goal is ``Credible
    Deterrent and Greater Compliance with the Law.'' The goal provides the
    Agency's law enforcement and compliance assurance organization with
    objectives for achieving deterrence and a high level of compliance.
    Achieving this goal requires not only government, but private party
    involvement.
        While the Agency recognizes there is considerable overlap between
    the objectives of this goal and those of the media goals, meeting the
    Agency's deterrence goal requires a multi-media approach that corrects
    problems in a holistic way, rather than shifting one media pollution
    problem to another. EPA has learned that the Agency needs to approach
    compliance on a cross-media, industry sector basis, using a full range
    of monitoring, enforcement and compliance assistance and compliance
    incentive tools. The Agency focuses on those civil and criminal cases
    which promote human health and the environment and a level playing
    field for the nation's industry, regardless of the media involved.
        With regard to your last question, the Agency has moved beyond
    simply tracking outputs like inspections. In January 1997, the Office
    of Enforcement and Compliance Assurance (OECA) initiated the National
    Performance Measures Strategy to develop and implement an enhanced set
    of performance measures for EPA's enforcement and compliance assurance
    program. The final report issued in January 1998 describes the enhanced
    set of performance measures and a plan to implement these measures is
    underway. OECA is collecting outcome data, such as environmental
    results from enforcement actions, and reporting this data in the annual
    Enforcement Accomplishments report. Attached is a chart from the fiscal
    year 1997 report showing pollutant reductions from EPA enforcement
    actions.
        However, output measures such as the number of inspections
    conducted, civil or criminal cases referred and penalties assessed,
    will remain important measures of program performance and
    accountability. The Agency will continue to need these kinds of
    measures because they assure the public of the government's presence,
    they provide accountability for Federal, state and local performance,
    and they give EPA important information about how our strategies are
    working.
    [GRAPHIC] [TIFF OMITTED] TVA.010

                       enforcement: environmental quality
        Question. What is EPA doing to assess to what extent specific
    enforcement actions or compliance actions improve environmental
    quality, in order to make programmatic decisions on that determination?
        Answer. The Agency is conducting a pilot project on case conclusion
    data sheets (CCDS) as a result of recommendations made by the Measures
    of Success Workgroup in March 1995. Under this project, EPA collects
    the following information for concluded administrative and judicial
    enforcement actions:
      --Expected costs of compliance (i.e. injunctive relief costs);
      --Type of actions taken to comply (e.g. industrial process change,
            emissions reduction, training);
      --Names and amounts of pollutants to be reduced, prevented or
            controlled;
      --Qualitative nature of the impact (e.g. human health or ecosystem
            protection); and,
      --Details on Supplemental Environmental Projects, including costs and
            environmental benefits such as above.
        In fiscal year 1995, EPA collected information on all concluded
    judicial orders and on compliance orders with penalties. In fiscal year
    1996, EPA expanded the collection to include all administrative and
    judicial actions regardless of accompanying penalty.
        Information from the data sheets was compiled and included with end
    of year reporting for 1995, 1996, and 1997. This information has been
    summarized and widely distributed to managers in the Agency. It has
    also been released publicly.
        Additionally, one of the tasks under the National Performance
    Measures Strategy, which grew from a series of national stakeholders
    meetings with industry, environmental, community, academic,
    governmental and media groups (announced with the end-of-year press
    release in December 1997), is to conduct an evaluation of the case
    conclusion or expected environmental benefit data and the processes for
    creating that information, and to enhance its comprehensiveness and
    accuracy. The majority of this evaluation will be concluded by the end
    of fiscal year 1998.
                            gpra: performance goals
        Question. How do the performance goals and measures in your annual
    performance plan reflect the need to ensure that we can assess EPA's
    performance on one level--that is, what improvements are directly
    attributable to EPA's actions--and, on another level, track the
    progress that the nation, as a whole, is making in protecting the
    environment?
        Answer. We believe we have struck a careful balance in articulating
    our array of annual performance goals (and corresponding performance
    measures), in relation to our more long-term strategic objectives. We
    have tried to express the latter in terms of real ``environmental
    outcomes,'' that is, tangible, measurable improvements in environmental
    quality and/or public health protection that are meaningful to American
    citizens. In casting our longer-term objectives in such measurable
    terms, however, we recognized the accompanying long-term challenges to:
    (1) achieve the ambitious targets we have set for ourselves; and (2)
    perfect the capability to accurately measure improvements in key
    parameters of environmental quality, particularly the measurement of
    the specific contributions of environmental-protection efforts to
    general trends. Consequently, shorter-term measures of annual
    performance will tend to be in output terms, more directly linked to
    the resources expended, at least for the first iterations of Annual
    Performance Plans.
        Consequently, most of the performance goals and corresponding
    performance measures for the fiscal year 1999 Plan are cast in terms of
    direct outputs associated with the expenditure of agency resources. We
    have made an effort to express some key performance goals as discrete
    incremental progress toward longer-term environmental-quality gains,
    and, as our capability to measure and achieve such tangible gains in
    other areas improves, we intend for successive Annual Plans to contain
    a higher proportion of these outcome-based performance goals. Part of
    our commitment to implement GPRA is to institute an ongoing ``multi-
    year planning'' effort in each of our 10 goals, with an explicit
    purpose being a ``roadmap'' for improving our performance goals.
                        gpra: performance goals overlap
        Question. Under specific strategic goals covered in the performance
    plan, EPA lists as performance goals various activities and actions
    that appear to be relevant to other strategic goals. For example, under
    strategic goal 7, ``Expansion of Americans Right-to-Know About Their
    Environment,'' EPA lists performance goals that clearly involve water
    program and enforcement activities covered under other parts of the
    plan. Is there an overlap that needs to be/has been recognized and if
    so, how? Please be as specific as possible in your response and also
    address the budget implications, i.e., how any overlap has been
    addressed concerning the budget amounts requested for any specific
    program activities involved and the resources being applied to achieve
    the respective goals.
        Answer. Some degree of ``cross-cutting'' categorization is
    inevitable in trying to present an annual plan that simultaneously
    addresses the entirety of the Agency's activities and highlights the
    most significant achievements in a systematic manner. You will note
    that in Chapter 5 of the Strategic Plan (pp 80-88) the Agency
    highlighted six specific themes that cannot be adequately captured by
    the presented set of strategic goals and objectives. Likewise, as you
    note, activities among the 10 goals and 45 objectives sometimes
    overlap.
        We have carefully aligned the Agency's resources in a strictly
    ``linear'' fashion according to the array of goals and objectives
    presented; we have painstakingly avoided ``double counting.'' We do not
    believe any overlap in resource allocation exists, since the sum of
    budget components allocated to the objectives cannot exceed the Agency
    total.
        Since the array of goals and objectives are cross-cutting, programs
    have to make decisions about how best to represent their activities.
    For instance, water program activities that relate to improving the
    public's understanding of local surface-water conditions or specific
    public water supply conditions are accounted for under Goal 7, even
    though the bulk of water program activities appear under Goal 2.
                           gpra: key external factors
        Question. The September 1997 strategic plan identifies ``key
    external factors'' that influence EPA's ability to achieve its goals
    and objectives and over which the agency notes it has only partial
    control or little influence. Important among these are the partnerships
    EPA says it relies heavily on with states, tribes, local governments
    and regulated parties. In many cases, it appears that the achievement
    of a program's goals would be highly dependent on such relationships.
    How does the performance plan recognize this condition in establishing
    performance goals and measures?
        Answer. Many of the Agency's core environmental protection
    activities are delegated to the states and tribes, and entail risk
    management measures performed by regulated entities. The Agency relies
    on the performance of these key parties to produce the gains in cleaner
    air, water and land that the Agency seeks for the nation. Consequently,
    among the performance goals and measures the Agency reports in its
    fiscal year 1999 Annual Plan are those activities which states and
    tribes perform and report to the Agency as part of state grant
    assistance (e.g., ``core measures'' and associated reporting
    requirements provided in the National Environmental Performance
    Partnership System).
        However, the preponderance of the goals and measures specified in
    the Plan are associated directly with Agency activities. In part, the
    selection of annual goals and measures is guided by the imperative to
    represent as closely as practicable the actual activities performed by
    EPA during the fiscal year. For practical purposes, this means the
    preponderance of reported performance targets relate to those
    activities for which the Agency is directly responsible. For example,
    the goals and performance indicators specified under Goal 9 (``Credible
    Deterrent and Greater Compliance'') exclusively represent the planned
    activities, workload and accomplishments of EPA's compliance and
    enforcement staffs, and not the totality of nationwide compliance and
    enforcement activities.
                    srf: movement of funds between the srf's
        Question. In fiscal year 1999 states can move up to one-third of
    the drinking water SRF appropriation to their clean water SRF. And this
    same dollar amount can be moved from clean water to drinking water
    SRF's. To what extent is it anticipated that states will move funds
    between SRF's?
        Answer. Three states (New York, Colorado, and New Jersey) have
    definite plans to transfer funds from the Clean Water to the Drinking
    Water State Revolving Fund in fiscal year 1999. Currently there is no
    state transferring from the DWSRF to the CWSRF. Several other states
    have indicated interest in transferring but do not have definite plans
    at this time.
                drinking water state revolving fund: set-asides
        Question. States may make expenditures only from their fiscal year
    1997 drinking water SRF grant to perform source water assessments
    required by the 1996 Amendments. How many states have taken advantage
    of this SRF set-aside? In general, would you please give an overview of
    the extent to which states are intending to use the various SRF set-
    asides?
        Answer. Although not every state has yet been awarded Drinking
    Water State Revolving Funds (DWSRF), we do have information from all of
    the states on their intent regarding the DWSRF set-aside provisions
    authorized in the 1996 Amendments to the Safe Drinking Water Act. With
    respect to the set aside for source water assessments (a subset of
    1452(k)), 42 states and Puerto Rico are taking or expect to take the
    full 10 percent allowed by law and the remaining eight states will or
    are taking between 3.6-8.0 percent of the set aside.
        The following are some general data compiled from the states; the
    number of states (plus Puerto Rico) that are expected to take the set
    asides is shown in brackets:
        The average use of set asides for all grants (awarded and
    unawarded) is expected to be 22 percent out of a maximum 31 percent
    allowed.
        The average use of the 1452(k) set aside to fund local assistance
    and other state activities (loans for source water protection measures,
    source water assessments, capacity development, wellhead protection) is
    estimated at 12 percent (maximum is 15 percent, with no one activity
    more than 10 percent). [51]
        The average use of the set aside to administer programs under
    section 1452 is expected to be 4 percent, which is the maximum allowed.
    [51]
        The average use of the set aside to provide technical assistance to
    small systems is estimated at 2 percent--the same as the maximum
    allowed in the statute. [47]
        The average use of the 1452(g)(2) set aside to conduct state
    program activities (PWSS program, capacity development, operator
    certification, source water protection) under section 1452 is expected
    to be 5 percent (maximum allowed is 10 percent). This set aside
    requires a 1:1 match by the state. [36]
        To date, 30 states have completed the application process and
    received all or a portion of their DWSRF allocation. We expect that the
    remaining 20 states and Puerto Rico will be awarded their DWSRF monies
    by September 30, 1998.
                   clean water action plan: cafo's and afo's
        Question. Earlier this year, the Vice President announced the Clean
    Water Action Plan, an interagency initiative aimed at improving water
    quality with a particular emphasis on a watershed approach and nonpoint
    sources of pollution. As part of the Clean Water Action Plan EPA plans
    to focus efforts on regulating livestock waste, so-called CAFO's. How
    much of the total budget request is to be allocated to developing and
    implementing the Animal Feeding Operations strategy, and would any of
    these funds be used to assist farmers in complying with new
    requirements?
        Answer. Of the $145.0 million requested for the Clean Water Action
    Plan (CWAP), $4.0 million is designated to assist with the
    implementation of agency activities that will result from the U.S.
    Department of Agriculture and U.S. Environmental Protection Agency
    Joint Unified National Strategy on Animal Feeding Operations (AFO's).
    These resources will be used to support EPA and the States' efforts to
    implement CAFO requirements through the NPDES program, including for
    example, improved tools and training for permitting of CAFO's. These
    funds will not be used directly to assist farmers in complying with any
    potential new requirements.
        The Clean Water Action Plan includes significant increases in the
    funding requested for EPA and USDA financial assistance programs, which
    may assist farmers in complying with any new AFO requirements. EPA
    provides grant money to the states for demonstration projects,
    education, and technical assistance through the nonpoint source grant
    program under Section 319 of the Clean Water Act. Compared with other
    nonpoint sources, agriculture related projects received the largest
    percentage of funding through Section 319 grants, about 34 percent in
    fiscal year 1995. EPA is requesting a total of $200 million for 319
    funding in fiscal year 1999. Half of the funding of USDA's
    Environmental Quality Incentives Program (EQIP) is allocated to the
    livestock sector. Currently $100.0 million is available through this
    cost-share program to help livestock producers implement management
    practices that will be encouraged in the Joint Unified National
    Strategy. Some of these same practices could eventually be required
    under the potential revision of the Combined Animal Feeding Operations
    (CAFO) regulations. Of the $194.0 million increase requested by USDA
    for the CWAP, $100.0 million is for EQIP in fiscal year 1999.
        Question. Under your proposed strategy on AFO's what type of
    regulatory requirements could small producers expect?
        Answer. The regulatory process is just beginning so we do not yet
    know in detail how the regulations will be revised, and how they will
    vary by size of facility. We do expect the regulatory requirements to
    focus on large facilities and others collectively determined to be
    contributing to water quality problems based on a watershed assessment.
                    cwap: enforcement of farming information
        Question. Concerns have been raised that EPA's enforcement office
    is aggressively attempting to get ``farmer information'' or lists from
    NRCS in different regions of the country for the intent of pursuing
    enforcement cases against farmers. If true, this would have a chilling
    effect on farmers who are voluntarily seeking assistance from USDA
    cost-share programs to improve environmental quality. Could you comment
    on that or look into that and see to it that records are not obtained
    by EPA for that purpose?
        Answer. The Environmental Protection Agency (EPA) understands the
    concerns that have been expressed, and is currently working with the
    United States Department of Agriculture (USDA) to address this issue.
    The USDA and EPA have not come to closure on this matter yet, but EPA
    does not intend to aggressively obtain NRCS data regarding specific
    farms to pursue enforcement cases against farmers. EPA's position is
    further explained in the attached letter signed by Steven A. Herman,
    EPA's Assistant Administrator for the Office of Enforcement and
    Compliance Assurance on May 29, 1998, to the National Association of
    Conservation Districts. This issue is also addressed by USDA/EPA's
    Unified National Strategy for Animal Feeding Operations Reported
    released September 17, 1998. USDA and EPA are continuing to work on
    this important issue.
                 clean water action plan: agroforestry systems
        Question. EPA will be spending $2 million on a project I included
    in last year's funding bill to demonstrate the multiple benefits of
    agroforestry systems in the flood plains. These benefits include
    nonpoint pollution mitigation but it also has benefits of flood
    control, wildlife habitat and an additional income source for farmers.
    Do you envision this type of win-win management practice as a good use
    of nonpoint resources?
        Answer. EPA agrees that these types of systems can have economic
    and environmental benefits. The project to which you refer should yield
    positive results relating to nonpoint source pollution, as well as
    economic benefit to the agroforestry producer. It appears that the
    project has the potential to positively blend commodity production with
    agricultural chemical/sediment runoff reduction, resulting in cleaner
    water.
        Agroforestry practices include streamside buffer strips, streambank
    bioengineering, alley cropping, windbreaks, tree/pasture systems, tree/
    specialty crop systems, living snowfences, forest farming, waste
    disposal systems, and wildlife habitat plantings. These practices
    improve water quality and protect soil, water, wildlife, roads,
    buildings, and recreational areas. For example, streamside buffers
    filter pollution from adjacent land, reduce bank erosion, protect
    aquatic environments, enhance wildlife, and increase biodiversity. Many
    of the practices are fully adaptable for use in cities and rural
    communities.
        Agroforestry holds great promise to enhance the vitality of farm
    enterprises and rural communities, while addressing societal concerns
    such as soil erosion, water quality, and biodiversity. It is important
    to bear in mind, however, that agroforestry despite its benefits is not
    always the appropriate land use strategy. States, Tribes, and local
    governments, working with all their stakeholders, should carefully
    assess the characteristics and needs of their watersheds before funding
    or otherwise promoting a particular practice, including agroforestry.
    In the context of water quality and biodiversity, the potential
    benefits of agroforestry should be analyzed relative to current or
    projected alternative land uses. While agroforestry will generally
    provide higher water quality and biodiversity benefits than row crop
    agriculture or more intensive development, it will almost always yield
    lower water quality and biodiversity benefits than native forests,
    grasslands, or wetlands.
                               cwap: afo research
        Question. In the Conference Report to accompany H.R. 2158 for
    fiscal year 1999, the EPA was directed to coordinate its research
    activities on air quality impacts resulting from swine confinement
    operations with those currently underway at the Agricultural Research
    Service and other public and private research efforts. How much does
    EPA currently spend on research that relates to animal feeding
    operations and what research is currently being emphasized?
        Answer. The State of North Carolina is in the process of providing
    the Environmental Protection Agency's Office of Research and
    Development (EPA/ORD) with resources of $92,500 for conducting air
    emission measurements from swine farms and preparing a report that
    compares alternative measurement approaches and results. In addition,
    EPA/ORD has expended approximately $50,000 in the development of an
    improved method being used for conducting the measurements.
        Question. Is there adequate coordination with the ARS?
        Answer. EPA/ORD is conducting measurements of ammonia, methane, and
    other pollutants being emitted from swine farms at the request of the
    State of North Carolina's Department of the Environment and Natural
    Resources (NCDENR). The U.S. EPA's Office of Air Quality and Planning
    (OAQPS) is also working with the NCDENR. All of this work has been
    coordinated with the U.S. Department of Agriculture (U.S.D.A.).
    Industry is cooperating with the program. There are periodic meetings
    with all participants, and EPA/ORD has representatives at each meeting.
    The U.S.D.A. has coordinated all interactions with the farmers.
    Periodic progress reports are prepared, and these are made available to
    each participant. The results from EPA/ORD's test program will be
    documented and the report will be peer reviewed and will undergo EPA/
    ORD's administrative review prior to release. This document is expected
    to be completed by the winter of 1998-99.
        There has been frequent communication between EPA/ORD and U.S.D.A.
    while these measurements have occurred. The EPA/ORD has always been
    careful to coordinate its efforts through the State of North Carolina
    and U.S.D.A. and will continue to do so. The EPA/ORD appreciates the
    opportunity to work with the U.S.D.A. There have been meetings of a
    U.S.D.A. Air Quality Task Force in Amarillo, Texas, and representatives
    from the State of North Carolina were requested to attend but to our
    knowledge EPA was not.
      clean water action plan: animal feeding operations (afo's) strategy
        Question. Please explain in detail how EPA will use the funds
    requested for the Animal Feeding Operations Strategy.
        Answer. EPA will use the $4.0 million in the funding request to
    implement the USDA/EPA Joint Unified National Strategy on Animal
    Feeding Operations (AFO's). The Strategy will be targeted at both point
    and nonpoint source contributions. EPA and USDA expect to publish the
    strategy for public review and comment in July 1998 and to finalize it
    in November 1998. Implementation activities may include: a review of
    state animal feeding operation programs; an economic analysis of
    different aspects of the livestock industry; and collection and
    analysis of data on animal feeding operations. These monies will also
    help support development of revised regulations (NPDES permitting
    regulations and the effluent guideline) and efforts to improve
    permitting of CAFO's.
                            pm: decrease in research
        Question. EPA is requesting about $485 million for the Office of
    Research and Development, a decrease of almost $50 million below fiscal
    year 1998. While there are increases proposed in some areas--such as
    the right-to-know initiative referred to as EMPACT--there are a number
    of decreases, the largest being research on fine particles.
        According to EPA's Science Advisory Board, EPA is requesting less
    than it needs to get the job done. The ORD budget request, adjusted for
    inflation, would represent the low point for ORD's budget in the
    1990's. If EPA is truly committed to making science-based regulatory
    decisions, and in view of the increasing complexity of environmental
    issues, why is research and development not a higher priority within
    EPA's budget, particularly in view of the fact that so many regulatory
    and programmatic activities are slated for increases?
        Answer. As always, EPA is committed to having a regulatory program
    based on sound science and thus continues to support a strong research
    program. This includes a strong particulate matter (PM) program with a
    fiscal year 1999 President's Budget request of $28.7 million. The
    decrease to the Office of Research and Development's (ORD) Science and
    Technology budget in fiscal year 1999 comes as a result of not carrying
    forward fiscal year 1998 Congressional add-ons. The Agency has a policy
    not to request continuation of Congressional add-ons. The
    discontinuation of these add-ons results in an initial decrease to
    ORD's budget of over $70.0 million. The largest of these earmarks is
    the Comprehensive PM Research add-on at $23.0 million.
        Despite the discontinuation of the Comprehensive PM Research add-
    on, EPA's President's Budget request exceeds the NRC's recommendation
    for combined PM research funding for fiscal years 1998 and 1999. To
    summarize, the NRC recommends $39.6 million in fiscal year 1998 and
    $45.7 million in fiscal year 1999 be spent on PM research to address
    their highest priority research areas for a total of $85.3 million. EPA
    has in its fiscal year 1998 Enacted Budget $50.2 million for PM
    research (plus an additional $5.2 million in certain Congressional
    ``add-ons''). For fiscal year 1999, the President's Budget Request
    includes $28.7 million for PM research within EPA's Office of Research
    and Development and $15 million for monitoring ``super sites'' within
    EPA's Office of Air and Radiation; a total of $43.7 million related to
    PM research needs in fiscal year 1999. EPA's combined PM research-
    related budget for these two years is $93.9 million (plus an additional
    $5.2 million in certain Congressional ``add-ons'' for 1998 enacted).
        In addition to a strong PM program, EPA has continued to invest in
    sound science through increases to other high priority research
    programs. These include: Global Climate Change, the Science to Achieve
    Results (STAR) Program, the Advanced Monitoring Initiative (AMI),
    Environmental Monitoring for Public Access and Community Tracking
    (EMPACT), and the Agency's Post-Doctoral initiative. These and other
    investments in the S&T account continue to ensure science-based
    regulatory decisions.
                                 pm: nas report
        Question. There has been some confusion surrounding what the March
    31st National Academy of Sciences report said about EPA's plan for the
    monitoring network. NAS staff have indicated to my staff that current
    plans for the monitoring network could be improved to provide
    information for research. NAS indicated you should bring in some
    outside advisors to evaluate the plan. Do you agree?
        The report raises the question of whether you intend to get
    scientific input as to how well the network will actually measure
    particulate matter for compliance. It also raises the question as to
    whether we are putting in place a system that will actually measure
    what it is about particulate matter that causes these health effects.
    As planned, the system will measure the concentration of particles
    which are 2.5 microns or less. If we find that it is some chemical on
    some portion of these particles that is the culprit, will most of the
    planned system let us measure for compliance if you modify the standard
    to target the culprit (e.g., something other than PM-2.5)? I understand
    that there will be some monitoring stations that can be used to learn
    about the chemical composition (``speciation''), but there is concern
    as to how well we can extrapolate from these fewer stations. Will you
    bring in some outside expertise to see if our current plan for a
    network to monitor compliance is adequate and flexible enough?
        Please explain the rationale for requesting more for monitoring
    than for research in fiscal year 1999.
        Answer. At the outset it is important to note that the NAS
    committee made it clear that ``substantial resources must be applied to
    ambient monitoring to ascertain attainment of the standards in various
    geographic areas.'' The only way to do this is to procure, put into
    place, and operate a national network of sufficient size and quality to
    cover areas with substantial populations or source regions that may
    contribute to areas that may violate the new PM-2.5 standards. As you
    note, the NAS committee is concerned about the balance of overall
    resources allocated to the PM-2.5 monitoring activity as compared to
    work that will address the priority health related research areas
    listed by the panel. In this regard, EPA welcomes the panel's comments
    and recommendations on ways to optimize the balance of regulatory
    monitoring activities so as to provide maximum benefit to the research
    program. These recommendations are consistent with EPA's approach to
    supplement the baseline PM-2.5 network with monitors that provide
    continuous readings, chemical and physical composition of PM, and
    measures of materials not adequately addressed by the PM-2.5 method. We
    will continue to work with the committee and others in the scientific
    community to ensure the best use of these monitoring resources. More
    specific responses to each of the issues raised in your question are
    provided below.
    Review of the Networks
        We agree with the NAS that the external scientific community should
    provide advice to the regulatory community on PM-2.5 monitoring
    efforts, both to ensure that quality information is gathered and that
    opportunities for addressing priority research needs are not missed.
    Each aspect of the monitoring program (including ``supersites'',
    routine chemical speciation, and attainment demonstration network) has
    already or will soon receive input from the outside scientific
    community as follows:
        1. Attainment network.--The Federal Reference Method (FRM) monitor
    design and the blueprint for the monitoring network for determining
    attainment with the standard were peer reviewed by the technical
    monitoring subcommittee of the Clean Air Scientific Advisory Committee
    (CASAC), the external scientific panel that advises EPA on air quality
    standards.
        2. Routine chemical speciation.--The EPA has established an expert
    panel of scientists to review plans for the ``routine'' chemical
    speciation network, and already has convened a meeting in Seattle,
    Washington to obtain outside advice on this part of the monitoring
    program.
        3. Supersites.--EPA is working with the North American Research
    Strategy for Tropospheric Ozone (NARSTO) organization (a public/private
    partnership) to sponsor a July 1998 workshop of scientific experts to
    advise EPA on the supersites program. This program will establish
    monitoring platforms in selected cities to collect detailed air quality
    data to support health effects research and development of State
    Implementation Plans (SIP's). Through the workshop, the scientific
    community will advise EPA on the timing, location, and types of
    measurements to be performed.
        4. The EPA will meet with the NAS on June 22-23, and at this
    meeting the plans for the various aspects of the monitoring program
    will be presented and discussed. Three key representatives of State and
    local agency organizations will attend the meeting and will be
    available to discuss the State role in the PM-2.5 monitoring program.
    In addition, at EPA's request, CASAC has agreed to reformulate the fine
    particle monitoring technical subcommittee to review those components
    of the network not previously reviewed.
        All of these reviews provide opportunity for information exchange
    among EPA, State and local agencies, and the research community.
    Adequacy of the Network for Specific Substances
        As is well known, the new PM-2.5 standards were developed under an
    intensive process with substantial scientific review. The 1996 CASAC
    review, as have all previous reviews over the past 20 years, concluded
    that a standard for a mixture of particles, e.g. PM-10 or PM-2.5, was
    more appropriate than standards for any specific toxic particle
    component. The NAS panel states explicitly that it is not questioning
    this conclusion. The method for measuring PM-2.5 is based on the
    methods used in past health effects studies. The strengths and
    limitations of the method with respect to identifying and collecting
    specific components were well recognized by EPA and external scientists
    involved in the standards review. As noted above, the Federal Reference
    Method (FRM) monitor design and the blueprint for the monitoring
    network were peer reviewed by a monitoring subcommittee of the CASAC,
    the external scientific panel that advises EPA on air quality
    standards.
        The NAS panel clearly recognizes the need to establish a network to
    measure PM-2.5 for attainment decisions, but wants to ensure enough
    measurements are made of specific components of PM-2.5, as well as
    materials that are not fully captured by the method. They also
    recommend use of continuous monitors to provide insights into exposure
    patterns. EPA agrees. It is important to note that EPA's monitoring
    plans already include substantial resources to make just such
    measurements. While initial EPA monitoring efforts have focused on the
    attainment related mass measurements that were reviewed by CASAC, the
    Agency has already begun enlisting the support of the scientific
    community with respect to the optimal use of the remaining resources.
    We will continue to work with the NAS panel and other scientists in
    developing this program in order to optimize the results for priority
    research areas identified by the NAS panel.
    Resources allocated to Monitoring and Research
        Regarding the question as to the balance of resources for
    monitoring and research, it is important to recognize that
    environmental characterization, including monitoring of constituents of
    PM and copollutants, is essential to many research activities including
    source-receptor modeling, epidemiological and toxicological studies of
    the toxic effects of exposure to PM, and assessment of actual human
    exposures and exposure relationships. Per the recommendations of the
    NAS, the EPA is developing a portfolio of research activities which is
    coordinated with and builds on the monitoring efforts. Substantial
    research-related resources are being allocated to address priority PM
    research needs (totaling over $90 million combined for fiscal year 1998
    and fiscal year 1999). This level of resources is consistent with the
    recommendations of the NAS and will enable substantial new information
    to be developed to support evaluation of the National Ambient Air
    Quality Standards and standards implementation. The Agency is
    coordinating the monitoring and research activities to ensure that
    optimal use is made of both the monitoring and research resources.
                               fqpa public notice
        Question. Food processors, agricultural interests and others have
    been very concerned with EPA's implementation of the Food Quality
    Protection Act. Has EPA used formal public notice and comment
    procedures to ensure adequate public input and to assure that new FQPA
    policies are transparent and consistent with good science?
        Answer. EPA is committed to effective public participation in the
    implementation of the Food Quality Protection Act (FQPA) and is
    reviewing its regulatory process to ensure there are adequate
    opportunities for public input. The Agency has utilized notice and
    comment where appropriate, such as for general data requirements, the
    establishment of tolerances, or to accept input on the content of the
    consumer brochure required by FQPA. At this time, however, EPA does not
    intend to use formal rulemaking or issue formal regulations on specific
    data requirements or exposure or risk assessment policies. The Agency
    feels it is important to continue implementation activities both for
    the establishment of new tolerances and the reassessment of existing
    tolerances without the delays resulting from this type of rulemaking.
    It is also important in order for EPA to maintain flexibility as our
    understanding of these issues evolves. We do not believe rulemaking is
    necessary to ensure public participation. Registrants will be alerted
    to any changes and allowed a reasonable time to incorporate them. The
    Agency has also presented all proposed changes in data requirements or
    risk assessments to the Federal Insecticide, Fungicide, and Rodenticide
    Act Scientific Advisory Panel for discussion. This issue is among the
    many that we expect to address in the new EPA/USDA Tolerance
    Reassessment Advisory Committee. As Vice President Gore stated in his
    recent memorandum, the Administration is committed to receiving public
    input where appropriate and will continue to evaluate our use of formal
    notice and comment and will expand it if necessary.
        Question. Wouldn't public notice and comment provide affected
    stakeholders with no voice in Washington an opportunity to give input
    on what decision criteria should be used?
        Answer. EPA values regular and appropriate input from the regulated
    and scientific communities in developing pesticide risk assessments and
    risk management strategies. Industry regularly contributes scientific
    data and comments on regulatory strategies. EPA has also provided
    significant opportunity for industry, growers, and other stakeholders
    to weigh in during our implementation of FQPA. We established a Food
    Safety Advisory Committee (FSAC) immediately after the law was passed
    to provide guidance on implementation, and we have continued to work
    extensively with the Pesticide Program Dialogue Committee (PPDC). A
    variety of stakeholders were represented on the FSAC and are currently
    represented on the PPDC: large companies such as Monsanto and DuPont,
    small companies such as Gowan Chemical, growers, public health
    representatives, environmental and public interest groups.
        We have presented our approaches to FQPA's science issues to the
    Federal Insecticide, Fungicide, and Rodenticide Act Scientific Advisory
    Panel as they are developed. These presentations include an opportunity
    for industry and other stakeholders to appear and have input. EPA has
    also conducted workshops for minor users and antimicrobial registrants.
        The Agency has published notices on our interim approach to risk
    assessment, our priority systems for minor use and reduced risk
    pesticides, our draft consumer brochure, and our schedule for tolerance
    reassessment. Many of these published notices called for public comment
    and those comments were considered in further refining our policies. As
    always, EPA's decisions are subject to existing legislative
    requirements which insure registrants and others have the opportunity
    to challenge tolerance actions, new active ingredient decisions, and
    any action which effects a pesticide registration; including public
    comment and hearing rights for registrants. In addition, EPA uses its
    Web site as an important tool to further distribution of material
    related to the FQPA.
        Question. Based on the Vice President's memo of April 8th, will you
    begin using notice and comment procedures?
        Answer. The Vice President outlined the principles that are
    essential to proper implementation of FQPA: use of sound science in all
    decisions; ensuring that the regulatory process is transparent;
    providing appropriate, reasonable transition mechanisms which reduce
    the risk associated with pesticide use without jeopardizing U.S.
    agriculture; and, consultation with interested constituencies. To
    ensure that these goals are realized, the Tolerance Reassessment
    Advisory Committee, co-chaired by EPA Deputy Administrator Fred Hansen
    and USDA Deputy Secretary Richard Rominger, is being established to
    seek advice and consultation from affected user, producer, consumer,
    public health, environmental, and other interested groups. The Agency
    itself is reviewing its regulatory processes to ensure that there are
    adequate opportunities for public input. As part of that review, EPA
    will discuss with the Tolerance Reassessment Advisory Committee ways to
    improve transparency and to ensure adequate public participation. In
    the interim, the Agency will continue to use it where appropriate.
                              fqpa: reliable data
        Question. FQPA was supported by many in groups, in part due to an
    expectation that EPA decision-making would rely on ``real world'' data
    instead of exaggerated exposure assumptions. What actions have been
    taken to ensure that reliable data are obtained on pesticide risk
    before making decisions on tolerance reassessments and reregistrations?
        Answer. Within six months of the Food Quality Protection Act (FQPA)
    going into effect, EPA issued Pesticide Regulatory Notice 97-1, in
    which the Agency discussed the types of data that are useful in making
    regulatory decisions. The registrant is always free to submit
    additional data in support of their application, and they are in the
    best position to know if supplemental data is needed.
        Pesticides are the most thoroughly studied substances regulated by
    EPA. In addition to the wide range of studies required from pesticide
    registrants, EPA has access to very comprehensive data on food
    consumption and on measured pesticide residues from USDA. There is also
    a growing body of data on pesticides in water compiled by the U.S.
    Geological Survey and others.
        As a result, EPA already has considerable data to draw upon in the
    review of tolerances. The Agency uses a tiered approach to data
    requirements. If the first tier of data indicate risks of concern, EPA
    requires additional data to refine its analysis. This enables the
    Agency and industry to use resources efficiently, without wasting time
    and money on unneeded studies. Where additional data is critical to
    making a sound decision, EPA will require that data. However, the
    Agency believes it would not be responsible to wait for additional data
    if available information is sufficient to make a decision.
        Question. How high a priority is this to EPA?
        Answer. Making regulatory decisions using sound science and the
    best available data is a high priority for EPA. The Agency recognizes
    that how we implement FQPA will have important and far reaching
    consequences. The Agency is asking its new advisory committee, the
    Tolerance Reassessment Advisory Committee, to assist in establishing
    the framework for EPA's decisions on organophosphates, including
    discussion of how to properly document and communicate decisions, ways
    to improve the pace of registering newer and safer pesticides and new
    uses of existing pesticides that meet the FQPA standard, and methods to
    foster public input during the decision process. We expect that
    approaches pioneered by focusing on the organophosphates can be applied
    broadly to all of our work in implementing FQPA.
        Question. Do you have all the data you need to make decisions that
    reflect actual use and actual exposure?
        Answer. EPA uses only sound, peer reviewed science in regulatory
    decisions. Our first priority is to obtain the best scientific data
    available. Pesticides are the most thoroughly studied substances
    regulated by EPA. We have a wide range of laboratory and field data
    submitted by registrants and access to comprehensive data on food
    consumption and measured pesticide residues from USDA and the U.S.
    Geological Survey. Finally, we have been encouraging registrants and
    users to provide any additional information they may have to ensure the
    best decision making possible.
        In any particular case, when EPA evaluates a pesticide, final
    decisions on whether to establish, maintain, revise, or revoke a
    tolerance will be based on the best data set available. Where data are
    incomplete, we make a judgement of how important the missing data is to
    making a regulatory decision. We may use additional uncertainty factors
    or make professional judgments and reasonable, health-based
    assumptions. This is a long standing scientific practice, which
    addresses the need for timeliness both in making decisions to permit
    market entry of new products and to maintain or modify the registration
    status of old products.
        Question. To what extent do you rely on hypothetical risk estimates
    in making tolerance decisions?
        Answer. EPA uses the best data available. Where data are
    incomplete, EPA may compensate by using an additional uncertainty
    factor or making a reasonable health-protective assumption. This has
    long been EPA practice and FQPA emphasizes the importance of
    uncertainty factors where data are incomplete. Where risk estimates are
    used, for instance in drinking water exposure, EPA relies on actual
    data supplemented with scientifically reviewed models and not on worst-
    case assumptions. Where detailed data, such as monitoring data, are not
    available, EPA uses screening procedures to identify pesticides that
    are unlikely to get into drinking water. This screening process allows
    the Agency to make timely decisions without requiring additional data
    from registrants that are not necessary to make a decision. If a
    pesticide does not pass this screen, EPA considers factors such as the
    nature of the health concern, overall risk, and the potential magnitude
    of drinking water contamination. The Scientific Advisory Panel and the
    International Life Sciences Institute is providing expert advice and
    review of our methods.
        Question. Have registrants and users been told what new data they
    need to generate to determine if products comply with the new
    standards?
        Answer. EPA did issue PR Notice 97-1 discussing what information
    would assist in reviewing pesticide applications. The Agency also
    issued guidelines on conducting reproductive toxicity tests, which will
    address concerns about potential impacts on the developing fetus and
    young animals. As we further develop and refine our approach to risk
    assessment under FQPA, we will adjust guidelines as needed. We have
    been encouraging registrants and the user community to provide us any
    additional information they may have to ensure the best decision making
    possible and companies have had more than a year to provide any
    additional data they believe may help support their registered uses.
        Question. By when and in what manner will you inform registrants
    and users?
        Answer. EPA is strongly committed to an open process of airing new
    data requirements. All proposed new studies are presented at least
    once, and generally several times, to the Scientific Advisory Panel
    (SAP) for their review and comment before they are formally adopted. As
    you may know, SAP meetings are public and documents are available two
    or more weeks before the meeting. Oral and written comments are
    welcome. As an example, the possible approach to screening chemicals
    for endocrine disruption was recently presented to the SAP and the
    Administrator's Science Advisory Board. In December, the Agency is
    expected to present the details of the screening process to the SAP.
    EPA will consider use of formal rulemaking where appropriate,
    particularly if we amend the general data requirements for pesticide
    registration.
                      fqpa: reregistration vs registration
        Question. How much does EPA's budget contain for reregistration
    efforts compared to new registrations?
        Answer. In the 1999 President's budget, $47.2 million and 496.7
    FTE's (or full time equivalents) were budgeted for reregistration and
    $30.8 million and 263.1 FTE's were budgeted for registration.
        Question. How much does the agency need to allow for more expedited
    registration of new products to replace those which may not meet the
    FQPA standard?
        Answer. The Agency estimates that roughly doubling the resources
    used for registration would allow the pesticide program to move away
    from a priority system to a review of all applications and reduce the
    amount of time required for that review.
        Question. Does EPA have adequate staff to review in a timely
    fashion new active ingredients?
        Answer. EPA currently has adequate staff to register approximately
    25-30 new active ingredients per year and approximately 100 new uses.
    The Agency has tried to reduce review times by creating new divisions
    to review antimicrobial and biological registration applications, and
    working with registrants to reduce the number of rejected studies. EPA
    continues to search for ways to efficiently review applications given
    available resources and requirements.
        Question. How long does it take for EPA to make a decision on a new
    product petition after it is received?
        Answer. The average review time for a conventional new active
    ingredient is 3-3.5 years. Average review time for a new reduced risk
    pesticide active ingredient is 16-18 months.
        Question. Can this review and processing time be reduced?
        Answer. As noted above, more resources would allow for reduced
    review and processing time for new applications. The Agency is also
    looking at other ways to streamline the registration process and will
    be discussing this issue with its new advisory committee, the Tolerance
    Reassessment Advisory Committee.
                            fqpa: new advisory group
        Question. The Vice President's April 8, 1998 memo directs EPA to
    work more closely with the U.S. Department of Agriculture and with
    stakeholders in implementing the FQPA. In response, EPA established a
    new advisory group and committed itself to apply sound science, to
    employ an open process of decision making, and to ease any necessary
    transition to new rules so as not to jeopardize agriculture and farm
    communities. Has the new advisory group been formed?
        Answer. Yes. The group was announced on April 30, 1998. A list of
    members is attached.
        Question. Has it met?
        Answer. The first meeting of the Advisory Group took place on May
    28 and 29, 1998. There will be three additional meetings of the
    Advisory Group, one in June and two in July 1998.
        United States Environmental Protection Agency (17O3),
    Communications, Education and Public Affairs
        EPA Note to Correspondents
                     for release: thursday, april 30, 1998
      epa broadens public involvement in implementation of food, quality
                                 protection act
        The U.S. Environmental Protection Agency in conjunction with the
    U.S. Department of Agriculture is establishing a new advisory group to
    ensure the broadest possible public involvement as it moves forward to
    implement the Food Quality Protection Act. This new committee responds
    to Vice President Gore's request that implementation of the new law is
    informed by appropriate input from affected members of the public.
        EPA Administrator Carol M. Browner said, ``The new committee to
    advise EPA on pesticide-safety issues is part of the Clinton
    Administration's common-sense approach to protect public health while
    ensuring the abundance of America's food supply. One of the most
    important parts of that approach is consulting openly and often with a
    broad variety of groups representing the views of the American public.
    We look forward to hearing from this committee on issues ranging from
    protecting children's health to using the best scientific data in our
    decision making.''
        USDA Deputy Secretary Richard Rominger said, ``USDA looks forward
    to working closely with EPA and this advisory group to develop a
    scientifically sound and balanced implementation strategy for FQPA.
    Using this process to craft an effective transition strategy for at-
    risk commodities is critically important to USDA and American
    Agriculture.''
        The new committee will be co-chaired by EPA Deputy Administrator
    Fred Hansen and USDA's Richard Rominger. Its members will be made up of
    experts that include farmers, environmentalists, public health
    officials, pediatric experts, pesticide companies, food processors and
    distributors, public interest groups, academicians, and state, local
    and tribal governments.
        The new committee will advise EPA and USDA on a host of issues
    pertaining to the implementation of the Food Quality Protection Act.
    Examples of those issues include helping EPA use the best science in
    making decisions about pesticide safety; helping EPA set priorities in
    considering broad categories of pesticides, such as organophosphates;
    helping EPA speed the pace of decisions on pesticide safety to make
    sure that farmers can have products they need in a timely way, advising
    USDA on prioritizing research programs to address FQPA-driven needs,
    and making sure pesticide safety rule are protective of children.
        A list of nominees is attached.
                                                   John Kasper,
                               Director, R-51, Press Services Division.
    may 13, 1998--epa-usda tolerance reassessment advisory committee (trac)
     subcommittee to national advisory council for environmental policy &,
                                   technology
        Fred Hansen, Deputy Administrator, EPA, Co-Chair
        Richard Rominger, Deputy Secretary, USDA, Co-Chair
    Designated Federal Officer
        Margie Fehrenbach, Office of Pesticide Programs, EPA.
    Environmental/consumer Organizations/Farmworker Representatives
        Carolyn Brickey, National Campaign for Pesticide Policy Reform.
        Nelson Carrasquillo, Executive Director, C.A.T.A. (Farmworker
    Support Committee).
        Ken Cook, Environmental Working Group.
        Shelley Davis, Farmworker Justice Fund.
        Jeannine Kenney, Consumers Union.
        Sarah Lynch, World Wildlife Fund.
        Maion Moses, Pesticide Education Center.
        Erik Olson/David Wallinga, Natural Resources Defense Council.
    Agriculture/Farmer Representatives
        Dan Botts, Florida Fruit and Vegetable Association.
        Jim Czub, National Corn Growers Association.
        Larry Elworth, Program for Strategic Pest Management.
        Hugh Ewart, Northwest Horticultural Council.
        William T. Lovetady, Chairman, National Cotton Council.
        Brad Luckey, Luckey Farms, Imperial County, California.
        Charles Mellinger, National Association of Independent Crop
    Consultants.
        Steven Pavich, Organic Grape Producer, Terra Bella, CA.
        Bill Spencer, Farmer, American Farm Bureau Federation.
        Robin Spitko, Plant Pathologist, Massachusetts.
    Pesticide Companies
        Emilio Bontempo, Novartis.
        Linda Fisher, Monsanto.
        Jon Jessen, Gowan.
        Elin Miller, DowElanco.
        Nancy Rachman, American Cyanamid.
        Jay Vroom, American Crop Protection Association.
    Other Federal Agencies
        Dick Jackson, Centers for Disease Control and Prevention.
        Robert Lake, Food and Drug Administration.
    NACEPT/SAP Representatives
        Mark Greenwood, Ropes & Gray.
        Ernest McConnell, Chair, FIFRA Scientific Advisory Panel (SAP).
    Academia
        Dr. Jose Arnador, Director, Agriculture Research & Extension
    Center, Texas A&M.
        Dr. Mike Linker, North Carolina State University (State Extension
    Service).
        Dr. J. Routt Reigart, Pediatrician, Medical University of South
    Carolina.
        Dr. Michael Shannon, Pediatrician, Children's Hospital/Harvard
    Medical School.
        Michael Taylor, Visiting Scholar, Resources for the Future.
        Dr. John Wargo, Yale University.
        Mark Whalon, Michigan State University.
    Tribal, State, & Local Representatives
        Henry (Andy) Anderson, Association of State & Territorial Health
    Officials, Wisconsin.
        Bill Cottkamp, Supervisor of Vector Control, St. Louis County Dept.
    of Health, MO.
        Alice Devine, Commissioner, Kansas Department of Agriculture.
        Jean-Mari Peltier, California Department of Pesticide Regulation.
        Greg Phillips, Omaha Tribal Council.
        Lora Lee Schroeder, Chair, AAPCO FQPA Minor Use Committee, GA Dept.
    of Agriculture.
    Food Processors/Distributors
        John Cady, National Food Processors Association.
        Kay Holcombe, Policy Directions, Inc.
        Alfred Pieroallini, Gerber Products Company.
        William Spain, Del Monte Foods.
        Margaret Wittenberg, Whole Foods Market, Inc.
    Structural Pest Control User
        Robert Rosenberg, National Pest Control Association.
    Observers
    EPA Regional Office
    EPA Office of Children's Health Protection
        Ramona Trovato.
    USDA
        Allen Jennings, Office of Pest Management.
    Congressional Participants
        Howard Cohen, House Commerce Committee.
        John Ford, House Commerce Committee.
        Eric Burger, House Commerce Committee.
        Greg Dotson, Congressman Waxman's Office.
        Bill O'Connor, House Agriculture Committee.
        Dannell Farmer, House Agriculture Committee.
        Terri Nintemann, Senate Agriculture Committee.
        Phil Schwab, Senate Agriculture Committee.
        Jean Fruci, House Committee on Science.
        Paul Charton, Office of Congressman Berry Jay Hawkins, Senate
    Committee on Labor and Human Resources.
                         fqpa: cumulative risk guidance
        Question. A new report from the International Life Sciences
    Institute is expected to provide guidance on how to calculate
    cumulative risk. Does EPA expect to use that report in developing its
    implementation approach?
        Answer. EPA certainly will be factoring the International Life
    Sciences Institute's (ILSI) report into the process for decision making
    on cumulative risk assessment. In addition, we will be obtaining input
    on this issue from the new advisory committee, from a policy viewpoint.
    As with all of our science policies, as our approach is developed we
    will receive expert review and comment from the FIFRA Scientific
    Advisory Panel and the Administrator's Science Advisory Board.
                        fqpa: insecticide cancellations
        Question. How might EPA ease the transition if one or more popular
    insecticide uses are canceled?
        Answer. EPA is committed to making every effort to ensure that
    farmers have the critical tools they need to grow our food. EPA wants
    all affected growers to be able to anticipate and plan for our actions.
    We are balancing tolerance reassessment with the introduction of new
    products and pest control methods to help ensure that both chemical and
    non-chemical alternatives are available.
        EPA has stepped up its efforts to provide better, safer choices for
    pesticides for farmers. In the past few years, EPA has created two new
    programs aimed at expediting reviews and ultimately market entry of
    lower risk products and safer substitutes. The Agency created the
    Biopesticides and Pollution Prevention Division. The types of products
    registered in this Division generally have a non-toxic mode of action.
    By combining the risk managers with the review scientists in one
    division, we have been able to streamline the entire review process.
    About half of post--Food Quality Protection Act (FQPA) new active
    ingredients have been for biopesticides.
        The second program, known as the Reduced-Risk Pesticide Program,
    has been in place since 1994. Applications that come in under the
    Reduced-Risk Program are placed at the head of the review queue. To
    date, 17 new chemicals have been approved as reduced risk alternatives.
    This program clearly provides an incentive for companies to develop
    lower-risk products and safer substitute products. Among the 13
    chemicals currently under review as part of this program, 5 new active
    ingredients are potentially significant substitutes for some
    organophosphate registered uses for which reviews should be completed
    before tolerance reassessment on organophosphate pesticides is
    completed. EPA has also proposed a draft policy to give expedited
    consideration to applications for reduced risk pesticides that may be
    alternatives to the organophosphates. As stated in the Vice President's
    April 8 memorandum on food safety, EPA is establishing an advisory
    process to ensure broad stakeholder involvement in the development and
    implementation of an approach to tolerance reassessment for
    organophosphate pesticides.
        In addition, EPA works with the U.S. Department of Agriculture
    (USDA) on a regular basis to ensure that the impact of its regulations
    and decisions on farmers is considered. USDA has committed to enhance
    research and development of alternative pest control methods and EPA
    has committed to expediting review of any products that result from
    this research and development. EPA and USDA also have a Memorandum of
    Understanding to foster cooperative efforts to provide replacements for
    pesticides that are likely to be subject to cancellation or suspension
    by EPA, or are subject to voluntary cancellation based on risk or
    economic concerns. This program is particularly important for minor use
    crops, such as fruits and vegetables, which may face a lack of safe and
    effective pest management alternatives.
                    antimicrobials pesticides: label claims
        Question. Does EPA have any evidence that particular label claims
    and/or advertising of the antimicrobial pesticide properties in
    particular consumer products such as toys, cutting boards or
    toothbrushes are misleading or confusing to consumers? If so, please
    provide it to this Committee.
        Answer. The Agency has received numerous questions and complaints
    from citizens, reporters, and competitors about label claims and/or
    advertising of the antimicrobial pesticide properties in consumer
    products. A significant proportion of these contacts have indicated
    that the claims being made by some companies are, at best, confusing
    and often appear intentionally misleading. While public concerns have
    focused on the truthfulness of the claims, EPA has not contended in its
    enforcement actions that these statements are false or misleading.
    Rather, the Agency has taken enforcement actions against consumer
    products, such as sponges and cutting boards, because the products have
    made claims to control disease-causing germs, such as E. Coli, staph,
    and strep, without having first been registered as pesticides. In its
    public statements, EPA has consistently been careful to say that it
    does not know whether such public health claims are true. Rather, we
    have stressed that EPA's role under the pesticide law is to evaluate
    data presented by companies to support their claims to control human
    pathogens, since the consumer is unable to tell whether an
    antimicrobial pesticide is working. Moreover, the Agency has emphasized
    that if such products do not work, the public may be put at risk
    because they may forego normal hygienic practices in mistaken reliance
    on the products' claims.
                   antimicrobial pesticides: limiting claims
        Question. What are EPA's reasons for limiting the claims that a
    pesticide that inhibits the growth of bacteria in a consumer product
    can make against any type of pest if the claim can be substantiated?
        Answer. EPA has repeatedly said that the Agency is prepared to
    register and allow the marketing of consumer products which make
    pesticidal claims, provided those products are properly labeled, safe
    to use, and, to the extent they make claims to control pathogenic
    microbes, efficacious. In particular, as part of such a registration
    decision, EPA would approve a claim that a product inhibits pathogenic
    bacteria if the claim is substantiated and presented in a manner that
    does not mislead the consumer into expecting a greater degree of
    antimicrobial activity than the product actually provides.
                       antimicrobial pesticides: protocol
        Question. Does EPA have a protocol to test the efficacy of a
    bacteriostatic pesticide against microorganisms? If not, how long will
    it take EPA to develop such a protocol?
        Answer. Historically, claims to limit the growth of bacteria (i.e.
    bacteriostasis) are not considered public health claims, and EPA does
    not require the submission of efficacy data to support the registration
    of a product making such a claim. As mentioned above, EPA does require
    efficacy data to substantiate claims to control disease-causing
    microbes. The Agency believes that requiring companies to demonstrate
    to EPA the efficacy of products claiming to benefit public health is
    critical, both because of the potentially serious consequences for
    society if such products do not work, and because the user simply
    cannot tell whether such products work. EPA has already issued
    guidelines for testing of antimicrobial pesticides making public health
    claims. From time to time, a company may seek registration of a
    pesticide that makes public health efficacy claims for which there is
    not an approved testing method, usually because the product is
    innovative and is of a type that has never been marketed. In such
    situations, EPA works with the company to develop an acceptable interim
    testing protocol. Typically, the company will consult with appropriate
    experts and submit a proposed protocol for EPA review. Using its
    internal expertise, and consulting with outside experts where
    appropriate, EPA provides recommendations for the improvement of the
    protocol. The amount of time required to develop such a protocol
    depends on a number of factors including the efforts made by the
    company and the degree to which an existing method can be adapted to
    the innovative product.
                 antimicrobial pesticides: enforcement actions
        Question. With regards to enforcement actions taken against makers
    of consumer products incorporating antimicrobial additives, what steps
    did EPA take to provide an opportunity for companies to correct their
    alleged violations before EPA undertook enforcement?
        Answer. EPA has repeatedly expressed concerns about the need for
    consumer products companies to follow the registration process that
    Congress established to safeguard public health. EPA has raised the
    issue in its public Antimicrobials Stakeholders' Meetings held
    quarterly and in meetings with numerous individual pesticide
    manufacturers. In addition, EPA's Antimicrobials Division Ombudsman has
    spent a significant amount of time counseling companies about how to
    comply with the pesticide laws, and has provided written responses to
    over 25 companies on acceptable claims. Finally, EPA has attempted to
    convey its message to the consumer goods industry through the general
    media and trade press publications.
        The Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA)
    does not provide for an amnesty period prior to EPA initiating
    enforcement actions. After initiating actions, EPA did allow companies
    to continue to sell and distribute products once interim corrective
    measures were negotiated and agreed upon. These measures allowed
    companies to continue distribution and sales of existing stocks versus
    disposal or instituting expensive recall and repackaging procedures.
        All products that make pesticidal claims must be registered by EPA
    before they may be legally marketed in the United States pursuant to
    Section 3 of the FIFRA, 7 U.S.C. Sec. 136a, unless they are exempt from
    registration. Under FIFRA, EPA created a limited exemption to allow
    pesticide treated articles to be sold without an EPA registration as
    long as product claims are limited to protection of the product itself.
    The treated articles exemption is set forth in 40 Code of Federal
    Regulations Section 152.25(a). The regulated community has had notice
    of this regulation since it was first promulgated in 1988.
                  antimicrobial pesticides: in the marketplace
        Question. EPA's proposed Pesticide Registration Notice creates a
    regulatory scheme that effectively deters consumer products treated
    with an antimicrobial pesticide from entering the marketplace. Is this
    EPA's intended purpose? If not, how is EPA going to prevent this from
    happening?
        Answer. EPA's Pesticide Registration Notice does not deter consumer
    products treated with registered antimicrobials from entering the
    marketplace. In fact, it continues the longstanding policy of exempting
    such products from any registration requirements if the only claims
    made for the presence of the antimicrobial in the product are that the
    pesticide protects the product itself. The PR Notice does deter
    companies from making public health or other pesticidal claims that are
    not substantiated by scientific data. In effect, the PR Notice would
    require companies making claims of public health benefits either to
    submit data for EPA review as part of an application for registration
    or to limit any pesticidal claims only to the protection of the treated
    article.
        EPA is very interested in supporting the introduction into the
    marketplace of products impregnated with antimicrobials that will
    contribute significantly to protecting the public health. Thus, we have
    been working actively with the regulated community and the scientific
    community to address policy and science issues concerning how to
    evaluate these products efficiently and fairly. A meeting of EPA's
    Scientific Advisory Panel last September provided very helpful guidance
    on the design of new efficacy testing methods. We have also scheduled
    the topic of regulating treated articles for extended discussion in the
    upcoming National Antimicrobials Workshop in mid-June. We will continue
    to issue guidance and to consult with affected parties as decisions are
    made.
                    nepps: napa report on formal assessments
        Question. According to the Sept. 1997 NAPA report, ``EPA has not
    used the opportunities presented by NEPPS to give states clear
    incentives for better performance. The agency has failed to establish
    the practice of making formal assessments of state performance and
    using these assessments to link performance explicitly with the level
    of Federal oversight and with the flexibility in program design and
    innovation. Such a policy would create strong incentives for improved
    state performance.'' Do you agree with NAPA's recommendations on the
    need for formal assessments and linking performance with the level of
    oversight and flexibility? If so what are EPA's plans to follow this
    recommendation?
        Answer. EPA is already implementing the approach to oversight
    recommended by the National Academy of Public Administration (NAPA). As
    a fundamental component of the National Environmental Performance
    Partnership System (NEPPS), EPA tailors the amount and type of
    oversight--as well as provision of EPA technical assistance--to each
    state's needs. The first step in the NEPPS process is a state and EPA
    assessment of environmental conditions and program performance. EPA
    believes these assessments form an appropriate basis for negotiating
    Performance Partnership Agreements (PPA's) and for determining where
    greater flexibility should be provided and what level of oversight is
    needed.
        The NEPPS process has already resulted in reduced oversight and
    reporting in several states, and through NEPPS evaluation efforts and
    other means, EPA will identify and promote wider use of successful
    approaches to assessing performance and tailoring oversight to state
    needs and conditions. As an example of how EPA has reduced reporting,
    Region VII has collaborated with Missouri and Nebraska to switch from
    quarterly reporting to semi-annual reporting and is exploring use of
    self-evaluation by Missouri. In the state assessment arena, EPA Region
    IV has developed indicators and benchmarks for the drinking water
    program and uses them to focus regional resources on weaker states. In
    an example of how EPA tailors assistance to specific state needs, one
    EPA region provided program staff to work in a state temporarily to
    reduce backlogs while helping the state convince its legislature that
    the agency needed more resources.
        A variety of quantitative and qualitative information is considered
    in the assessments of state performance, such as formal reports on
    accomplishment of grant and other program commitments, the experience
    of state staff, environmental monitoring data, the quality of permits
    issued, changes in state funding levels, economic development
    pressures, and changes in legal authorities. There are multiple
    environmental programs, and a state's performance may vary
    substantially among them. The availability and quality of information
    useful for assessment varies as well. Therefore, EPA believes that its
    adaptable approach to assessment is the most appropriate way to fairly
    accommodate the variations among states and the complexity of factors
    that should be taken into account in assessing and then addressing
    state performance and needs.
        EPA program offices and regions use a range of approaches and tools
    for assessing state performance--both formal and informal. The core
    performance measures, developed as part of the NEPPS effort, provide
    EPA and states with an important tool for evaluating progress in
    environmental protection and implementing environmental programs that
    should aid in making the assessment process more consistent. However,
    given the many factors involved, EPA does not think it possible or
    advisable to try to develop a ``one size fits all'' protocol that would
    set out specific standards for performance and specific responses that
    EPA would make to a given performance score. (Highlighting the
    challenge of developing acceptable criteria, state officials themselves
    abandoned efforts to implement the ``leadership'' designation
    originally envisioned as part of NEPPS when they were unable to agree
    on the standards to use.) Rather, EPA believes it most appropriate to
    tailor the Agency's response to state performance to the specific needs
    and strengths of the individual state--designing solutions to problems
    or rewards for good performance to suit the specific situation.
                               nepps: flexibility
        Question. How do you respond to the criticism that some of EPA's
    offices, such as the Office of Enforcement and Compliance Assurance,
    resist providing states with the flexibility to focus their
    environmental programs on results, and instead compel them to focus on
    process-oriented activities?
        Answer. All of the EPA National Program Managers (NPM), including
    the Office of Enforcement and Compliance Assurance (OECA), work closely
    with the states through the Environmental Council of the States (ECOS),
    to develop core performance measures (CPM) to measure state
    environmental performance. Core performance measures for the
    enforcement and compliance assurance program are referred to as
    ``accountability measures.'' The accountability measures are in sync
    with OECA program measures, which relate directly to the Agency's goals
    and assist OECA in meeting its obligations under GPRA.
        Core performance measures (including accountability measures) were
    issued under the ``Joint Statement on Measuring Progress Under the
    National Environmental Performance Partnership System'' signed by EPA
    and State officials in August 1997, which reaffirms our joint
    commitment to use core performance measures as tools to track progress
    in achieving results.
        Current accountability measures are a mixture of outcome and output
    measures. Traditionally, EPA relied on output measures, such as the
    number of enforcement actions taken and inspections conducted. These
    will remain important measures of program performance and
    accountability for both EPA and the states because they assure the
    public of the government's presence, they provide accountability for
    Federal and state actions, and they give EPA and the states important
    information about how our strategies are working.
        However, the core performance measures for states also reflect the
    progress EPA has made in developing outcome measures. Outcome measures
    included in the core performance measures are:
      --Rates of significant non-compliance by industry sector and by
            media;
      --Percent of significant violators in each media that have new or
            recurrent significant violations within two years of receiving
            a formal enforcement action;
      --Environmental and/or public health benefits achieved through
            inspection and enforcement activities (e.g.,through case
            settlements, compliance agreements, injunctive relief,
            Supplemental Environmental Projects); and,
      --Results or impact of using: state audit privilege or immunity law;
            state audit policies; state small business compliance
            assistance policies; and compliance assistance initiatives
            developed for specific industry sectors.
                         nepps: differential oversight
        Question. The National Performance Partnership System calls for
    differential oversight by EPA. EPA is expected to focus resources on
    state programs that need more assistance and attention to perform well
    and reduce oversight elsewhere. What steps have been taken to achieve
    this?
        Answer. As stated in the 1995 agreement to establish a National
    Environmental Performance Partnership System (NEPPS), ``This new system
    will not change federal authority, but serves as a guide to the
    judicious and more effective exercise of that authority.'' In other
    words, EPA still has responsibility and authority to conduct oversight
    of state programs under the various Federal environmental statutes.
    NEPPS seeks a more efficient and judicious use of that authority to
    ensure continued progress in environmental protection while allowing
    strong state programs more flexibility to innovate.
        EPA Regional Offices routinely differentiate between stronger and
    weaker performers through routine program reviews or other oversight
    procedures, and respond with an array of tools depending on the
    circumstances. Program performance can vary over time with changes in
    resources, changes in program objectives, or increased staff turnover.
    Quite often, when a weakness or need has been identified, EPA will
    provide training, technical assistance, and even loan staff to a state
    until the problem has been addressed. In other cases, the State and EPA
    will devise a strategy drawing on their respective strengths (such as
    different enforcement authorities, or different monitoring or modeling
    capabilities) to remedy the problem. Sometimes, the experience or
    ability of neighboring states can be brought to bear to solve a
    problem.
        As a key part of NEPPS the Performance Partnership Agreements have
    provided a mechanism to identify state needs, craft joint EPA/State
    responses, and articulate specific plans and commitments. The PPA also
    provides an avenue for EPA to identify strong program performance, and
    to adjust its oversight procedures for that program accordingly.
        The August 1997 EPA/State Agreement on Core Performance Measures
    provides an important new tool for measuring state environmental and
    program performance, thus forming a more solid and equitable basis for
    gauging state and EPA performance in the future. Core Performance
    Measures are intended to help make performance assessment less
    subjective over time, and more focused on meaningful results.
        Through NEPPS, EPA and the States are also investing considerable
    effort in reducing unnecessary state reporting. This work ties into the
    broader EPA/State Initiative on ``Reinventing Environmental
    Information.'' While much work remains to be done, ``reporting burden
    reduction'' has already made a measurable impact in several regions and
    states, and allows both EPA and State environmental agencies to devote
    more effort to their original missions of protecting human health and
    the environment.
                    partnership grants: regs and guidelines
        Question. Performance Partnership grants allow states to
    consolidate the many categorical grants. Both EPA and states are
    responsible for accounting for these Federal grant funds. Has EPA
    developed regulations or guidelines to define how combined grants can
    be rationalized and spent? Now that states are receiving combined
    grants under PPG's, how is EPA tracking the flow of Federal funds?
        Answer. Since Congress approved EPA's Performance Partnership Grant
    (PPG) authority in April, 1996, the award of PPG's has been governed by
    EPA Interim Guidance. Work is nearing completion on proposed changes to
    EPA's regulations (40 CFR Part 35). The revised regulations will govern
    individual environmental program grants to states as well as PPG's. The
    draft regulations were developed in an extensive collaborative process
    involving State and Tribal representatives.
        The draft rule streamlines administrative processes and builds key
    partnership concepts--such as consideration of state as well as EPA
    priorities and joint evaluation--into the state grant programs. The PPG
    provisions further refine and simplify administrative requirements and
    articulate what can be funded under a PPG. States can opt to combine
    funds from two or more programs in a PPG to achieve administrative
    savings and more easily fund cross-media activities, and States may
    receive more than one PPG. Under the proposed regulation, States
    wishing to reduce or increase effort in various programs combined in
    PPG's must provide a rationale commensurate with the extent of the
    proposed shifts in emphasis.
        It is a state's decision whether to apply for PPG's and which
    eligible grant programs to include. The state will propose the
    activities to be carried out in the work plan which accompanies a grant
    application. In the work plan, the state will specify the components
    that make up the work plan and the related environmental commitments
    the state agrees to complete.
        The state's PPG work plan will include estimates of the work years
    and funding amounts related to the various work plan components. This
    information will allow EPA to tie the state's work plan commitments to
    the accomplishment of EPA's goals and objectives established under the
    Government Performance and Results Act (GPRA). This process will not
    increase the accounting burden on states. Work plans will also include
    proposed performance evaluation and reporting processes for PPG's. All
    aspects of proposed work plans are subject to negotiation between the
    EPA Regional Offices and the state. If proposed commitments in a work
    plan are not consistent with EPA's National Program Guidance, the
    Regional Administrator must consult with the appropriate EPA National
    Program Manager before approving the departure.
        After a state's PPG application is complete and accepted, EPA
    reprograms the appropriate funds from the individual program grant fund
    elements into a PPG program element. Awards are made from the PPG
    program element, and EPA tracks the funds there.
        At the end of each budget cycle, the state and EPA will carry out a
    performance evaluation in accordance with the processes that were
    agreed to in negotiating the PPG. These evaluations will assure that
    states accomplish the work they committed to do.
                        nepps: oversight vs flexibility
        Question. EPA will need to improve its reporting of outcomes
    (results) to comply with GPRA. The states are concerned that EPA will
    impose new reporting requirements and new burdens on states, since they
    have the bulk of day-to-day responsibility for national program
    implementation. This potentially would conflict with the administrative
    and fiscal flexibility EPA is offering states through performance
    partnership agreements. What is EPA's response to state concerns about
    conflicts between the goals of the National Environmental Performance
    Partnership System, and GPRA?
        Answer. EPA is committed to the goals of providing programmatic,
    administrative, and fiscal flexibility in the National Environmental
    Performance Partnership System (NEPPS). Furthermore, EPA is confident
    that the focus on performance-based management envisioned by the
    Government Performance and Results Act (GPRA) will not compromise these
    fundamental NEPPS principles.
        EPA has already done substantial work in aligning annual measures
    with our Strategic Plan goals and objectives, as well as beginning the
    process of instituting environmental outcome performance measures. EPA
    is also working closely with the states to ensure as close an alignment
    as possible between information states will provide under the Core
    Performance Measures and associated reporting requirements and what EPA
    must report to Congress under GPRA. Both EPA and states are reaching
    agreement that a mix of both outcome and output measures is needed to
    assess environmental results as well as program performance.
        Our preliminary comparison of the agreed-upon Core Performance
    Measures with the full range of reporting requirements found in the
    fiscal year 1999 Annual Performance Plan shows that GPRA has not
    resulted in the imposition of new reporting burdens on the states. Over
    the summer, states and EPA will be carefully analyzing the linkages
    between EPA's strategic goals and objectives, the Core Performance
    Measures, and the data needed to support them. With these efforts, EPA
    does not anticipate significant conflicts between GPRA and NEPPS.
        EPA is developing guidance for EPA Regions to address the challenge
    of providing flexibility with fiscal accountability in Performance
    Partnership Grants (PPG) while maintaining EPA's ability to report
    appropriately under GPRA. Where individual program grant funds are
    being combined in a PPG, EPA regions will work with states to develop
    an estimate of the amount of the combined funds being used to support
    the various GPRA goals and objectives.
                         nepps: short-term improvements
        Question. States identify several high-priority, short-term
    improvements that are needed to implement NEPPS. Chief among these are:
    achieving burden reduction (such as replacing numerous ``bean-
    counting'' activities with less numerous performance measures);
    changing the culture at EPA to accept partnerships with states rather
    than the traditional oversight relationship; and recognition by EPA
    that priorities identified by states may be different from EPA
    priorities. What concrete steps will EPA take during fiscal year 1999
    to effect these improvements?
        Answer. The goals of the National Environmental Performance
    Partnership System (NEPPS) are to improve environmental protection
    through better measurement of environmental results, better use of EPA
    and State resources to address the most pressing environmental problems
    across the country, and enhance public accountability. Since these
    multi-faceted goals encompass virtually everything EPA and States do,
    implementing all the changes involved will take time.
        Important steps toward achieving the NEPPS goals include reducing
    the reporting of information not necessary for effective program
    management, carrying out EPA's responsibility for oversight of state
    programs in a way that is tailored to individual state conditions and
    needs as well as designed to help improve program performance over the
    long run, and recognizing state priorities in planning and priority
    setting. Efforts to address State concerns about the need for greater
    progress in these areas are already underway, and work will continue
    during fiscal year 1999. Following are some examples of steps EPA is
    taking, in cooperation with States, to improve NEPPS implementation.
        Burden reduction.--A key objective of NEPPS is to achieve a better
    balance between environmental and traditional activity measures. This
    summer, in a critical step towards reducing state reporting burden, EPA
    and states will analyze the alignment between EPA's goals and
    objectives and the Core Performance Measures/Associated Reporting
    Requirements. We will use this process to refine the fiscal year 2000
    Core Performance Measures and to identify potential candidates for
    reduced reporting. In addition, States and EPA are now working together
    in a major initiative to reform environmental information systems and
    their accessibility. This multi-faceted effort should bring about
    reduced reporting burden for both the regulated community and States.
        Partnership culture.--EPA recognizes the challenges faced by both
    EPA and States in getting increased understanding of and support for
    the partnership approach to State-EPA relations. EPA believes that the
    culture change will accelerate as the processes and mechanisms for
    NEPPS and PPG's become more routine and implementation details are
    clarified and more widely understood. Several mechanisms are in place
    to identify and ensure that issues are addressed, including an internal
    EPA NEPPS senior management group, a cross-agency staff working group,
    and an ECOS-EPA steering group. In addition, EPA holds periodic NEPPS
    workshops, the most recent of which involved both State and EPA staff.
        State priorities.--NEPPS is designed to help EPA and States direct
    scarce public resources toward improvement of environmental results.
    Since State priorities may be different from EPA priorities, joint
    planning and priority setting--based on assessment of environmental
    conditions and program needs--is a fundamental aspect of NEPPS. State
    priorities are explicitly considered in negotiation of Performance
    Partnership Agreements (PPA's) and State grant agreements. To ensure
    that national priorities and needs are also met, EPA Regions must
    consult with National Program Managers before agreeing to a State
    proposal to deviate significantly from national guidance or Core
    Performance Measures. EPA will encourage future NEPPS evaluation
    efforts to review how well the joint planning and priority setting
    aspect of the system is working to improve environmental performance.
                         ccti: greenhouse gas releases
        Question. What analysis did the administration perform to determine
    that $6.3 billion is needed to implement climate change activities and
    how to allocate these funds to ensure that they are used most
    effectively to decrease greenhouse gas releases?
        Answer. There was a coordinated effort within the Administration
    among several agencies to determine the appropriate resources to invest
    in activities to stimulate the development and deployment of energy
    efficient and low carbon technologies. The starting point for these
    efforts was a review of the costs and benefits of existing programs
    which had been developed last year through an interagency effort
    chaired by the Council on Environmental Quality. The results of this
    analysis were published in the ``U.S. Climate Action Report--1997''.
    This was followed with a sector-by-sector review of additional
    opportunities for carbon reductions, selecting strategic opportunities
    that cost-effectively can advance the development and deployment of
    energy efficient and low-carbon technologies across the economy. A
    recent study, by five Department of Energy laboratories of energy
    technologies that reduce carbon emissions, supported the sector-by-
    sector review. The Administration also considered the extensive
    recommendations of the President's Committee of Advisors on Science and
    Technology (PCAST) for new investments in energy research and
    development. These recommendations are contained in the November 1997
    report ``Federal Energy Research and Development for the Challenges of
    the 21st Century.'' The Treasury Department and several other Federal
    agencies worked together to evaluate the costs and benefits of
    potential tax incentives.
                        ccti: effectiveness of programs
        Question. How is the administration planning to monitor the
    effectiveness of its programs to ensure they are functioning
    effectively?
        Answer. The Administration regularly evaluates the effectiveness of
    its climate programs through interagency evaluations. The first such
    interagency evaluation, chaired by the White House Council on
    Environmental Quality, examined the performance of programs included in
    the Climate Change Action Plan. The results were published in the
    ``U.S. Climate Action Report--1997'' as part of the United States
    Submission to the Framework Convention on Climate Change. There were
    several opportunities for public comment. The Administration will
    continue monitoring the effectiveness of its programs through the
    programs' performance measures established under the Government
    Performance and Results Act. Several performance measures for EPA's
    climate change programs were included in our 1999 Annual Plan provided
    to the committee.
                     ccti: implementation of kyoto protocol
        Question. As you know, there has been some concern that EPA's
    proposed increase of 130 percent for the Climate Change Technology
    Initiative indicates that the Administration plans to begin
    implementing the Kyoto protocol prior to its ratification by the
    Senate. How do you address such concerns?
        Answer. The 1999 request for Climate Change has not come about
    because of Kyoto, nor is it an extension of the Kyoto treaty. Rather,
    the Climate Change request is intended to enhance the existing programs
    established in 1993 to meet our commitment under the Framework
    Convention on Climate Change that was negotiated by the Bush
    Administration and ratified by the Senate in October 1992. It also
    makes good economic sense, because it requires energy consumption and
    saves businesses and consumers money.
        The request continues and improves upon work projects and efforts
    underway that improve energy efficiency and result in greenhouse gas
    reductions. Since these programs are good common sense measures. By
    fully funding our request, the Senate will be agreeing to meet goals
    for energy efficiency that have long been Executive Branch and
    Congressional priorities.
        The Agency strongly believes these activities are prudent
    investments and must be pursued now for a number of reasons including:
        These programs make good economic sense to undertake now. Improving
    the energy-efficiency of our businesses, homes, and vehicles can save
    businesses and consumers money and make our economy more productive.
        It is prudent to take reasonable steps to reduce greenhouse gas
    emissions that have numerous other benefits to the economy and the
    environment.
        Energy efficiency reduces other pollutants in addition to
    greenhouse gases, including nitrious oxide (NOX),
    particulate matter (PM), and mercury.
        Catalyzing a strong domestic market for energy efficiency will help
    U.S. manufacturers expand their leadership in the development and
    production of these technologies, strengthening our global
    competitiveness and technology leadership.
                     ccti: commitments under kyoto protocol
        Question. Would any of the proposed activities in the budget help
    the U.S. to meet its proposed commitments under the Kyoto Protocol?
    What additional EPA activities would be necessary to implement the
    Kyoto Protocol if it were ratified?
        Answer. EPA's objective is based on voluntary, profitable
    opportunities to reduce our greenhouse gas emissions while
    strengthening the economy and is consistent with existing U.S.
    international obligations under the 1992 United Nations Framework
    Convention on Climate Change (FCCC), which the Senate ratified, to work
    toward reducing greenhouse gas emissions. These programs are a
    sensible, cost-effective step to begin to reduce greenhouse gas
    emissions. Improving the energy-efficiency of our businesses, homes,
    and vehicles can save businesses and consumers money and make our
    economy more productive, while also reducing greenhouse gas emissions.
                         epa anti-lobbying requirements
        Question. Please provide a list of the 20 largest EPA grantees who
    also engage in lobbying activities (not including states or
    municipalities).
        Answer. EPA has taken strong steps to ensure and believes all its
    grantees are adhering to the government-wide lobbying requirements.
        Attached is a chart indicating the 20 largest EPA grantees
    (excluding states or municipalities) of active projects. The chart
    indicates the total dollar amounts awarded, number of active grants,
    whether the recipient has certified that they will not use Federal
    funds for lobbying, and whether the recipient has submitted a
    disclosure form (SF-LLL) reporting the use of non-Federal funds for
    lobbying.
        To implement Public Law 101-121 (``the Byrd Amendment''), EPA
    requires all recipients receiving new grants or cooperative agreements
    over $100,000 to certify they have not and will not use Federal funds
    to obtain Federal contracts, grants, cooperative agreements or loans.
    In addition, EPA requires recipients to complete a disclosure form if
    they use non-Federal funds to lobby (Note: Public Law 101-121 permits
    lobbying with non-Federal funds).
        EPA has also aggressively implemented the Lobbying Disclosure Act
    of 1995 (this Act prohibits awards to nonprofit organizations
    classified as 501(c)(4) by the Internal Revenue Code of 1986 that
    engage in lobbying activities. This restriction applies to any lobbying
    activities of a 501(c)(4) organization without distinguishing between
    lobbying funded by Federal funds and lobbying funded by other sources).
    EPA includes a Term and Condition on all grants made to nonprofit
    organizations requiring the organization to certify that it is either
    not a non-profit organization described in Section 501(c)(4) of the IRS
    code or that if it is a 501(c)(4) organization it will not engage in
    lobby activities.
        Finally, EPA includes a special term and condition on all grants
    (other than to State or local governments or Indian Tribes) emphasizing
    the restrictions imposed by the OMB Cost Principles on using grant
    funds for lobbying and includes a guidance document on lobbying
    restrictions in grant awards to nonprofit organizations and educational
    institutions.
             potentially responsible party-lead in settlement cases
        Question. EPA's budget indicates there will be 136 construction
    completions by the end of fiscal year 1999. Given EPA's heavy reliance
    on Potentially Responsible Parties for these cleanups--an assumption is
    made that 70 percent of all cleanups will be PRP funded--how can we
    have any confidence in your estimate?
        Answer. This question is referring to two different annual
    performance goals in the Annual Plan. The 136 construction completions
    are part of the 900 completions the Agency expects to finish by
    December 2001. EPA's 70 percent projection of PRP-lead applies to
    settlements for construction starts and not completions. In other
    words, EPA estimates that approximately 70 percent of new remedial work
    at NPL sites (excluding Federal Facilities) will be initiated by
    private parties. This estimate is based on recent history where PRP's
    have consistently settled for construction costs at 70 percent or more
    of the sites.
               superfund recovered funds available for obligation
        Question. GAO has notified us that EPA has recovered in fiscal year
    1997 $210 million of the $249 million potentially available in unspent
    obligated funds. These funds are available for obligation. What
    specifically is EPA doing with these funds, and to what extent do they
    lessen the need for appropriations in view of the fact that EPA's
    fiscal year 1998 budget request did not include an assumption that
    these funds would be recovered? According to GAO, EPA has plans to
    deobligate an additional $25 million this year, and there is an
    additional $125 million available for deobligation from contracts
    completed in 1997. Does EPA's budget include an assumption that these
    funds will be recovered? If not, why not? How will these recoveries be
    applied.
        Answer. Each year, EPA recovers unspent Superfund resources from
    contracts, grants and IAG's through deobligation and recertification of
    funds. Funds recovered are to be recertified, or obligated, in the same
    year they are deobligated. These recoveries assist the Agency in
    managing the Superfund program by shifting unused obligations at
    inactive or closed projects to active projects.
        The Agency anticipates the recovery of unspent funds in setting and
    meeting annual performance commitments. These funds, as with carryover,
    are included in our planning needs in addition to annual
    appropriations. The recovery of unspent funds therefore, does not
    reduce the need for new obligating authority.
        OSWER and the Office of Administration Management has established
    an annual process for recovering unspent funds from expired contracts.
    Each year 100 percent of the funds remaining in contracts that have
    been expired for six months or more are reviewed for potential
    deobligation. Using this process all of the funds identified by GAO in
    contracts that expired in 1997 will be reviewed and, where appropriate,
    deobligated in fiscal year 1999. In addition, the Office of Grants
    Debarment will continue working with the Regions to expedite the
    closeout of expired assistance agreements and grants.
        In fiscal year 1998, the Agency anticipates recovering between $75
    and $100 million in deobligated funds. These funds will be directed, as
    in prior years, to response actions/cleanup efforts.
                            accident investigations
        Question. What is requested in the budget for chemical accident
    investigations? Why is EPA requesting funds to support this activity,
    in view of the fact that the Chemical Safety Board is now operational?
        Answer. EPA requested $1,000,000 and 10 FTE in the President's
    budget for activities related to accident investigations and to support
    the Chemical Safety Board (CSB) in conducting investigations.
        In the intervening months since submitting the 1999 President's
    request for this program, the Agency has reviewed our resource
    estimate. With the Board becoming operational, EPA is now focusing our
    activities on those foreseen under Section 112(r) of the Clean Air Act
    Amendments and other relevant statutes: establishing an effective
    chemical safety and accident prevention program. To carry out these
    responsibilities, the Agency is currently estimating, based upon
    current assumptions, a minimum resource requirement of approximately 6
    FTE and $750 thousand in fiscal year 1999.
        EPA recognizes that the Chemical Safety Board has the lead
    responsibility for investigating the root causes of chemical accidents.
    We are currently working on an MOU with the Board to clarify our roles.
    The MOU will cover coordination of field activities as well as
    research, information sharing, accident databases, international
    activities, and other areas of chemical safety.
        EPA (along with OSHA) continues to have a fundamental
    responsibility for chemical safety and accident prevention programs.
    EPA's program emphasizes off-site community/environmental protection
    (OSHA's, worker protection). We believe a complementary accident
    prevention effort will ensure success in investigating and preventing
    chemical accidents. For the immediate future, the Agency's priority
    will be to continue to build with our available resources a credible
    accident prevention program in cooperation with the Board, OSHA and
    other agencies. EPA will concentrate our activities on:
        Completing accident reports.--EPA's priority for fiscal year 1998
    and early fiscal year 1999 will be to complete the 9 major
    investigations reports begun prior to the Board's funding. These
    reports are in various stages of the investigation and documentation
    process. By the end of fiscal year 1998 we expect that six of the nine
    reports will be completed. The remaining three will be published in
    early fiscal year 1999.
        Respond to and Implement Board Recommendations.--As EPA's accident
    report activity winds down in early fiscal year 1999, we anticipate a
    significant growth in workload to respond to and take actions on the
    Board's recommendations to EPA resulting from their investigations and
    other responsibilities. This is a statutorily mandated responsibility
    for EPA under CAA Sec. 112r(6)(I) which became effective with the
    board's funding, and reflects the experience of other agencies with
    independent investigatory boards; i.e., DOT and DOE.
        We expect that several recommendations will be generated by
    accidents investigated by the Board and that these recommendations
    would likely be related to emergency planning, lists of substances
    subject to emergency planning or chemical accident prevention, and
    hazards analysis, process safety management, or emergency response
    under the Risk Management Program for prevention of chemical accidents.
    The recommendations might call for regulatory action, outreach or
    guidance to the regulated community or state and local levels.
        Information Gathering.--We will gather information in the field to
    improve our understanding of how to prevent accidents, so we can
    respond faster and more effectively to Board recommendations. This
    activity will be a small but essential part of the program. It stems
    from our authorities for accident prevention under the CAA Sec. 112(r)
    and CERCLA Sec. 104 and information gathering under CAA Sec. 114 and
    Sec. 307 and CERCLA Sec. 104. The work will be done in cooperation with
    other agencies such as the Board and OSHA and would complement their
    efforts (much as FAA and NTSB work together in the field).
        Prevention Actions.--In addition to what EPA learns from the
    Chemical Safety Board, we will also act to prevent accidents, based
    upon what we learn in the field and from other sources (e.g., chemical
    safety audits, past accident investigations, research, compliance,
    enforcement, etc.). Our chemical safety responsibilities under CAA
    Sec. 112r (1), (3), (7), (8), and (9) and CERCLA Sec. 104 (b) and (e)
    require us to take actions to prevent accidents. A top priority will be
    to ensure that accident stakeholders are notified promptly so they take
    steps to minimize risk. As warranted, we will also develop guidance,
    modify existing rules and develop new ones, conduct and promote
    research, and communicate with industry, government and the public to
    enhance the application of safety measures.
                           year 2000: budget request
        Question. How much is included in EPA's budget request for
    activities necessary to ensure EPA will be Year 2000-compliant? Is EPA
    confident that all necessary steps will be taken to ensure all systems
    will be compliant in a timely fashion? Please provide a timeline for
    steps that will be taken to ensure Y2K compliance.
        Answer. The Agency's most recent estimates for Year 2000 (Y2K) are:
            Fiscal year                                                 Cost
    1996..............................................................  $0.8
    1997..............................................................   5.3
    1998..............................................................  13.0
    1999..............................................................   6.1
    2000..............................................................   1.0
                            -----------------------------------------------------------------
                            ________________________________________________
          Total.......................................................  26.2

        EPA has adopted an aggressive strategy to ensure that Agency
    information technology assets will be compliant in a timely fashion.
    The Agency has established a Senior Y2K Council, under the direction of
    the CIO, to review progress, receive early warnings on potential
    problems, and take necessary action to avoid critical delays. An
    independent certification program has been established for mission
    critical systems to ensure compliance. The timetable the Agency has
    adopted conforms to the government-wide milestones established by OMB.
    The critical dates in the time-line include completing renovations for
    mission-critical systems by September 1998; validation by January 1999;
    and implementation by March 1999. This schedule allows for nine months
    of operation in a production environment to identify and fix any bugs.
                 project xl: superior environmental performance
        Question. As perceived by many industry and state stakeholders, a
    principal obstacle to success in Project XL has often been EPA's
    definition of ``superior environmental performance.'' This definition
    has often been viewed as overly restrictive and has been believed to
    have contributed to eliminating worthy proposals from XL consideration.
    Please explain EPA's current stance regarding this issue. Finally, are
    there any present XL proposals where significant differences exist
    between EPA and stakeholders over the definition of ``superior
    environmental performance?''
        Answer. Project XL tests cleaner, cheaper, and smarter approaches
    to achieving the nation's environmental goals. This objective
    distinguishes XL from many other Agency actions for regulatory change
    that seek to offer either simple efficiencies of administrative process
    or site-specific customized alternatives to the one-size-fits-all
    traditional system of environmental protection.
        EPA engaged in a deliberative process to define a broad array of
    qualitative and quantitative factors in making a determination of
    ``superior environmental performance (SEP).'' In a Federal Register
    notice dated April 23, 1997, EPA established a procedure for
    determining baseline performance against which SEP would be measured.
    Once the baseline has been met, EPA weighs quantitative and qualitative
    factors that can produce superior performance. These factors include
    but are not limited to: reduction in pollutants below the baseline;
    risk reduction; pollution prevention; historic demonstration of
    leadership in environmental performance; and addressing environmental
    concerns of local stakeholders including issues not governed by EPA
    rules (e.g., habitat preservation, green space, odors).
        When EPA developed this method for evaluating SEP over a year ago,
    it was based on our experience with XL proposals and projects to date.
    The Agency explicitly recognized that the described approach may not be
    appropriate in all situations. We are currently exploring ways to
    ensure superior environmental performance in other environmental
    protection scenarios, such as in hazardous waste remediation. We will
    be issuing a Federal Register notice that actively solicits projects in
    a number of areas that will require other approaches to SEP including:
    environmental management systems; market-based approaches; and
    administrative paperwork reductions.
        EPA is presently implementing and evaluating over two dozen XL
    proposals in which the Agency definition of SEP has served as a
    beneficial criterion. However, we have one XL proposal where some
    stakeholders have expressed philosophical differences over what level
    of environmental performance should be required for participation in
    XL. Andersen Windows has submitted a proposal in which they have
    proposed to establish an air emissions cap and a per-unit of production
    emissions rate that are both higher than they currently emit. EPA has
    suggested a number of possible alternatives that we feel could achieve
    SEP and Andersen is currently considering those alternatives, as well
    as other options that achieve superior environmental benefits.
                           csi: usefulness of policy
        Question. The Common Sense Initiative (CSI) has been criticized for
    its perceived insistence on total consensus within the subcommittees.
    EPA, in 1997 began evaluating the usefulness of this policy. What are
    the results of that analysis thus far? In addition, the Automobile
    Sector Subcommittee lost participants partly due to this problem. Are
    any other subcommittees presently experiencing similar dissension over
    this issue?
        What level of funding is EPA committing to ensure that the Agency
    fulfills its commitment to the Common Sense Initiative involving the
    metal finishers?
        Answer. In February 1997, the results of a broad CSI evaluation
    were presented to the CSI Council which showed that consensus was being
    implemented in a variety of ways, and not to the full satisfaction of
    all parties. As a result, a white paper, dated October 1, 1997,
    Consensus Decision-Making Principles and Applications in the EPA Common
    Sense Initiative (attached), was created as guidance for the Council
    and subcommittees. This document was unanimously adopted by the
    Council, and has led to a greater level of satisfaction with the
    operating principles of consensus within the CSI framework. To our
    knowledge, there is no current dissension over this issue in the
    subcommittees.
        The EPA's lead office on the Metal Finishing Goals 2000 Project is
    the Office of Policy, Planning and Evaluation (OPPE). OPPE has budgeted
    $783,500 on this sector this fiscal year. This budget includes
    administrative support of the CSI Metal Finishing Subcommittee,
    implementation of the Strategic Goals Program, grants to industry trade
    associations to help with program operation, and support of EPA
    regional programs.
                    audit policy: encouraging self-policing
        Question. Please discuss all present state-audit related
    legislation, enacted or proposed, that the Agency objects to. In
    particular, discuss cases in which the Agency (1) is considering the
    withholding or denying of delegation of any environmental program; or
    (2) is considering overfiling of state enforcement cases. Also, please
    list and discuss the status of any EPA and state discussions that are
    ongoing and relate to EPA objections to a state's audit related
    legislation or policy.
        Answer. In general, EPA works with states both prior to and
    following enactment of state audit privilege and immunity legislation
    to identify and express its policy and legal concerns. As a policy
    matter, EPA believes that audit privilege laws are anti-law
    enforcement, impede public right-to-know, and chill public reporting of
    illegal activity to law enforcement authorities. While EPA supports
    penalty mitigation as an incentive for self-policing, EPA believes that
    to immunize serious violations--including those where there is criminal
    conduct, imminent and substantial endangerment, and actual harm--is
    wrong. Such immunity laws discourage needed investments in pollution
    control, lower the standard of care, undermine the rule of law, and
    endanger the public. Additionally, evidence developed in civil or
    administrative cases often leads to discovery of criminal violations so
    that civil immunity may undermine government's ability to enforce
    criminal laws.
        EPA also has a legal obligation to review State audit laws. Federal
    environmental laws in effect for more than a decade mandate that EPA
    ensure that authorized, delegated, or approved State environmental
    programs (authorized programs) have and maintain minimum information
    gathering authority, public access to certain types of information, and
    minimum civil and criminal enforcement authority. See, for example,
    Clean Water Act section 402(b), 33 U.S.C. 1342(b); Clean Air Act
    section 502(b), 42 U.S.C. 7661a(b); Resource Conservation and Recovery
    Act section 3006(b), 42 U.S.C. 6926(b); 40 C.F.R. 123.26-.27 (CWA/
    NPDES); 40 C.F.R. 70.11 (CAA); 40 C.F.R. 271.15-.16 (RCRA/Sub. C).
        EPA's interpretation of the impact of a state audit law on the
    state's ability to fully meet Federal statutory and regulatory
    requirements is explained in its ``Statement of Principles,'' which was
    issued by EPA on February 14, 1997. EPA is particularly concerned with
    whether a State has the authority to obtain immediate and complete
    injunctive relief; to recover civil penalties for significant economic
    benefit, repeat violations and violations of judicial or administrative
    orders, serious harm, and activities that may present an imminent and
    substantial endangerment; to obtain criminal fines and sanctions for
    willful, knowing, and negligent violations of Federal law; to retain
    information gathering authority required under Federal delegations; and
    to preserve the right of the public to obtain information and bring
    enforcement actions.
        As of mid-May 1998, to EPA's knowledge, audit privilege and
    immunity legislation is pending in Massachusetts, New Jersey, New York,
    Delaware, Pennsylvania, South Carolina, Oklahoma, Missouri, California,
    and Hawaii. When an audit privilege and immunity bill appears to be
    moving forward in a State legislature, EPA expresses the policy and
    legal concerns (discussed above) it finds given the terms of the
    individual bill. These efforts are designed to ensure that the
    potential ramifications of an audit privilege and immunity law on
    enforcement and information gathering authority are fully considered
    prior to enactment.
        Once a state audit privilege and immunity bill is enacted into law,
    EPA has adopted a pragmatic, problem solving approach to addressing
    legal adequacy in specific states. EPA and the state use a process
    under which they identify the legal impediments to Federal program
    authorization resulting from the state's audit law. The impediments can
    then be addressed through tailored statutory amendments, or a state
    Attorney General opinion interpreting the law consistent with Federal
    requirements, or both.
        EPA has reached agreement on needed legislative changes with Utah,
    Texas, Michigan, Wyoming, and, pending enactment by the state
    legislature, Ohio. EPA has also received an interpretation from the
    Virginia Attorney General concluding that its state audit privilege and
    immunity law is inapplicable to federally authorized programs, and thus
    resolving any authorization issues for that state. EPA's agreements
    with these states are limited to identifying those changes to their
    audit laws needed to meet minimum legal requirements for Federal
    program authorization. EPA is currently discussing the effect of an
    enacted audit privilege and immunity law with the states of Kentucky,
    South Carolina, Indiana, Minnesota, Arkansas, Colorado, Montana, South
    Dakota, Alaska, and Oregon, as follows:
        Kentucky.--In December 1997, EPA provided a written statement of
    concerns with the state's audit law to the state at its request. In
    late January 1998, EPA met with the State. In February, a bill
    containing partial changes to the law was introduced in the state
    legislature and referred to committee. The legislature adjourned in
    April without further action on the bill.
        South Carolina.--In March 1998, EPA sent a reply to South
    Carolina's response to EPA's letter detailing specific concerns with
    the state's audit law. In March and April 1998, EPA held a series of
    conference calls with the state, and the parties appear close to
    agreement on needed changes to the audit law. The South Carolina
    legislature is scheduled to adjourn in early June.
        Indiana.--On March 4, 1998, Steven Herman and Indiana Department of
    Environmental Management Commissioner John Hamilton met to discuss
    concerns with the state's audit law. Staff held a series of follow-up
    conference calls in March and April 1998. In April 1998, the state
    submitted a draft Attorney General's statement. EPA is currently
    preparing a letter to the state describing its remaining concerns.
        Minnesota.--Since December 1997, EPA and the state have held
    several conference calls to discuss the effect of the audit law. In
    February 1998, the state sent EPA a draft Attorney General statement.
    In May 1998, EPA sent a letter to the state describing its remaining
    concerns.
        Arkansas.--The state has not yet replied to EPA's letter from
    September 1997 to the Arkansas Department of Pollution Control &
    Ecology outlining legal concerns with Arkansas' audit privilege and
    immunity law. The Arkansas legislature does not reconvene until 1999
    and so cannot consider amendments to their law until then. EPA has
    continued to speak informally to the state about the audit law.
        Colorado.--Since 1994, before the enactment of the audit law, EPA
    has sent a series of letters to and participated in meetings with the
    state to discuss the effect of the state's audit law. Most recently, in
    February 1998, EPA sent a letter to the state, responding to the
    state's November 1997 letter. In March, EPA staff began to participate
    in a series of meetings with state officials.
        Montana.--In November 1997, EPA sent a letter to the state posing
    questions regarding the impact of the state's audit law. In April 1998,
    EPA received a draft state response, which is currently under review.
        South Dakota.--In June 1997, EPA sent a letter to the state posing
    questions regarding the impact of the state's audit law. In March 1998,
    the State sent a draft Attorney General opinion to EPA, which is
    currently under review.
        Alaska.--In March 1998, EPA sent a letter to the state regarding
    the impact of the state's audit law. In April 1998, the State sent a
    response, which is currently under review.
        Oregon.--EPA has conferred informally with the State and is
    currently preparing a letter to the state regarding the impact of the
    state's audit law.
        With regard to overfiling, the Agency's analysis shows that
    overfilings are a relatively rare event. Overfilings represent a
    fraction of 1 percent of state enforcement cases. EPA considers
    overfiling state enforcement actions where the state's action in
    response to environmental violations is not timely or appropriate.
    Where a state law immunizes serious violations, the state may be unable
    to take timely and appropriate enforcement action. If the state's
    response to self-disclosed violations is timely and appropriate,
    however, EPA will not pursue formal enforcement actions. EPA's exercise
    of its enforcement discretion generally takes into account
    considerations such as the nature of any harm to human health or the
    environment, the status of remedial measures, the need to ensure that
    violators do not obtain an economic advantage over law-abiding
    competitors, and other factors.
        A specific example of a case in which a state audit privilege and
    immunity law interfered with a state's ability to enforce in a timely
    and appropriate manner involves a company that violated the Clean Air
    Act for as many as ten years. In some cases, the facility's violations
    resulted in excess emissions of volatile organic compounds (VOC's),
    which can contribute to high levels of ozone and cause significant
    health and environmental problems at ground level. The company's
    violations are particularly troubling because they occurred in an area
    that already fails to meet national air quality standards for ozone.
    Under the state audit law, the company was granted immunity from state
    prosecution and all penalties were waived, including penalties to
    recover the substantial economic windfall that the company gained from
    violating the law. Even though the company's law-abiding competitors
    invested in the control equipment needed to meet VOC standards, the
    immunity granted under the state audit law made it necessary for EPA to
    step in and seek to ensure that the company not be allowed to profit
    unfairly and to the detriment of public health and the environment
    because it did not make the same timely investment.
                   audit policy: audit information privilege
        Question. EPA has consistently stated its strong objection to
    creation of an audit information privilege. Is there any conceivable
    statutory approach, or specific wording, that EPA can propose to either
    Congress or the states that would satisfy the Agency's concerns about
    the creation of a limited evidentiary privilege for audit-related
    documents?
        Answer. No. EPA views any environmental audit privilege as bad
    public policy and simply unnecessary. Audit privilege laws interfere
    with law enforcement, impede public right-to-know, and breed
    litigation. Audit privilege laws keep environmental compliance
    information secret from the state and from the public. Thus, an audit
    privilege interferes with a state's ability to obtain the information
    it needs to protect human health and the environment. For example,
    information on the cause of violations, the environmental harm
    resulting from violations, and the steps needed to correct the
    violation and prevent recurrence may all be shielded by an
    environmental audit privilege. In the case of an actual or threatened
    imminent or substantial endangerment, the regulator should have
    immediate and unencumbered access to the best available information,
    which may be present in an audit report. If so, information needed to
    protect the public would be unavailable due to the procedural hurdles
    set up by an audit privilege.
        An audit privilege also makes critical information unavailable to
    the public. For example, a company may be able to use an audit
    privilege to hide information concerning its release of hazardous
    pollutants into the community even where those pollutants are causing
    health problems for the public. The public may not be able to obtain or
    use the information to stop the emissions, or to seek compensation for
    their medical bills or other damages resulting from the hazardous
    pollutants.
        Many state audit privilege and immunity laws also contain sanctions
    for those who disclose violations based on information taken from the
    audit. Such sanctions protect the violator at the expense of the good
    citizen attempting to report violations or potential hazards to the
    State. Historically, public tips and citizen enforcement have served as
    important sources of information and triggers for governmental
    environmental enforcement and compliance actions. Audit privileges
    interfere with citizens' ability to protect themselves and others.
        Audit privilege laws also engender expensive and counter-productive
    litigation. Under state audit privilege laws, where an audit privilege
    claim is asserted, the party seeking the information must invoke
    whatever legal proceedings are available in the particular jurisdiction
    to obtain the documents. Such proceedings usually involve in camera
    hearings at which testimony and other independent evidence is often
    required in order to demonstrate that a violation has been committed
    and remains uncorrected or that another exception to the privilege
    applies. Such an inquiry is particularly likely to be complex and time
    consuming because many such laws contain ambiguous definitions,
    standards, and procedures for application of the privilege. If any
    documents are determined to be privileged, then a further set of
    hearings is likely to follow in which the plaintiff or prosecutor must
    demonstrate that all other evidence was obtained independently of the
    privileged document. The burden of such ``exclusionary rule'' and
    ``fruit of the poisonous tree'' proceedings has long been recognized in
    our criminal justice system.
        Research shows that an audit privilege is simply not needed to
    encourage environmental auditing. Environmental auditing has increased
    to the point where it is already standard practice for 75 percent of
    corporations responding to a 1995 survey by Price Waterhouse, and is
    growing among the remaining 25 percent as well. Most companies do not
    view privilege as a precondition to conducting auditing--they see good
    business reasons for auditing. A 1995 Government Accounting Office
    study of the practice of environmental auditing also recognizes that
    environmental auditing emerged as a compliance management tool in the
    late 1970's, and developed and spread through the 1980's, as corporate
    managers realized that environmental auditing was an important tool for
    managing compliance and environmental performance. United States
    Government Accounting Office, Report to the Ranking Minority Member,
    Committee on Governmental Affairs, U.S. Senate, ``Environmental
    Auditing: A Useful Tool That Can Improve Environmental Performance and
    Reduce Costs'' (GAO/RED-95-37 April 1995).
            drinking water research priorities for fiscal year 1999
        Question. EPA faces a substantial drinking water regulatory agenda.
    What are EPA's drinking water research priorities for fiscal year 1999?
    Are the requested resources and institutional capacity adequate to meet
    these priorities?
        Answer. The EPA has provided and will continue to provide strong
    support to the Safe Drinking Water Act and 1996 Amendment (SDWA)
    priorities. The Agency developed two peer reviewed research plans to
    address many of these SDWA priorities [Research Plan for Microbial
    Pathogens and Disinfection By-Products in Drinking Water (December
    1997), and Research Plan for Arsenic in Drinking Water (February
    1998)]. Implementation of these plans and other high priority drinking
    water research are coordinated between EPA's Offices of Research and
    Development, and Water.
        In 1999, EPA has requested a total of $35.6 M and 189.8 workyears,
    which will continue to provide strong support to the SDWA priorities.
    The Agency's drinking water research will focus on sensitive
    subpopulations, adverse reproductive effects of drinking water
    contaminants, research on selected disinfectant by-products and
    arsenic, and waterborne disease occurance studies, as well as treatment
    and maintenance of water quality in the distribution system.
                       regional haze: advance rulemaking
        Question. Since the regional haze program is one of aesthetics, and
    not driven by public health concerns, why is the Agency advancing this
    rulemaking ahead of other funding priorities and rulemakings which will
    provide public health benefits? Isn't this inconsistent with a risk-
    based approach to regulation? Shouldn't, at a minimum, the Agency
    realign the schedule for regional haze SIP's to coincide with the NAAQS
    PM-2.5 process?
        Answer. The regional haze program addresses more than
    ``aesthetics.'' Improvements in visibility have real quality of life
    and economic benefits as well. The EPA (Environmental Protection
    Agency) is developing the regional haze rulemaking consistent with the
    schedule established in section 169B of the Clean Air Act, which calls
    for EPA to promulgate regulations which assure reasonable progress
    toward meeting the national goal of preventing any future and remedying
    any existing impairment of visibility within 18 months of receiving the
    recommendations from the Grand Canyon Visibility Transport Commission.
    Section 169B further calls for EPA to require a SIP submittal one year
    from promulgation of these regulations. The rule proposed by EPA would
    limit the scope of this SIP to addressing initial planning activities.
        Because fine particles are the principle cause of visibility
    impairment, the proposal emphasizes the importance of coordination of
    planning and controls strategy implementation activities for regional
    haze and PM-2.5 standards.
        Another regional haze SIP revision would be required subsequently
    in which the States would have flexibility to establish appropriate
    reasonable progress targets and to include any necessary emission
    management strategies to achieve these targets. It is EPA's intent to
    coordinate the timing of this second SIP revision for regional haze
    with the SIP's required for PM-2.5 nonattainment areas.
        The Transportation Equity Act, which recently passed the House and
    Senate, also requires EPA to harmonize the schedules for State
    submissions of regional haze and PM-2.5 SIP's.
                          regional haze: class i areas
        Question. How many of the 156 class I areas currently have the
    necessary monitors to acquire all the data required by the proposed
    rule?
        Answer. There are currently 58 class I areas that have monitoring
    to measure PM-2.5 concentrations for visual air quality and other
    related data. Of the 156 class I areas, 98 do not currently have any
    monitoring.
        Question. How much funding is needed for the monitoring networks
    for the class I areas?
        Answer. Seventy-eight new visibility sites in or near Federal class
    I areas are planned for deployment in 1998 and 1999. The estimated
    costs are $2.5 million for 1998, and $4.4 million for 1999.
        Starting in the year 2000, approximately $3.6 million per year will
    be needed for the expanded network of 108 visibility sites.
        Question. How much funding in the fiscal year 1999 budget request
    is for the establishment of this monitoring network?
        Answer. EPA has identified a need for $3.1 million for expanding
    the visibility monitoring network as part of Sec. 103 State grant
    dollars. The budget request includes $1.3 million for the existing
    monitoring work. The total is $4.4 million.
        Question. Will EPA fund all the costs associated with the
    monitoring network or will states be required to provide funding?
        Answer. EPA will pay for all the costs associated with monitoring
    equipment, analysis and quality assurance. The Federal Land Managers
    (NPS, FS and FWS) provide the field personnel to operate the monitors.
    The States will not have to incur any additional cost.
        Question. How much effort has EPA devoted to the coordination of
    the monitoring networks needed for visibility and for the PM-2.5
    ambient standards?
        Answer. EPA recognizes the importance in coordinating the
    monitoring networks for visibility and PM-2.5. Visibility impairment in
    class I areas is caused primarily by fine particles. Measurements of
    fine particles in class I and rural areas can help characterize the
    regional transport of fine particles. The visibility aerosol monitor
    (called the IMPROVE PM-2.5 sampler) is very comparable to the PM-2.5
    Federal Reference Method (FRM) monitor which will be utilized in the
    new PM-2.5 network. In fact, the PM-2.5 monitoring regulations provided
    for coordination between the two networks by allowing the States to use
    the IMPROVE PM-2.5 sampler in lieu of the PM-2.5 FRM at regional
    background/transport monitoring sites (2 required per State). This
    allows the visibility monitors to provide background and regional
    transport information to the PM-2.5 program in a format which is
    comparable to the PM-2.5 aerosol measurements.
        EPA Regional Offices are working closely with the States to
    coordinate the development and review of PM-2.5 network designs, an
    important component of which is regional transport and regional
    background monitoring, with existing and potential new IMPROVE
    visibility monitoring site locations. Furthermore, EPA chairs the
    Interagency IMPROVE Steering Committee which oversees the development
    of the nation's visibility network. This committee consists of
    representatives of State agencies, Federal Land Management Agencies,
    EPA, and NOAA. All parties are working very closely to meet their
    mutual needs for PM-2.5 and visibility monitoring.
                       regional haze: visibility research
        Question. When Congress passed the Clean Air Act Amendments of
    1990, it envisioned the States taking the lead on specifying the
    substance of the program and EPA's playing an important supportive
    role. Accordingly Congress authorized $40 million over five years for
    EPA to conduct visibility research and report writing. How much funding
    has EPA devoted to visibility research and report writing since 1990?
        Answer. Best estimates for visibility research since 1990 are:
        By Calendar year:
        1991: Project MOHAVE: $2,766,000--Visibility Monitoring for all
    Class I areas: $500,000; and Contribution to National Academy of
    Sciences review of Visibility Science: $100,000.
        1992: Project MOHAVE: $724,000--Visibility Monitoring for all Class
    I areas: $1,000,000; Castnet Visibility Monitors: $207,000; and Inter-
    Agency Workgroup on Air Quality Modeling: $700,000.
        1993: Project MOHAVE: $450,000--Visibility Monitoring Support for
    all Class I areas: $1,000,000; Castnet Visibility Monitors: $486,000;
    and Inter-Agency Workgroup on Air Quality Modeling: $290,000.
        1994: Project MOHAVE: $117,000--Grand Canyon Visibility Transport
    Commission: $1.4 million; Visibility Monitoring Support for all Class I
    areas: $900,000; Visibility Impairment and Process and Measurement
    Research: $550,000; and Castnet Visibility Monitors: $429,000.
        1995: Project MOHAVE: $290,000--Visibility Monitoring Support for
    all Class I areas: $1,000,000; and Castnet Visibility Monitors:
    $226,000.
        1996: Visibility Monitoring Support for all Class I areas:
    $1,000,000; and Castnet Visibility Monitors: $186,000.
        1997: Project MOHAVE $300,000--Visibility Monitoring Support for
    all Class I areas: $1,200,000; and Castnet Visibility Monitors:
    $343,000.
        1998: Visibility Monitoring Support for all Class I areas:
    $2,300,000; and Castnet Visibility Monitors: $300,000.
        NOTE: The work itemized above does not include substantial
    resources to develop new regional modeling platforms, such as MODELS3.
    The Environmental Protection Agency (EPA) has spent approximately $6.1
    million on regional particulate model development. These air quality
    models will be used by EPA and the States for strategy assessment
    during the coordinated implementation of ozone, fine particulate
    matter, and regional haze programs.
        Question. Has EPA completed all of the reports regarding the
    science and technology of air quality visibility that Congress
    requested?
        Answer. Yes. The EPA has completed all requirements for reports in
    Sec. 169B(a) of the Clean Air Act. Specifically, the EPA completed its
    report to Congress on the effects of the Clean Air Act Amendments of
    1990 on Visibility in mandatory Class I Federal areas in October 1993
    (``Effects of the 1990 Clean Air Act Amendments on Visibility in Class
    I Areas: An EPA Report to Congress,'' EPA 452/R-23-014). The EPA
    completed an interim findings report on research related to visibility
    in February, 1995 (``Interim Findings on the Status of Visibility
    Research,'' Office of Research and Development, U.S. Environmental
    Protection Agency, February 1995).
        Question. How much funding does EPA need in today's dollars to
    complete these assignments?
        Answer. No funding is needed for general research on the science of
    visibility. However the EPA has requested funds to support work on
    technical tool refinement to help States implement a visibility
    protection program.
        Question. Should we ask EPA to complete this work or should it be
    reassigned to the States?
        Answer. The EPA has made substantial progress in developing the
    needed technical products and is currently working with the States on
    relevant technical issues. For example, EPA is the major financial
    supporter of the Western Regional Air Partnership on issues related to
    implementing strategies to protect visibility. The EPA looks forward to
    continuing that cooperative relationship in addressing national
    regional haze protection. As compared to continuing to provide support
    for unified efforts to develop a nationally consistent set of technical
    products, EPA believes it would be far more expensive to attempt to
    fund individual States to develop technical tools that will be needed
    by all States.
        Question. How much time and money would the States need to take on
    this assignment?
        Answer. The States will need to develop their own priorities for
    addressing visibility technical work that is specific to their needs.
    The Environmental Protection Agency (EPA) has supported technical work
    for implementation of many Clean Air Act programs, including the
    existing visibility protection provisions. The EPA looks forward to
    continuing its support role with the States.
                              mexico border funds
        Question. There are a number of financial and regulatory problems
    which complicate the installation and successful hookup of drinking
    water and wastewater services to unserved households in the U.S.-Mexico
    border region, including (1) household capital costs of improvements,
    (2) jurisdiction conflicts between state and local governments and
    water supply corporations, (3) inconsistent national, state, and local
    building code requirements associated with home improvements required
    for participation in the water projects, and (4) the lack of
    coordination between EPA, HUD, and USDA water infrastructure projects.
    How significant are these problems and what remedies has EPA used or
    planned to use to address these problems?
        Answer. The problems that are identified are not significant in the
    sense that they are not preventing the construction of the water and
    wastewater infrastructure in the colonias. These problems have been
    known for some time and positive efforts have been initiated and are
    being implemented to minimize their effects.
    1. Household capital costs
        The EPA colonia grants can be used to assist the completion of
    household connections. This type of assistance has been made a priority
    in colonia projects where the initial funding has successfully created
    the needed treatment and collection system. In addition, the Border
    Environment Infrastructure Fund (BEIF) can include household
    connections in the project financing structure. The BEIF is an EPA
    funded program administered by the North American Development Bank to
    assist in the design and construction of water and wastewater
    infrastructure in the U.S./Mexico border.
    2. Jurisdiction Conflicts
        State laws and requirements define the jurisdiction and authority
    for providing water and wastewater service to communities. In cases
    where there is overlap the state will mediate. While there have been
    some conflicts this is not a major issue. The States have provided a
    cooperative environment that has resulted in fair and equitable results
    to all parties without major delays to providing needed services to the
    colonias.
    3. Inconsistent Housing Code Requirements
        The requirement for a licensed plumber for indoor plumbing and
    household connections is the only code-related issue associated with
    EPA funds. This issue has been resolved on a case-by-case basis at the
    local level. Code requirements are specified at the state and local
    level, not by EPA.
    4. EPA, HUD, USDA Coordination
        It is recognized that there may have been issues regarding
    coordination among Federal agencies during the early stages of the
    colonias program. Over time, however, the involvement of several
    Federal agencies has been an asset, since an ongoing dialogue has
    resulted in a cooperative, shared approach to solving problems on a
    project-by-project basis. This has been established for several years
    through a Texas colonias group made up of Federal and state agencies
    involved with colonias water and wastewater infrastructure. This effort
    was initially begun by EPA, and has continued under the chairmanship of
    the Texas Water Development Board.
              reg flex: sbrefa federal and proposed rule conflict
        Question. During the SBREFA panel process, did any of the small
    entity representatives (``SER's'') provide the Panel with any
    information regarding the following: other Federal rules that the SER's
    believe overlap, duplicate or conflict with the proposed rule; any
    reporting, recording or monitoring requirements that SER's believe
    small entities will be required to comply with if the proposed rule is
    promulgated; the cost of any equipment likely to be required to comply
    with the proposed rule; the cost of land or facilities likely to be
    required to comply with the proposed rule; any increase in pressures
    for consolidation within the industry; and any impact on employment
    within small entities. (OPPE should confer with OW and OAR when
    preparing response).
        Answer. To date, EPA has completed six Small Business Advocacy
    Review (SBAR) Panels under the Regulatory Flexibility Act, as amended
    by the Small Business Regulatory Enforcement Fairness Act (RFA/SBREFA)
    (See Table 1). Each SBAR Panel has four members: EPA's Small Business
    Advocacy Chair, a senior manager from the EPA program office developing
    the subject rule, the Chief Counsel for Advocacy of the Small Business
    Administration and a representative of the Office of Information and
    Regulatory Affairs within the Office of Management and Budget. Every
    rule is unique, so each SBAR Panel addresses new issues that are
    relevant to the subject rule, but in every case, pursuant to section
    609(b) of RFA/SBREFA, the Panel collects the advice and recommendations
    from Small Entity Representatives (SER's) on issues relating to key
    elements of an Initial Regulatory Flexibility Analysis, which are:
      --A description of and, where feasible, an estimate of the number of
            small entities to which the proposed rule will apply.
      --Projected reporting, record keeping, and other compliance
            requirements of the proposed rule, including an estimate of the
            classes of small entities which will be subject to the
            requirements and the type of professional skills necessary for
            preparation of the report or record.
      --An identification, to the extent practicable, of all other relevant
            Federal rules which may duplicate, overlap, or conflict with
            the proposed rule.
      --Any significant alternatives to the proposed rule which accomplish
            the stated objectives of applicable statutes and which minimize
            any significant economic impact of the proposed rule on small
            entities.
        Within 60 days of its convening and after consulting with the SER's
    and considering any other materials the Agency has prepared, the Panel
    prepares a report for the Administrator of EPA to consider in the
    preparation of the proposed rule. In each SBAR Panel report, the
    comments of the SER's are summarized and discussed. Copies of the
    written SER comments are also attached to the reports. With respect to
    the six specific issues in your question, comments from SER's to the
    Panel on these issues varied considerably from rule to rule for the six
    completed SBAR Panels. Detailed discussions of the comments and copies
    of the written comments are available in each of the SBAR Panel
    reports. A summary of input from the SER's on these six specific issues
    is presented below in Table 2.

                 TABLE 1--SUMMARY OF EPA RFA/SBREFA SBAR PANELS
    ------------------------------------------------------------------------
             Title (Office)                Convened            Completed
    ------------------------------------------------------------------------
    Nonroad Diesel Engines (OAR)....  Mar. 25, 1997.....  May 23, 1997.
    Industrial Laundries Effluent     June 6, 1997......  Aug. 8, 1997.
     Guideline (OW).
    Stormwater Phase II (OW)........  June 19, 1997.....  Aug. 7, 1997.
    Transportation Equipment          July 16, 1997.....  Sept. 23, 1997.
     Effluent Guideline (OW).
    Centralized Waste Treatment       Nov. 6, 1997......  Jan. 23, 1998.
     Effluent Guideline (OW).
    UIC Class V Wells (OW)..........  Feb. 17, 1998.....  April 17, 1998.
    ------------------------------------------------------------------------

        Question. During the SBREFA panel process, did any of the small
    entity representatives (``SER's'') provide the Panel with any
    information regarding the following:

                                                         TABLE 2
    ----------------------------------------------------------------------------------------------------------------
           Specific Subquestions           Nonroad       Stormwater       Laundries       TECI       CWT     UIC C-V
    ----------------------------------------------------------------------------------------------------------------
    Other Federal rules that the SER's  Y             Y                Y               Y          Y         Y
     believe overlap, duplicate or
     conflict with the proposed rule.
    Any reporting, recording or         Y             Y                Y               Y          Y         Y
     monitoring requirements that
     SER's believe small entities will
     be required to comply with if the
     proposed rule is promulgated.
    The cost of any equipment likely    N             N                Y               Y          Y         N
     to be required to comply with the
     proposed rule.
    The cost of land or facilities      N             N                N               N          N         N
     likely to be required to comply
     with the proposed rule.
    Any increase in pressures for       N             N                Y               N          N         N
     consolidation within the industry.
    Any impact on employment within     N             N                Y               N          Y         N
     small entities.
    ----------------------------------------------------------------------------------------------------------------

             regulatory flexibility: national pretreatment program
        Question. Reg Flex requires an identification of rules which
    duplicate, overlap or conflict with the proposed rule. On page 9-5, the
    relevant portion of the Reg Flex analysis states, in its entirety, the
    ``EPA addressed concerns about duplication by excluding onsite
    laundries, since these facilities are the most likely to be covered by
    another effluent guideline or standards or might be covered by future
    effluent guidelines. See EPA's discussion of the onsite laundries
    exclusion in the preamble to the proposed rulemaking.''
        Why doesn't the Reg Flex analysis make any mention of the National
    Pretreatment Program which currently regulates companies like
    industrial laundries that send their wastewater to public sewage
    plants? Isn't there some overlap or duplication between this new rule
    and the pretreatment program?
        Answer. The proposed pretreatment standards do not overlap or
    duplicate existing requirements under EPA's pretreatment program.
    Rather, the proposed standards, if promulgated, would represent a new
    component of the existing program. As you know, EPA regulations,
    adopted pursuant to section 307 of the Clean Water Act, among other
    provisions, establish a national program to control pollutants which
    may pass through or interfere with treatment processes at publicly
    owned treatment works (POTWS) or which may contaminate sewage sludge.
    Under the national program, POTW's administer their own programs to
    regulate the discharge of industrial waste waters, such as those from
    industrial laundries, into the POTW. The national program contains
    three types of substantive restrictions on the introduction of
    pollutants into POTW's that apply to those dischargers of industrial
    waste waters. These standards are nationally-applicable prohibited
    discharge standards (such as the prohibition against discharges of
    explosive materials), nationally-applicable categorical pretreatment
    standards and locally-applicable local limits. Each of these standards
    is designed to implement the proscription against industrial discharges
    that would pass through the POTW plant untreated or would interfere or
    otherwise be incompatible with continued operation of the POTW plant.
    POTW's develop local limits on a case-by-case basis sometimes with
    limited data. (EPA regulations describe the specific circumstances in
    which a POTW must develop local limits, generally related to the size
    of the POTW and whether the POTW is receiving pollutants that pass
    through or interfere with the operation of the POTW, 40 C.F.R.
    Sec. 403.8.) Categorical pretreatment standards, such as those in the
    new rule for industrial laundries, are based on review of a larger,
    nationwide data set to evaluate costs and technologies.
        There is no overlap or duplication between existing local limits
    and the proposed pretreatment standards, because any new categorical
    standards, if adopted, would apply only to the extent they are more
    stringent than the requirements already imposed by the local wastewater
    authority (or that arise as a result of the general prohibitions on
    certain discharges). Stated another way, the new standards are
    incremental to the existing requirements of the National Pretreatment
    Program. The existing requirements (such as those imposed by a local
    pretreatment program) are incorporated into the regulatory flexibility
    analysis as part of baseline economic conditions. Then, costs to comply
    with new pretreatment standards are added to that baseline.
            regulatory flexibility: industrial laundries compliance
        Question. What about new reporting and record keeping requirements?
    Why doesn't the Reg Flex Analysis describe the host of requirements
    that industrial laundries will have to comply with as a new
    ``categorical'' industry? These requirements may not be printed in this
    rule, but this rule puts laundries on the list of industries with
    ``categorical'' standards, and all ``categorical'' standards, and all
    categorical industries have significant reporting requirements. Does
    EPA take the position that a Reg Flex analysis does not have to assess
    these reporting requirements?
        Answer. Industrial laundries subject to the pretreatment standards
    but not previously designated as significant industrial users by the
    pretreatment control authority will be subject to the monitoring and
    reporting requirements for significant industrial users in 40 CFR 403
    as a result of promulgation of the pretreatment standards. These
    facilities will be required to submit a baseline monitoring report if
    they have not previously provided that information to the control
    authority. Likewise, compliance monitoring reports will be required.
    Although these monitoring, record keeping and reporting requirements
    are not specified in the proposed pretreatment standards, an estimate
    of the cost of monitoring is included in the annual operating and
    maintenance cost associated with this rule. This estimate, which is
    included in the regulatory flexibility analysis, is based upon an
    assumption of monthly monitoring for all limited parameters. EPA's
    estimate of economic impact conservatively assumes that this monitoring
    would commence within 6 months of promulgation, rather than on the date
    compliance is required (3 years after promulgation). EPA believes this
    estimate is sufficient to take into consideration both baseline
    monitoring requirements and routine compliance monitoring that is
    likely to be required by the pretreatment control authority.
                            gulf of mexico: hypoxia
        Question. In addition to the $4.3 million proposed in your fiscal
    year 1999 budget for the Gulf of Mexico Program office, what other
    Federal agencies are spending money on activities related to hypoxia in
    the Gulf of Mexico? How much are they spending, and on what activities?
        Answer. The $4.3 million proposed in the fiscal year 1999 budget is
    not exclusively for hypoxia-related activities. Nutrient enrichment is
    one of four major focus areas for the Gulf of Mexico Program (GMP). The
    GMP is a broad constituency of government and non-government
    organizations that are working together to: (1) reduce nutrient
    pollution; (2) restore shellfish growing waters and protect
    recreational waters; (3) improve and protect important coastal habitat;
    and (4) prevent the introduction of nonindigenous species in Gulf
    coastal waters. Hypoxia in the northern Gulf of Mexico is one component
    of the GMP's efforts to reduce nutrient pollution. The proposed fiscal
    year 1999 budget for this effort is approximately $300,000.
        Other Federal agencies are working with the Environmental
    Protection Agency (EPA) and the GMP in an effort to address the
    problems with nutrient over-enrichment in the Mississippi/Atchafalya
    River System. Nutrient loadings from this river system have been
    associated with the hypoxia issue in the northern Gulf. The Federal
    agencies participating in this effort are using funding from existing
    programs and authorities to address any nutrient enrichment and hypoxia
    issues that are within their mandate.
        EPA, in partnership with the GMP and other Federal agencies, in
    June 1997 compiled a document entitled ``Interagency Hypoxia Response
    Activity Report'' (Attachment 1). This document summarizes each
    agency's programs which may be applied to nutrient enrichment and
    hypoxia-related activities, including specific budget information where
    available. A table entitled ``Priority Hypoxia Response Program
    Activities for fiscal year 1997'' is also attached. (Attachment 2)
        Question. How much is the Federal government spending to verify the
    scientific theory that hypoxia in the Gulf of Mexico is directly linked
    to nutrient runoff from agricultural fields? Is the process open and
    peer reviewed?
        Answer. In 1997, an interagency group of senior Federal
    representatives formed a Task Force and recommended that an assessment
    of the scientific knowledge and understanding of hypoxia be conducted.
    The Task Force, through EPA, asked the White House Office of Science
    and Technology Policy to conduct a scientific assessment of the causes
    and consequences of Gulf hypoxia through its Committee on Environment
    and Natural Resources (CENR). A Scientific Evaluation and Support
    Committee (SESC) was formed under the leadership of CENR to conduct the
    hypoxia science assessment. The SESC or ``Hypoxia Work Group'' is
    comprised of representatives from the following:
        1. Department of Agriculture;
        2. Department of Commerce/National Oceanic and Atmospheric
    Administration (Lead);
        3. Department of Defense/Army Corps of Engineers;
        4. Department of Defense/Office of Naval Research;
        5. Department of Energy;
        6. Department of Health and Human Services/National Institute of
    Environmental Health Services;
        7. Department of Interior/Minerals Management Service;
        8. Department of Interior/U.S. Geological Survey;
        9. Department of State;
        10. Environmental Protection Agency;
        11. National Aeronautics and Space Administration;
        12. National Science Foundation;
        13. National Science Foundation Smithsonian Institution.
        The Hypoxia Work Group is addressing the issue of what is known
    about the hypoxia zone along the coast of Louisiana (its causes and
    effects) and what might be done to address the problem. The effort is
    addressing all possible sources of nutrients to the Mississippi River
    and the Gulf. The assessment will provide a series of interrelated
    reports, examining various aspects of the hypoxia issue. These reports
    will address the following topics:
        1. Characterization of hypoxia: distribution, dynamics, and causes.
    This report will describe seasonal, interannual, and long-term
    variation of hypoxia in the northern Gulf of Mexico and its
    relationship to nutrient loadings.
        2. Ecological and economic consequences of this hypoxia. This
    report will evaluate the ecological and economic consequences of
    hypoxia, including impacts on Gulf of Mexico fisheries and the regional
    and national economy.
        3. Sources and loads of nutrients transported by the Mississippi
    River to the Gulf of Mexico. This report will identify the sources of
    nutrients within the Mississippi/Atchafalya system and within the Gulf
    of Mexico with two distinct components. The first is to identify where,
    within the basin, the most significant nutrient additions to the
    surface water occur. The second, more difficult component, is
    estimating the relative importance of specific human activities in
    contributing to these loads.
        4. Effects of reducing nutrient loads to surface waters within the
    basin and the Gulf of Mexico. This report will estimate the effects of
    nutrient source reductions in the Mississippi/Atchafalya on water
    quality in these waters and on primary productivity and hypoxia in the
    Gulf of Mexico.
        5. Evaluation of methods to reduce nutrient loads to surface water,
    ground water, and the Gulf of Mexico. This report will identify and
    evaluate methods to reduce nutrient loads to surface water, ground
    water, and the Gulf of Mexico.
        6. Evaluation of social and economic costs and benefits of methods
    (identified in Topic # 5) for reducing nutrient loads.
        The assessment of the causes and consequences of Gulf hypoxia is
    intended to provide scientific information that can be used to evaluate
    nutrient management strategies, and to identify gaps in our
    understanding of this problem. NOAA leads this effort which includes
    teams of academic, Federal, and state scientists from within and
    outside the Mississippi River watershed. A detailed description of this
    effort and the process for the assessment, which includes peer review
    and general comment periods (detailed in Attachment 3), is provided in
    the Gulf of Mexico Hypoxia Assessment Plan. (Attachment 4)
        The amount of funding, source of funding, and recipient for each of
    the CENR topics is identified in Table 1. An estimate of the in-kind
    resource commitments from each of the participating agencies is given
    in Table 2. Five Federal agencies have provided the funding for the
    assessment which totals about $1.1 million.
        While NOAA has been asked to lead this CENR scientific assessment,
    oversight involves several Federal agencies and the assessment itself
    is being conducted in an open process by teams that include academic,
    Federal, and state scientists from within and outside the Mississippi
    River watershed. The assessment of the causes and consequences of Gulf
    hypoxia is intended to provide peer-reviewed scientific information
    that can be used to evaluate nutrient management strategies, and to
    identify gaps in our understanding of this problem. While the focus of
    the assessment will be on hypoxia in the Gulf of Mexico, the effects of
    changes in nutrient concentrations and loads and nutrient ratios on
    water quality conditions within the Mississippi/Atchafalaya riverine
    systems will also be addressed. In addition, the Assessment Plan
    provides several opportunities for public review and comment on the
    assessment reports.
                                     ______

                                  Attachment 1

                  interagency hypoxia response activity report
                                i. introduction
        The purpose of this report is to provide all stakeholders with a
    compilation of existing Federal programs which could be or are being
    used to aid in alleviating hypoxia in the Gulf of Mexico. Over the past
    several years many agencies in all sectors collected data and began
    evaluating the conditions of nutrient overenrichment and hypoxia. These
    efforts focused on understanding the issue and exploring activities
    which could begin to address and alleviate the potential problem. The
    current focus is to identify and coordinate implementation activities
    throughout the Mississippi and Atchafalaya River systems and the Gulf
    of Mexico. Rather than inventing new programs, many Federal agencies
    can re-direct their existing activities to focus on the hypoxia issue,
    especially for nutrient management.
        Background.--In the aquatic environment hypoxia refers to the
    condition where dissolved oxygen measurements are so low (less than 2
    parts per million or PPM) that little, if any, organisms such as fish
    and shellfish can continue to live and survive. This condition occurs
    in various locations throughout the world, but one of the largest and
    most complex areas influenced by human activities, is in the Gulf of
    Mexico. The size of the hypoxic or low oxygen area varies spatially and
    seasonally and available information indicates an increase in overall
    size since the 1960's. After 1993 it doubled in size from about 3,500
    to 7,000 square miles. This oxygen-depletion is typically associated
    with the bottom waters but can extend upward into the water column for
    as much as 5 to 30 meters. Economically, the short term effects of this
    condition are not evident since commercial and recreational fishing
    thrives along the edges of the hypoxic area. However, hypoxia has led
    to the ``death'' of large water bodies such as Lake Erie and is a major
    concern in other United States coastal areas.
        Presently available research has shown a relationship between
    Mississippi River flow, riverborne nutrients, plankton productivity and
    bottom water hypoxia, although the quantification and understanding of
    the relationships is complex and components of these relationships need
    to be strengthened. The major focus for addressing the hypoxia
    environmental issue is on the Mississippi and Atchafalya River systems
    because they contribute 90 percent of the freshwater loading to the
    Gulf of Mexico and drain America's industrial and agricultural
    heartland. In particular, there is a focus on the importance of
    nutrient contributions to the Gulf because according to studies done by
    the United States Geological Survey (USGS), concentrations of nitrates
    in water discharged to the Gulf have increased by threefold since the
    1960's which appears to be related to the increase in the hypoxic area.
    The major sources of nitrogen contributions, according to USGS
    estimates, are from commercial fertilizer, animal manure, and legumes.
    However, there are also contributions from domestic and municipal waste
    and atmospheric deposition.
                            ii. response activities
        Representatives from the Federal agencies and the Gulf of Mexico
    Program Office involved in the interagency effort identified and
    categorized their current programs which are relevant to addressing the
    science support (understanding of hypoxia) or stewardship actions
    (nutrient management). They further subcategorized their efforts,
    described the overall program, and as appropriate, presented resources
    expended or available this fiscal year.
                a. united states environmental protection agency
        AGENCY: United States Environmental Protection Agency (EPA)
        PROGRAM: Clean Water Act (CWA) 319--Nonpoint Source NIPS) Program
        RESPONSE CATEGORY/SUBCATEGORY: Nutrient Management/Nutrient Source
    Management
        DESCRIPTION: At the Federal level the EPA administers a technical
    assistance/grant program to address nonpoint sources. Under the 319
    program, EPA provides grant funding to the States to be used for
    controlling nutrients and other nonpoint source pollution, usually with
    the implementation of Best Management Practices (BMP's). Typically,
    States determine the priorities of projects and EPA provides technical
    support and review of projects for statutory eligibility. For States in
    the Mississippi River drainage system, funding is about $65 million per
    fiscal year. For addressing the hypoxia issue EPA would recommend
    building upon the current voluntary, incentive driven approaches.
    Specifically at the Federal level, EPA would encourage States to target
    319 funding for improving and broadening the use of nutrient management
    plans NMP's) and BMP's for livestock, crops, and lawns and gardens. In
    particular, the wider application of vegetative filter strips as a
    nonpoint source BMP helps to remove nutrients in wet weather flows from
    agricultural and urban areas before water runoff reaches the system of
    creeks and streams flowing into the Mississippi River. These ``win-
    win'' nutrient management actions would benefit the landowner in
    achieving better utilization of nutrients and would reduce the amount
    of nutrient input the Mississippi River system and Gulf of Mexico. EPA
    would also share examples from other States/Regions (e.g. Iowa,
    Florida, Pennsylvania, Chesapeake Bay) where implementation of NMP's
    are used to reduce fertilizer use and save farmers money. These
    examples could be used for voluntary efforts within the States. There
    is typically a high degree of coordination with USDA and the
    Conservation Districts in this program. Since 1990 a total of $470
    million in UPS grants have been awarded under Section 319.
        AGENCY: United States Environmental Protection Agency (EPA)
        PROGRAM: Coastal Zone Act Reauthorization Amendments of 1990
    (CZARA)
        RESPONSE CATEGORY/SUBCATEGORY: Nutrient Management/Nutrient Source
    Management
        DESCRIPTION: Section 6217 of the Coastal Zone Act Reauthorization
    Amendments of 1990 (CZARA) required that States with federally approved
    coastal zone management programs (currently 29 States) develop Coastal
    Nonpoint Pollution Control Programs to be approved jointly by EPA and
    NOAA. Coastal Nonpoint Programs have been submitted by all 29 States
    (includes all Gulf of Mexico States except Texas) and are at various
    stages in the approval process. The purpose of the program is to
    achieve implementation of specified management measures for nonpoint
    sources within coastal watersheds by more fully integrating federal,
    state and local authorities. Coastal Nonpoint Programs build upon state
    and local authorities and expertise. Initially a technology-based
    approach is used followed by a water quality-based approach, where
    necessary to address known water quality problems and protect
    threatened waters. These state programs must include state and locally
    developed management measures which are in conformity with EPA's
    technical guidance. States have some flexibility to adapt the
    management measures where local climatic or hydrological conditions can
    be demonstrated to require it. NOAA and EPA have worked collaboratively
    with the States to help them develop approvable programs that both
    reflect local conditions and meet the goals of CZARA. In particular,
    all Coastal Nonpoint Programs include management measures to address
    nutrient management for agricultural, forestry, urban and marina
    activities. While very limited Federal resources specifically for
    implementation of approved Coastal Nonpoint Programs have been
    appropriated to date, actions identified in Section 6217 Programs are
    eligible for funding under Section 319 of the Clean Water Act (see
    separate entry) at the state's discretion. This is a win-win response
    in the sense that the coastal States would lead by example,
    demonstrating to upstream localities the successes of commitments to
    action to reduce nutrient discharges.
        AGENCY: United States Environmental Protection Agency (EPA)
        PROGRAM: National Pollutant Discharge Elimination System (NPDES)
        RESPONSE CATEGORY/SUBCATEGORY: Nutrient Management/Nutrient Source
    Management
        DESCRIPTION: Point source discharges are regulated under the
    National Pollutant Discharge Elimination System (NPDES) permits
    program. Nationally, EPA has direct review and enforcement authority
    over NPDES permits and administers the program directly unless
    individual States are authorized to run the program. Two levels of
    decisions govern the requirements of these permits. The first, requires
    the imposition of a standard level of treatment based on prescribed
    technologies that implement Best Conventional Pollutant Control
    Technology (BCT) or the Best Available Technology Economically
    Achievable (BAT) for industries, and secondary treatment for
    municipalities. These controls are largely in place for :municipalities
    and manufacturing operations, although many confined animal feeding
    operations have not been permitted. The second level of decision occurs
    when monitoring or modeling shows that water quality standards are not
    being met.
        Four types of point sources under the permit program are relevant
    to nutrient management. These are (1) Municipal sewage treatment or
    Publicly Owned Treatment Works (POTW's); (2) Stormwater runoff; (3)
    Industrial manufacturing facilities; and (4) Confined animal feedlots.
        Municipal Sewage Treatment.--Municipalities treat domestic and
    pretreated industrial wastewaters prior to discharge. With secondary
    treatment (the equivalent of BCT), municipalities reduce nitrogen
    loadings by an average of 30 percent. For the States within the
    Mississippi river system and Gulf of Mexico coastal marine environment,
    there are 12,394 sewage treatment plants with secondary treatment. EPA
    provides funding in States Revolving Funds (SRF's) which are state run
    funds that provide low cost loans to municipalities for infrastructure
    for sewage treatment plants and other pollution control projects (see
    entry on SRF's). Improved treatment, such as nitrification and
    denitrification, to solve local problems and benefit local
    jurisdictions could eventually have impacts on the nitrogen loadings to
    the Mississippi river system. However, such treatment is costly. For
    this fiscal year, EPA will begin to track loadings from municipal
    facilities based on information in the Permits Compliance System (PCS)
    database.
        Stormwater Runoff.--For stormwater runoff the EPA program requires
    an NPDES permit for stormwater systems of urban areas with a population
    of over 100,000 and also for some industrial activities (for Phase I;
    Phase II will impact smaller sites). Most nutrients in stormwater
    originate from municipal systems. Nutrients in runoff from storm water
    are controlled by requirements from EPA for large municipalities, by
    State requirements, or by county or local ordinances and programs. In
    the Mississippi river system and Gulf coast there are 42 NPDES permits
    for stormwater covering 72 municipal systems. These permits differ from
    other NPDES permits in that they require that the permitees develop and
    carry out storm water management plans based on best management
    practices instead of requiring enforceable numeric water quality
    limits. Some funding has been provided by EPA through a competitive
    grant program for communities that are not required to have a permit.
    Local fees can be used to generate revenues for stormwater containment.
    Municipalities would have a win-win response if they implement BMP's
    for stormwater because they would be preventing serious threats to
    their drinking water supplies and water quality while at the same time
    reducing the amounts of nutrients and other pollutants from discharging
    into the Mississippi system.
        Industrial Discharges.--Discharges from industrial processes, such
    as fertilizer manufacturers, are covered by NPDES permits based on
    national treatment requirements (BAT and BCT), and on water quality
    standards. Nationwide there are 6,600 or more large operators of which
    about 1,500 are in the NPDES permit compliance system. In States
    located in the Mississippi River system and Gulf of Mexico States there
    are 3,877 industrial permits for primarily major sources which control
    the discharge of nutrients. For this fiscal year, EPA will begin to
    track loadings from industrial facilities based on information in the
    Permits Compliance System (PCS) database. Industrial dischargers are
    discussed further in the ``science/research'' category.
        Confined Animal Feeding.--Certain feedlot operations are considered
    point sources and are covered by NPDES permits. In the Mississippi
    River system and Gulf of Mexico States there are 3,209 feedlot
    operations subject to NPDES permitting. For this fiscal year, EPA will
    focus on reducing loadings from confined animal feedlot operations
    (CAFO's) through a joint effort between the Office of Water and the
    Office of Enforcement and Compliance by evaluating facility compliance
    and targeting additional animal feeding operation that could have a
    significant impact on water quality for permit coverage. NPDES feedlot
    discharges and operations not covered by NPDES (also see NPS program
    description) are discussed further in the ``science/research''
    category.
        AGENCY: United States Environmental Protection Agency (EPA)
        PROGRAM: National Pollutant Discharge Elimination System (NPDES)
        RESPONSE CATEGORY/SUBCATEGORY: Science/Research on Hypoxia/Loading
    Characterization
        DESCRIPTION: In order to understand the effects nutrients are
    having on the hypoxic zone in the Gulf of Mexico, we need to quantify
    nutrient loadings by having accurate estimates of the amounts being
    discharged into the Gulf from the Mississippi River drainage system.
    This information will also provide more accurate data for predictive
    models used to study the effects of nutrients on the hypoxic area. Data
    exists to better quantify the loadings from point sources. In
    particular, EPA's permit compliance system (PCS) could be used, with
    enhancements, to quantify loadings from point source dischargers (i.e.
    industrial sources and permitted animal feeding operations).
        AGENCY: United States Environmental Protection Agency (EPA)
        PROGRAM: State Revolving Fund (SRF) Program--CWA Title VI
        RESPONSE CATEGORY/SUBCATEGORY: Nutrient Management/Nutrient Point
    Source Management/Estuary Management
        DESCRIPTION: The State Revolving Fund (SRF) program was created in
    the 1987 Amendments to the CWA to establish permanent and independent
    sources of financing for water quality infrastructure projects in each
    of the 50 States and Puerto Rico. EPA and the States provide
    capitalization funds or ``seed money'' to establish these loan funds.
    States are responsible for managing these funds over the long-term so
    that they remain viable sources of funding for the foreseeable future.
        SRF's provide below market financing (0.0 percent to below market)
    for a wide variety of projects to address water quality problems. SRF's
    can finance virtually any project included in a state's approved
    nonpoint source management plan or estuary management plan, including
    agricultural BMP's, manure storage facilities, stormwater management
    projects, as well as nutrient removal from municipal sewage treatment
    systems. As of June 30, 1995, the States in the Mississippi River
    system had SRF's with assets totaling more than $9.2 billion which are
    available to make loans for priority water quality projects.
        AGENCY: United States Environmental Protection Agency (EPA)
        PROGRAM: National Wetlands Program
        RESPONSE CATEGORY/SUBCATEGORY: Nutrient Management/Assimilate in
    Natural Environment
        DESCRIPTION: The creation or restoration of wetlands in areas where
    nutrient loadings are high would help to ``filter'' nutrient discharges
    while at the same time preserve the complex ecological wetland habitat
    along the river corridors of the Mississippi River system. By working
    to protect and restore wetlands through regulatory and non-regulatory
    mechanisms, EPA helps to limit and reduce the nutrient loading to the
    Mississippi tributary system, and ultimately to the Gulf. The creation
    of new marshland within the coastal area would provide additional
    vegetative filters that would reduce nutrient loadings to the Gulf. EPA
    is one of the Federal agencies with responsibilities under the Coastal
    Wetlands Planning, Protection, and Restoration Act (CWPPRA) which
    provides funding for wetlands projects mostly to coastal Louisiana.
        AGENCY: United States Environmental Protection Agency (EPA)
        PROGRAM: National Wetlands/Ecosystem Restoration Program
        RESPONSE CATEGORY/SUBCATEGORY: Science/Research/Research on
    Restoration Techniques
        DESCRIPTION: EPA's wetlands research program includes the
    investigation of wetland restoration and creation of wetland methods
    and how to improve their functional performance. Nutrient assimilation
    and transformation are included among the wetland functions that are
    studied. The program also includes research into other water quality
    improvement functions of wetlands, and into landscape level wetland
    processes, which can help establish priorities for protection/
    restoration of wetlands to meet environmental objectives, including
    nutrient removal. EPA is developing an Ecosystem Research Plan, which
    could provide additional research results of use in addressing the
    hypoxia problem. EPA is also part of the interagency Task Force
    evaluating alternative ways to respond to the erosion of coastal
    Louisiana wetlands, which will have implications for sediment and
    nutrient patterns in the Gulf.
        AGENCY: United States Environmental Protection Agency (EPA)
        PROGRAM: Water Quality Standards and Criteria
        RESPONSE CATEGORY/SUBCATEGORY: Science/Research
        DESCRIPTION: States usually have standards and criteria for
    ammonia-nitrogen, but not for other forms of nitrogen such as nitrate,
    nitrite, and total nitrogen. Also, ammonia and phosphorus standards and
    criteria are based on toxicity rather than eutrophication concerns.
    These gaps result in the lack of comprehensive limits for point sources
    discharging nutrient loadings to the Mississippi and Atchafalya rivers
    and Gulf system. EPA can assist States in development of their water
    quality standards based on available information. However, the need
    exists to evaluate and develop site-specific guidance for criteria. As
    a result of a National Nutrient Assessment Workshop, EPA is evaluating
    the following recommendations: setting nutrient standards on an
    ecoregional or watershed basis; involving organizations, States and
    societies in development of a national nutrient overenrichment
    assessment strategy; recognizing cultural eutrophication as a public
    health threat; considering land use as a separate early warning
    indicator, providing simple software models for decision making;
    investigating models for rivers, streams, estuaries, and wetlands; and
    using ``reference sites'' to develop baseline data. In another effort
    EPA is developing a dissolved oxygen criterion for the protection of
    marine and estuarine animals in the Virginian Province (i.e., Cape Cod
    to Cape Hatteras). The scientific analysis and overall approach for the
    development of this criterion will help in the development and
    evaluation of low dissolved oxygen criteria and standards in other
    coastal waters as well, including the Gulf of Mexico.
        AGENCY: United States Environmental Protection Agency (EPA)
        PROGRAM: Geographic Initiatives: Designated Watersheds
        RESPONSE CATEGORY/SUBCATEGORY: Science/Research/Geographic
    Demonstrations/Technical Assistance
        DESCRIPTION: Specific geographic areas can be targeted for the
    purpose of characterizing nutrient loadings, answering science
    questions on hypoxia, and for applying and ``ground-truthing'' any
    techniques or models developed. EPA regional offices work directly with
    States and watershed groups. Proposed targeted watersheds for each
    region within the Mississippi River/Gulf of Mexico system are: (1)
    Region 4--Yazoo River; (2) Region 5--Illinois River; (3) Region 6--
    Tensas River; and (4) Region 7--Iowa River. If selected, EPA and other
    Federal agencies can focus their many science/research efforts within
    these watersheds. EPA will encourage the use of grants and FTE's,
    including travel funding, for the purpose of providing technical
    assistance within these watersheds. Applied science/research activities
    in other watersheds which can also support nutrient management and
    hypoxia issues will be considered as part of this response. This would
    be a win-win response because communities within the watersheds would
    benefit from addressing their specific water quality problems while at
    the same time contribute to the understanding and reduction of hypoxia
    in the Gulf of Mexico.
        AGENCY: United States Environmental Protection Agency (EPA)
        PROGRAM: CWA 303(d)--Total Maximum Daily Loads (TMDL's)
        RESPONSE CATEGORY/SUBCATEGORY: Science/Research/Loadings
    Characterization
        DESCRIPTION: Clean Water Act (CWA) Section 303(d) establishes the
    TMDL process to provide for more stringent water quality-based controls
    when technology-based controls are inadequate to achieve State Water
    quality standards. When information shows that water quality standards
    will not be maintained with required controls (e.g. CWA Section 302)
    States must develop a TMDL for the affected waters. The TMDL prescribes
    the allowable loadings of pollutants from significant sources (both
    point and nonpoint) which will maintain water quality standards. For
    the Mississippi River system, EPA will evaluate and use the appropriate
    TMDL tools to assist with development of TMDL's for nutrients in water
    quality impaired areas. This response will complement other responses
    to characterize nutrient loadings to the Gulf of Mexico.
        AGENCY.: United States Environmental Protection Agency (EPA)
        PROGRAM: Clean Air Act Amendment 1992, Section 112m section 105
        RESPONSE CATEGORY/SUBCATEGORY: Science/Research/Loadings
    Characterization/Air Deposition
        DESCRIPTION: The Great Water Bodies Air Deposition program (or the
    Coastal Waters Air Deposition program) was established by Congress to
    investigate the levels and impacts of air deposition, especially on
    coastal States experiencing deposition from distant sources. This
    includes the Great Lakes, the east coast, and the Gulf of Mexico
    States. To date, investigations have centered in the Great Lakes and
    Chesapeake Bay Regions, and recently, some work was funded in Tampa Bay
    and Galveston Bay. This year, OAR also provided some funds under
    Section 105 to expand the investigations in estuaries such as Casco Bay
    and Galveston Bay.
        AGENCY: United States Environmental Protection Agency (EPA)
        PROGRAM: Office of Water Air/Water Initiative
        RESPONSE CATEGORY/SUBCATEGORY: Nutrient Management/Nutrient Source
    Management
        DESCRIPTION: This year, Assistant Administrator for Water, Bob
    Perciasepe, in cooperation with the Assistant Administrator for Air and
    Radiation, Mary Nichols, established a special effort in the Office of
    Water to step up collaboration between the two offices. The initial
    foci of this special program includes the impact of nitrogen and
    mercury deposition to the waters of downwind States. Mr. Perciasepe
    directed his senior staff to prepare and implement an aggressive
    strategic plan to address these impacts. Among the first actions in the
    work plan for this program is an assessment of deposition ``hot spots''
    on the East and Gulf Coasts. To lead this program, a senior staff
    person, Doris Price, was detailed to the Office of Water from the Acid
    Rain Division, OAR.
        Mr. Perciasepe was prompted to take this action after participating
    with Mary Nichols in two public workshops which focused on the shared
    water and air resources. The action coincides with considerations by
    the Ozone Transport Commission to increase controls on nitrogen
    emissions during summer months, and with the Federal Energy Regulatory
    Commission's issued ``Open Access Rule.'' The latter permits consumers
    to purchase electric power from the cheapest source, which means that
    some coal-fired boilers will increase output while others could reduce
    output. This could produce dramatic changes in the levels of deposition
    to watersheds in ``downwind'' States.
        AGENCY:United States Environmental Protection Agency (EPA)
        PROGRAM:Office of Research and Development/National Health and
    Ecological Effects Laboratory (NHEERL)/Gulf Breeze, Fl
        RESPONSE CATEGORY/SUBCATEGORY: Science/Research/Understanding
    Hypoxia/Other
        DESCRIPTION: The Gulf Ecology Division of ORD's National Health and
    Ecological Effects Laboratory (NHEERL) proposes to investigate the
    mechanisms by which nutrient enrichment alters coastal ecosystems. The
    program is a 5-10 year effort focusing on the delineation of the
    process of coastal eutrophication in the Gulf of Mexico estuaries using
    field experiments and concomitant laboratory experiments as well as
    focusing on specific instances of coastal eutrophication in South
    Florida and the Louisiana Delta. Much of the process-level or
    mechanistic investigation is proposed for Pensacola and Perdido Bays,
    FL.
        The hypoxic zone of the Louisiana Shelf, previously described by
    Rabalais and associates, will form the primary area for a number of
    field investigations: (1) Riverine nutrient input and sediment carbon
    and nutrient concentrations will be compared using cruise transects
    through the Atchafalaya and Mississippi River plumes to determine
    differences in biogeochemical cycles in waters that are transported
    through marshes and open systems, respectively; (2) The storage
    capacity of shelf sediments for carbon and nutrients will be examined
    to determine its potential to fuel future hypoxic events; (3) Measures
    of the hypoxic zone bacterial oxygen demand, oxygen consumption and
    carbon dioxide production will be made, focusing on the comparative
    chemical, biological and photic consumption of oxygen; (4) Experiments
    conducted in the Atchafalaya and Mississippi River plumes and in the
    hypoxic region will be designed to develop further information on the
    factors that cause hypoxia along the Louisiana shelf; and (5) Automated
    field collections of dissolved oxygen concentrations and attendant
    water quality parameters will be conducted to determine the three-
    dimensional boundaries of the hypoxic and anoxic regions of the shelf
    and the Atchafalaya corridor to ascertain changes in habitat
    availability for benthic and pelagic communities. Related laboratory
    experiments will be conducted to assess the impacts of realistic
    hypoxic regimes on target estuarine organisms and the minimum dissolved
    oxygen requirements of aquatic organisms. Also, a nutrient loading
    model will be developed to relate eutrophication to biological effects,
    harmful algal blooms, etc. Resources available on an annual basis for
    supporting these research activities include 7 full-time scientists/
    technicians and approximately $60,000 in support costs.
        AGENCY: United States Environmental Protection Agency (EPA)
        PROGRAM: Office of Research and Development, National Exposure
    Research Laboratory, Characterization Research Division/Las Vegas NV/
    Landscape Characterization Project
        RESPONSE CATEGORY/SUBCATEGORY: Science/Research/Other (Landscape
    Characterization)
        DESCRIPTION: This project entails a national scale landscape
    characterization of approximately 2,108 watersheds (USGS 8-digit
    hydrologic accounting units or HUC's) using 10 indicators of landscape
    conditions generated from coarse-scale, nationally-consistent spatial
    data. When completed the Mississippi Basin portion should be relevant
    to Basin-wide assessment and restoration efforts potentially impacting
    the hypoxia zone. A major demonstration of this technology at a
    regional scale is being conducted in the Mid Atlantic in concert with
    EPA Region III.
        AGENCY: United States Environmental Protection Agency (EPA)
        PROGRAM: Office of Research and Development, National Center for
    Environmental Assessment
        RESPONSE CATEGORY/SUBCATEGORY: Science/Research/Assessment
        DESCRIPTION: NCEA will assist the Gulf of Mexico Program Office
    (GMPO) in focusing their strategic assessment activities for the
    hypoxia issue. This will be accomplished by developing a risk-based
    framework with emphasis on the initial planning and problem formulation
    stages of ecological risk assessment. The process will include
    identifying management goals, developing assessment endpoints, and
    preparing a conceptual model that links stressor sources and pathways
    with effects on ecologically, economically, and/or recreationally
    important resources in the Gulf. Results will provide input to the
    efforts by other organizations (e.g., the Committee on Environment and
    Natural Resources) that are also addressing the Gulf hypoxia issue.
                           b. gulf of mexico program
        AGENCY/PROGRAM: Gulf of Mexico Program Office
        RESPONSE CATEGORY/SUBCATEGORY: Watershed Management/Community Based
    Environmental Protection (CBEP)
        DESCRIPTION: The Program will support voluntary State and local
    community efforts in specific special emphasis watersheds in the Gulf
    States of Louisiana and Mississippi, focusing on nutrient reductions.
    Through pollution prevention practices, the rate, timing, and method of
    application of nutrients can minimize their potential losses through
    runoff or leaching to groundwater. Nitrogen is important for crop
    production, but, if not managed properly, can easily move from farmland
    to ground and surface waters. The Program will work with the States to
    support efforts such as innovative land practices, instream habitat
    alterations, and tracking of key environmental indicators to measure
    progress. The Program encourages incentive-based, prevention approaches
    that make economic sense and contribute to the ecological and human
    health of the Mississippi River Basin and the Gulf of Mexico.
        AGENCY/PROGRAM: Gulf of Mexico Program Office
        RESPONSE CATEGORY/SUBCATEGORY: Monitoring
        DESCRIPTION: The program will support the continued monitoring of
    the spatial and temporal extent of the hypoxic zone and the monitoring
    of major tributaries for nitrate levels. We will also support
    monitoring in Gulf state watersheds with nutrient reduction issues in
    the States on the Gulf coast to generate water quality data to identify
    the sources and quantify the amounts of nitrate generated in the
    watershed. This monitoring would establish the effectiveness of various
    BMP's for nitrogen removal.
        AGENCY/PROGRAM: Gulf of Mexico Program Office
        RESPONSE CATEGORY/SUBCATEGORY: Education and Outreach
        DESCRIPTION: The Program will support an educational outreach
    initiative providing a public education link to the public and private
    sectors on hypoxia initiatives and concerns and will implement
    agricultural outreach programs. The Program will provide information to
    urban areas throughout the Mississippi River Watershed on successful
    approaches to urban runoff and encourage efficient use of fertilizers
    among homeowners and businesses through the development of educational
    programs on proper handling of residential nutrient sources.
        AGENCY/PROGRAM: Gulf of Mexico Program Office
        RESPONSE CATEGORY/SUBCATEGORY: Modeling
        DESCRIPTION: The Program will explore innovative partnerships in
    the area of data collection for model calibration. GMPO will work with
    EPA, NOAA, USGS and others to quantify atmospheric sources and link air
    and water fate and transport models.
        AGENCY/PROGRAM: Gulf of Mexico Program Office
        RESPONSE CATEGORY/SUBCATEGORY: Research
        DESCRIPTION: The Program will support innovative approaches (e.g.,
    technology demonstrations for precision farming and sustainable
    agricultural practices) to reduce the contribution and effects of
    nutrients in the Mississippi River/Gulf ecosystem.
        The Program will encourage efforts to determine the extent and
    severity of fisheries impacts in the Gulf of Mexico and the development
    of biological indicators.
        The Program will support the assessment of the relative importance
    of atmospheric deposition to nitrogen loading within the Mississippi
    River Basin, as well and the relative significance of industrial, POTW,
    and stormwater point source loadings of nitrogen to the system.
                         c. department of the interior
    1. Fish and Wildlife Service
        AGENCY: U.S. Fish and Wildlife Service (FWS)
        PROGRAM: North American Waterfowl Management Plan
        RESPONSE CATEGORY/SUBCATEGORY: Nutrient Management/Assimilate in
    the Natural Environment, Managing River Resources, and Education
        The North American Waterfowl Management Plan is an excellent
    example of cooperation among a variety of private citizens, citizen
    organizations, private enterprise and governmental units at the local,
    state and rational level (including the U.S., Canada, and Mexico) for
    the mutual benefit of all. There are 14 partnerships called Joint
    Ventures which are responsible for on the ground implementation of the
    plan. Because of the very nature of its activities and the inextricable
    link between waterfowl and water quality, nearly all projects within
    the purview of the North American Plan have a collateral water quality
    benefit. The total nutrient reduction in the Mississippi basin as a
    result of this program is impossible to quantify. The North American
    Plan, however, calls for the protection and the restoration or
    enhancement of millions of acres of wetland and associated upland; 11
    of the 14 Joint Venture areas are in part or in whole within the
    Mississippi basin. The amount of nutrient removal associated with any
    individual tract depends upon a number of variables such as the
    watershed on which it is located, its precise location in the
    watershed, nutrient sources upstream, etc.
        In addition to the direct effects on the nutrients within a
    watershed, the North American achieves significant educational benefits
    which will ultimately result in better nutrient utilization within the
    basin. One of the most important educational benefits deals with the
    process of collaborating to achieve mutually desired goals in a non-
    regulatory environment.
        AGENCY: U.S. Fish and Wildlife Service (FWS)
        PROGRAM: National Wildlife Refuge System
        RESPONSE CATEGORY/SUBCATEGORY: Nutrient Management/Assimilate in
    the Natural Environment, Managing River Resources, and Education
        Within the Mississippi basin the National Wildlife Refuge System
    consists of about 4.6 million acres, or about 0.5 percent of the basin.
    The Service regularly adds to the Refuge System on a willing seller
    basis as opportunity, money, and Congressional authorization make it
    feasible. Part of the planning process for Refuge System acquisition
    includes evaluation of wetland values. After lands are added to the
    system, as a portion of achieving one of the primary objectives of
    improving habitat values for trust resources, it is normal procedure to
    restore wetlands and other habitat, and to subsequently manage them in
    a manner which also results in water quality improvement. In those
    instances where either the Service or lessees use fertilizers,
    herbicides and/or pesticides the Service has a program in place to
    reduce usage both in quantity and toxicity. Total nutrient reduction in
    the Mississippi basin is dependent upon a multitude of variables and is
    impossible to quantify.
        The National Wildlife Refuge System represents a true win-win
    situation. The citizens/sportsmen who pay for the property obtain
    additional public lands and the benefits that go with that land; the
    willing seller is able to, but not required to, sell property at
    appraised value; land, which is often of marginal agricultural value,
    is removed from production and returned to wetlands, hardwoods,
    prairie, etc., all of which helps improve downstream water quality.
        The National Wildlife Refuge System also has a technical
    assistance/education component wherein refuge personnel assist in
    educating the public through various programs such as the visitor's
    centers, classroom assistance, various local organizations, etc. on the
    values of wetlands and water quality. Refuge personnel often also
    provide technical assistance to non-refuge organizations and
    individuals on how to restore wetlands, improve habitat, and improve
    water quality.
        AGENCY: U.S. Fish and Wildlife Service (FWS)
        PROGRAM: Endangered Species Program
        RESPONSE CATEGORY/SUBCATEGORY: Nutrient Management/Assimilate in
    the Natural Environment, Managing River Resources, and Education
        The Endangered Species program contributes to improved water
    quality in the Mississippi basin in several manners. By means of
    Section 7 consultations the Service has an opportunity to influence the
    manner in which projects are developed. Often the staff works with
    developers in a preconsultation mode which results in a more
    environmentally friendly project without ever needing to enter into
    formal consultation. Such influence, by its very nature, tends to
    protect wetlands and riparian habitat with a collateral benefit of
    reduced nutrient loading and improved water quality.
        Habitat Conservation Plans (HCP's) encourage developers to engage
    in a comprehensive planning process which takes into account not only
    their development objectives, but also habitat requirements for one or
    more species. As a result of this process, the developer is assured
    that the project can proceed without danger of being stopped for
    endangered species as long as the plan is followed. From a resource
    perspective, the Service is assured that appropriate habitat will be
    protected. Again a collateral benefit is reduced nutrient loading and
    improve water quality.
        The Service is conducting educational programs on many fronts
    concerning endangered species and the need for appropriate habitat.
    Audiences vary from school children, to the agricultural community, to
    special interest groups, to government officials, to developers. Some
    of the payoff for the educational programs is immediate as in the case
    of farmers or developers who alter their approach, and some will not be
    realized until the next century as in the case of younger school
    children.
        As in many of the Service programs, it is impossible to quantify
    the amount of nitrogen and phosphorus which is precluded from entering
    the Mississippi drainage as a result of this program.
        AGENCY: U.S. Fish and Wildlife Service (FWS)
        PROGRAM: Partners for Wildlife
        RESPONSE CATEGORY/SUBCATEGORY: Nutrient Management/Assimilate in
    the Natural Environment, and Education
        The FWS operates its Partners for Wildlife program, wherein Service
    personnel provide technical and financial assistance to individual
    property owners to restore previously degraded wetlands, riparian
    areas, and other habitats under voluntary cooperative agreements. The
    Service works in close coordination with other federal and state
    agencies, local governments, conservation organizations and business
    and industry to enhance delivery of the program. The cooperating
    property owners agree to retain the restored habitats for a minimum of
    10 years under cooperative agreements with the Service.
        Since the program began operation in 1987 the Service has restored
    over 350,000 acres of wetland habitat nationwide. Of this total,
    approximately 40 percent (140,000) has taken place in the upper
    Mississippi watershed, and approximately 25 percent (90,000 acres) in
    the lower Mississippi River Basin. Total nutrient reduction as a result
    of this program is impossible to quantify.
        Currently, annual funding for the Partners for Wildlife restoration
    program is currently approximately $10 million nationwide.
    Cumulatively, (since 1987) Service funding for projects conducted in
    the upper and lower Mississippi watersheds is approximately $40 million
    and $25 million, respectively. These dollars have leveraged nearly an
    equal amount from landowner contributions and in-kind services, as well
    as from other funding partner sources, for a total investment of
    approximately $130 million in the Mississippi River Basin.
        This is an excellent example of a win-win cooperative program. The
    Service achieves its primary objective of improving habitat for trust
    resources while landowners improve the aesthetic, economic, and
    recreational value of their land. Downstream property owners also
    benefit by reduced flooding and improved water quality. The amount of
    nutrient reduction achieved by a given project is dependent upon a
    variety of factors, including where it is located in the watershed and
    surrounding land use activity. Property owners frequently indicate a
    desire to retain restored habitats long after expiration of Partners
    For Wildlife cooperative agreements.
        The program also provides opportunities for community involvement
    through education and research initiatives. Restoration projects often
    become the focal point for educational field trips and research
    studies. Engaging the local community also encourages surrounding
    landowners to become involved in additional habitat restoration and
    overall natural resources stewardship on the landscape.
        AGENCY: U.S. Fish and Wildlife Service (FWS)
        PROGRAM: Federal Aid Programs
        RESPONSE CATEGORY/SUBCATEGORY: Nutrient Management/Assimilate in
    the Natural Environment, Managing River Resources, and Education
        The Federal Aid in Sport Fish Restoration Act and Federal Aid in
    Wildlife Restoration Act provide major sources of funding for basin
    States for use in their fish and wildlife programs. In 1996 the States
    making up the Mississippi basin received a combined total of about
    $108.8 million in Federal Aid in Wildlife Restoration (not including
    the funding specifically targeted toward hunter education), and about
    $117.3 million in Federal Aid in Sport Fish Restoration. Portions of
    this money went toward purchase of real estate for fish and wildlife
    habitat. Other portions went toward restoration/improvement of habitat.
    In most instances the habitat acquired or restored provides a water
    quality benefit by virtue of its nutrient removal capabilities. In
    addition a component of the Federal Aid moneys goes to support
    education, which has a long term positive effect.
        These revenues, which are generated by taxes on many types of
    hunting and fishing equipment and supplies, were instituted at the
    request of sportsmen. The activities funded from these funds represent
    win-win situations in which all of society benefits. Because of the
    nature of these programs it is impossible to quantify nutrient
    reductions in the Mississippi drainage which is directly attributable
    to them. As with many of the natural resources programs, improved water
    quality is a collateral benefit.
        AGENCY: U.S. Fish and Wildlife Service (FWS)
        PROGRAM: North American Waterfowl Management Plan
        RESPONSE CATEGORY/SUBCATEGORY: Nutrient Management/Assimilate in
    the Natural Environment, Managing River Resources, and Education
        The North American Waterfowl Management Plan is an excellent
    example of cooperation among a variety of private citizens, citizen
    organizations, private enterprise and governmental units at the local,
    state and national level (including the U.S., Canada, and Mexico) for
    the mutual benefit of all. There are 14 partnerships called Joint
    Ventures which are responsible for on the ground implementation of the
    plan. Because of the very nature of its activities and the inextricable
    link between waterfowl and water quality, nearly all projects within
    the purview of the North American Plan have a collateral water quality
    benefit. The total nutrient reduction in the Mississippi basin as a
    result of this program is impossible to quantify. The North American
    Plan, however, calls for the protection and the restoration or
    enhancement of millions of acres of wetland and associated upland; 11
    of the 14 Joint Venture areas are in part or in whole within the
    Mississippi basin. The amount of nutrient removal associated with any
    individual tract depends upon a number of variables such as the
    watershed on which it is located, its precise location in the
    watershed, nutrient sources upstream, etc.
        In addition to the direct effects on the nutrients within a
    watershed, the North American achieves significant educational benefits
    which will ultimately result in better nutrient utilization within the
    basin. One of the most important educational benefits deals with the
    process of collaborating to achieve mutually desired goals in a non-
    regulatory environment.
        AGENCY: U.S. Fish and Wildlife Service (FWS)
        PROGRAM: Contaminants Activities
        RESPONSE CATEGORY/SUBCATEGORY: Nutrient Management/Assimilate in
    the Natural Environment, Managing River Resources, Education
        The Fish and Wildlife Service, working through its Division of
    Environmental Contaminants and through contaminants specialists in
    field offices throughout the basin, conducts various activities
    designed to improve management of trust resources (property and
    species). These activities may deal with contaminants originating on
    Service property, contaminants threatening to enter or impact Service
    property, contaminants on property the Service may be interested in
    acquiring or contaminants with a potential to threaten trust resources
    off site.
        The Service was instrumental in developing the Biomonitoring of
    Environmental Status and Trends (BEST) program. This program provides a
    standardized and systematic approach for identifying existing and
    potential contaminants problems on lands managed by the Department of
    the Interior and thereby provides a basis for remediation or for future
    assessments. This program is currently managed by the National
    Biological Service.
        The Service is a co-trustee with the States for natural resources
    in the Natural Resource Damage Assessment (NRDA) program. Under this
    program, money is assessed from responsible parties for damages to the
    natural resources, and is spent to restore habitat in the immediate
    vicinity of the damage. This restored habitat, which is often wetland,
    helps reduce nutrient loadings to the Mississippi. Each of the dozens
    of National Priorities List (NPL) sites in the basin is a potential
    source of restoration funds.
        Some service contaminants activities contribute to a better
    understanding of watercourse and wetland values and functions including
    the transport and fate of nutrients. The Service has no monitoring
    program for water quality parameters such as nutrients and pesticides
    which are associated with the Gulf hypoxia issue.
        AGENCY: U.S. Fish and Wildlife Service (FWS)
        PROGRAM: Coordination Activities
        RESPONSE CATEGORY/SUBCATEGORY: Nutrient Management/Assimilate in
    the Natural Environment, Managing River Resources, and Education
        The Fish and Wildlife Service, in accordance with the Fish and
    Wildlife Coordination Act, and various portions of other federal
    statutes such as the Clean Water Act, the Resource Conservation and
    Recovery Act, the Federal Agriculture Improvement and Reform Act (Farm
    Bill), Federal Power Act, etc. serves as a consultant to various other
    federal agencies concerning activities which might have the potential
    to impact trust resources. In this role, Service personnel use their
    technical expertise in fish, wildlife, and habitat management issues to
    help other agencies avoid conflicts. The Service makes recommendations
    aimed to help the other agencies first avoid, secondly minimize, and
    thirdly mitigate for adverse impact to fish and wildlife resources.
        It is not possible to quantify the impacts of the consultant/
    advisor role on the hypoxia problem. Sometimes, as a result of early
    discussions, an agency might make significant changes which result in
    improved water quality before the original plan is ever committed to
    paper. In such a case the damage which has been avoided is never
    documented. Also as a result of this process of interagency dialog, the
    developmental approaches of the cooperating agencies evolve to a more
    environmentally benign project.
        AGENCY: U.S. Fish and Wildlife Service (FWS)
        PROGRAM: Contaminants Activities
        RESPONSE CATEGORY/SUBCATEGORY: Nutrient Management/Assimilate in
    the Natural Environment, Managing River Resources, Education
        The Fish and Wildlife Service, working through its Division of
    Environmental Contaminants and through contaminants specialists in
    field offices throughout the basin, conducts various activities
    designed to improve management of trust resources (property and
    species). These activities may deal with contaminants originating on
    Service property, contaminants threatening to enter or impact Service
    property, contaminants on property the Service may be interested in
    acquiring or contaminants with a potential to threaten trust resources
    off site.
        The Service was instrumental in developing the Biomonitoring of
    Environmental Status and Trends (BEST) program. This program provides a
    standardized and systematic approach for identifying existing and
    potential contaminants problems on lands managed by the Department of
    the Interior and thereby provides a basis for remediation or for future
    assessments. This program is currently managed by the National
    Biological Service.
        The Service is a co-trustee with the States for natural resources
    in the Natural Resource Damage Assessment (NRDA) program. Under this
    program, money is assessed from responsible parties for damages to the
    natural resources, and is spent to restore habitat in the immediate
    vicinity of the damage. This restored habitat, which is often wetland,
    helps reduce nutrient loadings to the Mississippi. Each of the dozens
    of National Priorities List (NPL) sites in the basin is a potential
    source of restoration funds.
        Some service contaminants activities contribute to a better
    understanding of watercourse and wetland values and functions including
    the transport and fate of nutrients. The Service has no monitoring
    program for water quality parameters such as nutrients and pesticides
    which are associated with the Gulf hypoxia issue.
        AGENCY: U.S. Fish and Wildlife Service (FWS)
        PROGRAM: Coordination Activities
        RESPONSE CATEGORY/SUBCATEGORY: Nutrient Management/Assimilate in
    the Natural Environment, Managing River Resources, and Education
        The Fish and Wildlife Service, in accordance with the Fish and
    Wildlife Coordination Act, and various portions of other federal
    statutes such as the Clean Water Act, the Resource Conservation and
    Recovery Act, the Federal Agriculture Improvement and Reform Act (Farm
    Bill), Federal Power Act, etc. serves as a consultant to various other
    federal agencies concerning activities which might have the potential
    to impact trust resources. In this role, Service personnel use their
    technical expertise in fish, wildlife, and habitat management issues to
    help other agencies avoid conflicts. The Service makes recommendations
    aimed to help the other agencies first avoid, secondly minimize, and
    thirdly mitigate for adverse impact to fish and wildlife resources.
        It is not possible to quantify the impacts of the consultant/
    advisor role on the hypoxia problem. Sometimes, as a result of early
    discussions, an agency might make significant changes which result in
    improved water quality before the original plan is ever committed to
    paper. In such a case the damage which has been avoided is never
    documented. Also as a result of this process of interagency dialog, the
    developmental approaches of the cooperating agencies evolve to a more
    environmentally benign project.
    2. United States Geological Survey
        AGENCY: United States Geological Survey (USGS)
        PROGRAM: National Water Quality Assessment Program (NAWQA)
        RESPONSE CATEGORY: Science/Research
        SUBCATEGORY: Loadings characterization; Understanding nutrient
    transport mechanisms
        DESCRIPTION: In 1991 the USGS began full implementation of the
    National Water Quality Assessment Program (NAWQA). Objectives of the
    program are to: (1) describe the status and trends in the quality of a
    large, representative part of the Nation's ground- and surface-water
    resources, (2) to provide an improved understanding of the primary
    natural and human factors affecting these resources, and (3) to provide
    information that supports development and evaluation of management,
    regulatory, and monitoring decisions by other Federal, State, and local
    agencies. These objectives are being carried out through intensive 3-
    year studies in 60 study units in diverse hydrologic settings
    nationwide. The 60 study units selected for study in this program
    include more than two-thirds of the Nation's fresh water resources and
    more than two-thirds of the people served by public supply systems.
    About 20 of the NAWQA units are intensively studied for a period of 3
    years, and then the program rotates to studies of the next set of 20
    study units. This approach provides for intensive study of the 60 study
    units over a period of about 10 years. Twenty three (23) of the 60
    NAWQA study units lie within the Mississippi River basin, and 7 of
    these units are presently (1996-97) in the intensive study phase. Four
    of the active study units in the basin will provide data on nutrient
    sources and nutrient loading in relation to land use, that will be of
    particular value to study of the hypoxia issue. These active study
    units are: (1) the upper Mississippi basin, including Minneapolis-St.
    Paul, (2) the Cedar and Iowa River basins in eastern Iowa, (3) the
    lower Illinois River basin, and (4) the Mississippi embayment in
    Mississippi, Arkansas, and Northern Louisiana.
        The similar design of each investigation and use of standard
    methods make comparisons among the study units' results possible.
    Regional and national assessments, referred to as `` National
    Synthesis'', have been made, which focus on priority national issues,
    including nutrients and pesticides.
        AGENCY: United States Geological Survey (USGS)
        PROGRAM: National Water Quality Assessment Program (NAWQA)
        RESPONSE CATEGORY: Science/Research
        SUBCATEGORY: Point and Nonpoint Sources
        DESCRIPTION: The research is focused on developing national and
    regional water-quality models relating stream measurements of nutrients
    to point- and nonpoint-pollutant sources and watershed characteristics.
    The models are designed to empirically estimate the rates of nutrient
    loss from terrestrial and in-stream processes, and thus, quantify the
    transport of point and nonpoint sources to downstream locations.
    Preliminary versions of these models have been applied in the
    Mississippi River Basin (see Gulf of Mexico Hypoxia conference
    proceedings, 1996) to estimate the quantities of nitrogen and
    phosphorus delivered to the Gulf of Mexico from interior watersheds.
    Refinements to the models are currently being made to improve estimates
    of the terrestrial- and in-stream-loss processes and to quantify the
    uncertainty associated with estimates of the origin of nutrients
    delivered to the Gulf.
        AGENCY: United States Geological Survey (USGS)
        PROGRAM: National Stream Quality Accounting Network II (NASQAN II)
        RESPONSE CATEGORY: Science/Research
        SUBCATEGORY: Loadings characterization; Understanding nutrient
    transport mechanisms
        DESCRIPTION: The USGS National Stream Quality Accounting Network
    (NASQAN II) was redesigned in fiscal year 1996 to focus on the flux of
    chemicals and sediment in the Nation's four largest river basins. By
    drainage area these are: the Mississippi, Columbia, Colorado, and Rio
    Grande. In fiscal year 1997 the Mississippi Basin will have NASQAN II
    sampling sites at 17 key locations in the basin. The configuration of
    the sampling sites and the sampling strategy will provide estimates of
    the seasonal and annual flux (loadings) of nutrients, carbon,
    pesticides, sediment, and other chemicals from 17 discrete subbasins
    within the Mississippi-Ohio-Missouri River system. The program will
    also provide estimates of the seasonal and annual flux of nutrients and
    other chemicals to the Gulf of Mexico via the Mississippi and the
    Atchafalaya Rivers. The 17 subbasins will provide information on source
    areas for the nutrients and other materials discharged to the Gulf of
    Mexico and unit are yields of chemicals and sediment among the
    subbasins. The data from this program will help identify the geographic
    areas that contribute the largest unit area loadings of nutrients to
    the Gulf and will help quantify the success of any fixture efforts to
    reduce nutrients loadings to the Gulf. The nutrient loading data will
    also be critical in linking the onset and extent of hypoxia in the Gulf
    of Mexico to terrestrial nutrient sources via predictive models.
        AGENCY: United States Geological Survey (USGS)
        PROGRAM: Coastal and Marine Geology Program
        RESPONSE CATEGORY: Science/Research
        SUBCATEGORY: Predictive Models, Loadings Characterization
        DESCRIPTION: Scientific studies conducted through the Coastal and
    Marine Geology Program of the U.S. Geological Survey in the Mississippi
    River deltaic plain of south central Louisiana are providing important
    base-line information on a wide range of environmental conditions and
    processes. The primary focus of the studies, conducted in collaboration
    with several federal, state, and local agencies over the past decade,
    is on barrier island erosion, wetland loss, and contaminated sediments
    in the Pontchartrain basin. Many of the results from these studies in
    the form of maps, GIS data bases, scientific reports, and computer
    models of nearshore water circulation and sediment transport can be
    important too in improving our scientific understanding of the issues
    associated with seasonal hypoxia conditions in nearshore waters of the
    Gulf of Mexico.
                            d. department of defense
    1. United States Army Corps of Engineers
        AGENCY: Army Corps of Engineers (Corps)
        PROGRAM: Upper Mississippi River System Environmental Management
    Program UMRS-EMP)
        RESPONSE CATEGORY/SUBCATEGORY: Nutrient Management/Managing River
    Resources (Habitat Restoration)
        DESCRIPTION: Section 1103 of the Water Resources Development Act
    (WRDA) of 1986 (PA. 99-662), as amended, authorized a program for the
    planning, construction and evaluation of measures for fish and wildlife
    habitat rehabilitation and enhancement, with up to $19.4 million per
    year for 15 years to be appropriated. Two key components of the UMRS-
    EMP are the Habitat Rehabilitation and Enhancement Projects (HREP) and
    the Long-Term Resource Monitoring Program (LTRMP). Completed HREP's
    have restored and enhanced wetland and aquatic habitats previously lost
    and degraded. Sediment control is a primary consideration of HREP
    projects. More than 14,000 acres have benefitted from these projects.
        AGENCY: Army Corps of Engineers (Corps)
        PROGRAM: Mississippi River Diversion Projects
        RESPONSE CATEGORY/SUBCATEGORY: Nutrient Management/Managing River
    Resources (Habitat Restoration)
        DESCRIPTION: Two Corps projects have been designed for large-scale
    diversion of Mississippi River water, with its sediment and nutrient
    loads, into existing or former wetlands in coastal Louisiana. One
    project, Caernarvon Diversion, is complete and operational and the
    results have been favorable. Another project, Davis Pond, is ready for
    construction. These projects are designed so that substantial nutrient
    uptake will occur in wetlands adjacent to the Mississippi River before
    the water moves on to the Gulf of Mexico. Primary benefits include
    increased fishery production and conservation/restoration of wetlands
    that would otherwise be lost to saltwater intrusion and subsidence.
        AGENCY: Army Corps of Engineers (Corps)
        PROGRAM: Coastal Wetlands Planning, Protection, and Restoration Act
    (CWPPRA), Title III of Public Law 101-646 (Non-Indigenous Aquatic
    Nuisance and Control Act of 1990)
        RESPONSE CATEGORY/SUBCATEGORY: Nutrient Management/Managing Coastal
    Resources (Louisiana Area)
        DESCRIPTION: Public Law 101-646 established an interagency Task
    Force, chaired by the Secretary of the Army, to create, restore,
    protect, and enhance coastal wetlands in Louisiana, using a number of
    means to accomplish these goals. The program is funded by the Coastal
    Wetlands Restoration Trust Fund. The Corps has received about $35
    million per year from the Department of the Interior to carry out this
    program. The restoration and creation of wetlands in coastal Louisiana
    will help remove nutrients from nutrient-rich waters before they enter
    the Gulf of Mexico.
        AGENCY: Army Corps of Engineers (Corps)
        PROGRAM: Yazoo Basin, Mississippi, Demonstration Erosion Control
    Program (DECP)
        RESPONSE CATEGORY/SUBCATEGORY: Nutrient Management/Managing River
    Resources (Other-Reducing Streambank Erosion)
        DESCRIPTION: The DECP has been ongoing for several years in the
    Yazoo River Basin, Mississippi. This program is designed to demonstrate
    the effectiveness of a watershed or systems approach to reduce erosion
    and sedimentation associated with flood damage reduction measures. The
    project includes a variety of measures that detain flood waters and
    sediment, thereby improving water quality and reducing the nutrient
    loads to streams.
        AGENCY: Army Corps of Engineers (Corps)
        PROGRAM: Section 1135, Water Resources Development Act of 1986, as
    amended, Public Law 99-662
        RESPONSE CATEGORY/SUBCATEGORY: Nutrient Management/Managing River
    Resources (Habitat Restoration) and Managing Coastal Resources
        DESCRIPTION: Section 1135 of Public Law 99-662, as amended,
    authorizes the Corps to carry out a program to make modifications to
    the structures and operations of constructed Corps projects which would
    improve the quality of the environment. Many of these Section 1135
    projects have been restoration of wetlands and other aquatic habitats
    that trap sediments and nutrients. While this is a national program, a
    number of the projects have been carried out in the Mississippi River
    Basin and other drainage that impact upon the Gulf of Mexico. One
    project has been completed at Calcasieu River and Pass, Louisiana; the
    Mississippi River Outlets, Venice, Louisiana, project has been approved
    for implementation; and the South Pass, Mississippi River, project is
    currently under planning and design work. Section 1135 projects are
    typically small projects, usually less than $1 million each.
    Nationwide, this program is funded at about $10 million per year.
        AGENCY: Army Corps of Engineers (Corps)
        PROGRAM: Section 204, Water Resources Development Act of 1992,
    Public Law 102-580
        RESPONSE CATEGORY/SUBCATEGORY: Nutrient Management/Managing Coastal
    Resources (Other--Beneficial Use of Dredged Material)
        DESCRIPTION: Section 204, Public Law 102-580, authorizes the Corps
    to carry out projects for the protection, restoration, and creation of
    aquatic and ecologically related habitats, including wetlands, in
    connection with dredging for construction, operation, or maintenance of
    an authorized Federal navigation project. One of the primary goals of
    this program is to make beneficial use of clean, suitable dredged
    material. A major focus is the use of wetlands vegetation to stabilize
    sediments from dredging. Wetlands vegetation will also take up
    nutrients from these sediments and silts. Two projects in coastal
    Louisiana have been carried out under this authority, one at the Sabine
    National Wildlife Refuge ($600,000), and one at the Barataria Bay
    Waterway ($800,000). Nationwide, this program has been funded at about
    $3 million per year.
        AGENCY: Army Corps of Engineers (Corps)
        PROGRAM: Regulatory Program (Permits)
        RESPONSE CATEGORY/SUBCATEGORY: Program/Policy/Regulatory Evaluation
        DESCRIPTION: The Corps Regulatory Program, authorized by the Clean
    Water Act of 1977 (Public Law 95-217) and the River and Harbor Act of
    1899, provides an opportunity to help reduce nutrient loading in the
    Mississippi River drainage or coastal area of the Gulf of Mexico. The
    Regulatory Program, which requires a Federal permit for anyone to place
    dredged or fill material in waters of the United States, enables the
    Corps to work with developers, landowners, and other applicants in
    reducing or eliminating runoff of sediments and nutrients from credible
    lands that could otherwise impact upon the Gulf of Mexico.
                       e. health and human services paint
    1. Food and Drug Administration
        AGENCY: Food and Drug Administration (FDA)
        PROGRAM: Phytoplankton Surveys
        RESPONSE CATEGORY/SUBCATEGORY: Science/Research
        DESCRIPTION: Phytoplankton surveys seeking potential toxic forms
    which could cause seafood to be harmful to humans; there may be a
    connection between nutrient enrichment of Gulf waters from land runoff
    which is related to both the hypoxic zone and to the conditions
    favoring blooms of toxic phytoplankton. Any fish killed due to contact
    with waters of the hypoxic zone would be deemed unfit for food, as
    would any fish collected from an environmentally caused fish kill, and
    would be violative if entered into interstate commerce.
        The work done on these surveys is not designed to determine the
    environmental conditions related to the occurrence of toxic
    phytoplankton, or to conditions which can lead to blooms of these
    plankton. However, FDA can provide results it obtains on the presence
    of particular phytoplankton to others who may be able to incorporate
    those results into a larger analysis of Gulf of Mexico conditions.
        AGENCY: Food and Drug Administration (FDA)
        PROGRAM: National Shellfish Sanitation Program (NSSP)
        RESPONSE CATEGORY/SUBCATEGORY: Science/Research/Water Quality
    Criteria
        DESCRIPTION: Establishment of water quality criteria for the safe
    harvest of molluscan shellfish; to the extent that pollution abatement
    might occur in order to restore shellfish harvest areas, the criteria
    of the National Shellfish Sanitation Program (NSSP), a state/federal
    cooperative program with the FDA could have an effect on contributions
    to the hypoxic zone.
        The States along the Gulf apply the established criteria of the
    NSSP to determine the opening or closing of shellfish harvest waters so
    information on the bacterial quality of shellfish harvest waters, which
    may reflect runoff conditions or river inflow effects, could be
    obtained and related to other environmental data in the hypoxic zone
    area for possible correlations between these parameters and the extent
    of the hypoxic zone.
               f. national oceanic and atmospheric administration
        AGENCY: Coastal Ocean Program: National Oceanographic and
    Atmospheric Administration
        PROGRAM: The Nutrient Enhanced Coastal Ocean Productivity Program
        CATEGORY: Science/Research
        SUBCATEGORY: Education and Understanding; Predictive Models;
    Understanding Nutrient Transport Mechanisms
        DESCRIPTION: Much of the understanding of the so-called ``dead
    zone'' in the northern Gulf of Mexico (GOM) has been provided through
    the NOAA Coastal Ocean Program's (COP) Nutrient Enhanced Coastal Ocean
    Productivity (NECOP) Program. The NECOP study was initiated to address
    the effects of nutrient discharge in the coastal waters of the United
    States. The program has focused on the impact of the outflows of the
    Mississippi and Atchalaya Rivers on the northern GOM coastal waters.
    Since 1989, some 40 federal and academic scientists have joined forces
    in an interdisciplinary investigation of the continental shelf of the
    northern GOM at a total funding of almost $10 million.
        Previous research efforts in this region have linked anthropogenic
    nutrient inputs to the development of hypoxia in the nearshore waters
    of Louisiana. Hence one of the major goals of the NECOP study was to
    quantitatively relate the input of the riverborne nutrients in the
    Mississippi River discharge to the development of hypoxia on the shelf.
    Much of the NECOP investigations has dealt with the hypoxia, the extent
    and timing of its occurrence, causal factors, impacts, and history
    through retrospective analysis. A high priority has been the
    development of a water quality model to describe the interrelationships
    between nutrients, phytoplankton and dissolved oxygen.
        Fiscal year 1997 will be the last year of the NECOP Program. NOAA-
    COP has initiated and advanced the scientific understanding of the
    processes and mechanics of the Mississippi River Plume. In fiscal year
    1997 NECOP will continue with critical monitoring, final data
    synthesis, further calibration of the water quality model and transfer
    of the model to Louisiana State University.
        The objectives of the NECOP Program have been successfully met.
    However, a number of research and monitoring uncertainties remain.
    Future directions in research and monitoring studies should focus on
    the following:
      --continue critical water quality monitoring to maintain the
            continuity of the long-term database in the northern Gulf of
            Mexico
      --the impacts of nutrients and hypoxia on ecosystem structure and
            function in the region (including fisheries impacts)
      --missing components of the mass balance modeling of phytoplankton,
            nutrients, and dissolved oxygen.
        AGENCY: Office of Habitat Conservation: National Marine Fisheries
    Service (NMFS); National Oceanic and Atmospheric Administration
        PROGRAM: Coastal Wetlands Planning, Protection and Restoration
        CATEGORY: Nutrient Management
        SUBCATEGORY: Assimilate in the Natural Environment/Restoring
    Wetlands
        DESCRIPTION: Under the Coastal Wetlands Planning, Protection and
    Restoration Act of 1990 (CWPPRA), the National Marine Fisheries Service
    (NMFS) is a member of a multi-federal agency Task Force responsible for
    implementing wetland habitat restoration projects which focus on
    coastal Louisiana. Louisiana possesses 40 percent of the coastal
    wetlands in the lower 48 States, but experiences 80 percent of the
    entire nation's wetlands loss. Each year, 25 square miles of coastal
    wetlands are lost in Louisiana. The Task Force critically evaluates and
    awards restoration projects to be jointly implemented between the
    federal sponsor and the State of Louisiana's Department of Natural
    Resources (DNR). CWPPRA mandates a cost-share agreement of 75 percent
    federal funds and 25 percent State funds for all Louisiana projects.
    The site selection process is based on the proposed project's technical
    (scientific) merit, cost effectiveness, and predicted wetland quantity
    and quality. The Task Force was responsible for the preparation of a
    comprehensive coastal Restoration Plan for the State of Louisiana which
    was completed in 1993. The Plan provides much of the basis for
    selecting future restoration projects.
        To date, NMFS has awarded 10 grants to Louisiana DNR and works
    closely with DNR to implement these wetland projects. NMFS-sponsored
    and funded projects focus on protecting existing wetlands by restoring
    natural hydrologic regimes of coastal wetlands, creating new wetlands
    by dredge-deposition and sediment diversions, and enhancing Louisina's
    barrier islands by nourishment from dredged sediments. Collectively,
    current NMFS projects will benefit over 45,000 acres of coastal wetland
    habitat. Joint project funding between NMFS and DNR for these efforts
    is $40 million.
        AGENCY: National Marine Fisheries Service (NMFS): National
    Oceanographic and Atmospheric Administration
        PROGRAM: Magnuson-Stevens Act--Monitoring Landings and Stock
    Assessment
        CATEGORY: Science/Research
        SUBCATEGORY: Other (Fishery Statistics; Resource Surveys)
        DESCRIPTION: The NMFS collects, complies and analyzes data on
    landings, fishing effort and stock sizes of fishery species in order to
    monitor changes and protect against losses in fishery productivity.
    Since annual variability may be relative large due to environmental
    factors, long-term databases are necessary to establish trends or
    changes in patterns of productivity. The database for the shrimp
    fishery in the Gulf of Mexico is long-term (since 1960) and intensively
    collected. NMFS port agents take landings data from all major dealers
    in the Gulf on a monthly basis and conduct interviews with vessel
    captains in order to identify locations of shrimp catch. In addition,
    the NMFS conducts two seasonal at-sea surveys each year (summer and
    fall) in order to provide fishery-independent information on fish and
    shrimp in the western Gulf of Mexico, via the Southeast Area Marine
    Assessment Program (SEAMAP). The analyses of these stock assessment
    data is essential to determining the impacts of hypoxia on fisheries
    and living marine resources.
        AGENCY: National Marine Fisheries Service (NMFS): National
    Oceanographic and Atmospheric Administration
        PROGRAM: Magnuson-Stevens Act--Fishery Management Plans (FMP's)
        CATEGORY: Science/Research
        SUBCATEGORY: Other (Fish Habitat Conservation)
        DESCRIPTION: The NMFS is charged through Magnuson Act (16 U.S.C.
    1801 et seq) and it's subsequent re-authorization, the Magnuson-Stevens
    Act (Public Law (104-208), with identification and conservation of
    essential habitats for marine and andromous fisheries. Moreover,
    identification and management of marine fisheries habitats is now (with
    Magnuson-Stevens Act reauthorization) an integral part of Fishery
    Management Plans prepared by Regional Fishery Management Councils. In
    the case of habitat affected by hypoxia off the coast of Louisiana and
    Texas, the primary concern of the Gulf of Mexico Fishery Management
    Council is for shrimp, menhaden, red drum, red snapper and other
    important commercial and recreational fisheries. Since hypoxia degrades
    the shelf habitat of these fisheries and affects maintenance of their
    productivity, the NMFS is obligated to measure the annual ``extent of
    hypoxia'' through at-sea surveys and other means such as satellite
    imagery. The NMFS is also committed to work cooperatively with other
    Federal agencies to assist in providing information that will help in
    finding ways to reduce the problem.
        AGENCY: Office of Ocean Resources Conservation and Assessment
    National Ocean Service: National Oceanic and Atmospheric Administration
        PROGRAM: National Estuarine Eutrophication Survey
        CATEGORY: Science/Research
        SUBCATEGORY: Other (Characterization and Assessment)
        DESCRIPTION: The goal of the National Estuarine Eutrophication
    Survey is to comprehensively assess the temporal and spatial scale,
    scope, and severity of nutrient enrichment and eutrophication-related
    phenomena in over 100 U.S. estuaries. This is accomplished by
    collecting information from national, regional, and local experts about
    16 different water quality parameters--including the frequency of
    occurrence and spatial extent of hypoxia and anoxia--for each estuarine
    system. The results of the survey for the Gulf of Mexico estuaries have
    recently been confirmed in a regional workshop held in the summer of
    1996.
        The extent to which the oxygen-poor water from the hypoxic area may
    be affecting low dissolved oxygen conditions in estuarine systems in
    Louisiana and Texas is not well understood. Because the Eutrophication
    Survey evaluates trends in eutrophication, and assesses the severity of
    this problem for the tidal fresh, mixing, and seawater zones (i.e., the
    head, main body, and mouth) of each estuary, it may be possible to
    detect the influence of an offshore input of low-oxygen water from the
    hypoxic area on different segments of the estuary, and also possibly
    the change in this influence over time. Further, because the Survey
    comprehensively covers the major estuarine systems in the Gulf of
    Mexico using a consistent survey approach, it will be possible to
    evaluate and compare potential impacts among estuarine systems.
        AGENCY: Office of Ocean Resources Conservation and Assessment:
    National Ocean Service: National Oceanic and Atmospheric Administration
        PROGRAM: Strategic Assessment of the Gulf of Mexico Program's
    Shellfish Challenge
        CATEGORY: PROGRAM/POLICY
        SUBCATEGORY: Other (Planning and Assessment)
        DESCRIPTION: The goal of the Gulf of Mexico Program's Shellfish
    Challenge Project is to increase Gulf shellfish beds available for safe
    harvest by 10 percent. Over the past year, the Program has brought
    together Federal, state, and local stakeholders to examine the nature
    of the problems causing harvest limitations of shellfish growing
    waters, and to identify watershed-based solutions on a regional scale.
    The next step is to translate these regional strategies into action
    within priority watersheds.
        The strategic planning process used to target ``best candidate''
    watersheds for different priority shellfish restoration strategies
    could be readily adapted to identifying priority areas for various
    nutrient reduction actions that are needed to address the hypoxia zone
    problem. Such an approach is important because the hypoxia zone and the
    watershed in which the nutrient discharges originate is a diverse and
    complex environment in which many of the physical and biological
    processes and their inter-relationships are not well understood. The
    cumulative effects of human activities have resulted in an
    environmental problem on a regional scale that is unprecedented. In
    addition, the mix of Federal, state, and local governments, non-
    governmental organizations and public stakeholders required to address
    this problem make for an extraordinarily complex management context in
    which to forge solutions. In this decision-making context of scientific
    and management uncertainty, a comprehensive and integrated assessment
    framework is an essential building block to provide managers with the
    synthesized information necessary to not only identify the appropriate
    management strategies and actions to implement but also to evaluate
    their effectiveness in a timely manner and target the locations where
    these actions should be directed.
        AGENCY: Office of Ocean Resources Conservation and Assessment:
    National Ocean Service: National Oceanic and Atmospheric Administration
        PROGRAM: Gulf of Mexico Land Based Sources Inventory
        CATEGORY: Science/Research
        SUBCATEGORY: Loadings Characterization
        DESCRIPTION: The goal of the Gulf of Mexico Land Based Sources
    Inventory is to develop an integrated inventory of point, urban
    nonpoint, and nonurban nonpoint sources of pollution and associated
    nutrient discharge estimates for the coastal watersheds of the Gulf of
    Mexico for a base year of 1991. Estimates will be available on a
    seasonal basis, and can be aggregated by county, USGS hydrologic
    cataloging unit, or estuarine drainage area. The inventory will be
    completed in January 1997.
        A prerequisite to developing a comprehensive management strategy
    for the hypoxia zone is an understanding of the location, timing,
    magnitude, and temporal and spatial distribution of pollutant sources
    and discharges in coastal watersheds, and an assessment of the relative
    contribution of discharges among various sources, both with and across
    watersheds. This project will provide estimates of point and nonpoint
    source pollution into each of the local coastal water areas of the Gulf
    coastline. Local authorities can use the estimates to evaluate their
    areas of responsibility to help establish a baseline for discharges and
    to support the targeting of control strategies.
        AGENCY: Office of Ocean Resources Conservation and Assessment:
    National Ocean Service: National Oceanic and Atmospheric Administration
        PROGRAM: Gulf of Mexico Habitat Suitability Project
        CATEGORY: Nurtrient Management
        SUBCATEGORY: Managing Coastal Resources
        DESCRIPTION: The Gulf of Mexico Habitat Suitability Project
    assembles information on key environmental parameters (e.g., salinity,
    temperature, substrate, dissolved oxygen, etc.) as inputs to a habitat
    suitability model that attempts to target areas of differing
    environmental fitness for selected finfish and crustacea in Gulf
    estuaries. A pilot study has recently been completed for Pensacola Bay
    for oysters, white shrimp, and spotted sea trout. A protocol for
    application of the approach to other estuarine systems in the Gulf is
    currently being developed.
        The results of the habitat suitability analyses for the estuaries
    and near coastal areas affected by the hypoxic zone could provide
    insights regarding the impact of various management strategies under
    consideration on these systems. For example, one strategy that has been
    discussed to mitigate the delivery of nutrients to the mouth of the
    Mississippi River is to divert flow to Barataria Bay and Breton/
    Chadeleur Sounds. Such diversions would have a significant impact on
    the environmental conditions and species in these systems. The habitat
    suitability information could be used to evaluate pre- and post-
    diversions conditions resulting from these management actions.
        AGENCY: Office of Ocean Resources Conservation and Assessment;
    National Ocean Service: National Oceanic and Atmospheric Administration
        PROGRAM: Coastal Assessment Framework
        CATEGORY: Program/Policy
        SUBCATEGORY: Other (Planning and Assessment)
        DESCRIPTION: NOAA's Coastal Assessment Framework is a digital set
    of spatial areas that has been developed to provide a consistently
    derived framework that managers and analysts can use to organize and
    present information on the Nation's coastal, near-ocean, and Great
    Lakes resources. The framework encompasses over 80 percent of the land
    areas within the contiguous United States and includes the drainage
    basins of nearly all the Nation's rivers. It is available on CD-ROM or
    can be downloaded from NOAA's internet site.
        The Coastal Assessment Framework could serve as the starting point
    for building an ``integrated'' spatial decision-analysis system to
    support management strategy development to address the Mississippi
    River hypoxia zone. Actual development and application of such a
    framework would be the logical next step in a long-term management
    process. The goal would be to design a tool to make the best use of
    existing management programs and projects at the Federal, state, and
    local levels, and to identify where to implement effective and cost
    efficient new management strategies over time. The system should
    include data and information that will help mangers: (1) determine the
    current status of the ecosystem; (2) detect changes and trends;
    validate and verify predictive models; (3) enhance the knowledge and
    understanding of the processes affecting the ecosystem; (4) serve as an
    early warning of future problems; (5) and most importantly, evaluate
    the efficacy of local and regional nutrient management strategies and
    policies.
        AGENCY: Office of Ocean Resources Conservation and Assessment:
    National Ocean Service: National Oceanic and Atmospheric Administration
        PROGRAM: Gulf of Mexico Estuarine and Offshore Living Marine
    Resources Mapping
        CATEGORY: Nutrient Management
        SUBCATEGORY Managing Coastal Resources
        DESCRIPTION:
        NOAA's Estuarine Living Marine Resources (ELMR) project currently
    includes information on the presence, distribution, and relative
    abundance by five life stages of over 40 fish and invertebrate species
    in the 31 estuaries of the Gulf of Mexico. Information in ELMR is
    currently being updated to support the development of Environmental
    Sensitivity Maps for oil spill response in the Gulf of Mexico. As part
    of the update process, the distribution of species will be refined from
    three to five salinity zones within each estuarine system. In addition,
    characterization of the presence, distribution, and relative abundance
    of up to 10 important offshore species will be undertaken.
        Knowledge of the fish and invertebrate distributions in ELMR will
    be extremely useful in understanding the impact of the hypoxic zone on
    both offshore and estuarine dependent species. Moreover, if this
    information could be combined with other habitat parameters to produce
    habitat suitability models, managers could evaluate the impact of
    phenomena such as the hypoxia zone on fisheries productivity and
    availability of habitat.
        AGENCY: Office of Ocean and Coastal Resource Management; National
    Ocean Service; National Oceanic and Atmospheric Administration
        PROGRAM: Weeks Bay National Estuarine Research Reserve
        CATEGORY: Science/Research
        SUBCATEGORY: Education and Understanding; Predictive Models
        DESCRIPTION: The National Estuarine Research Reserve System (NERRS)
    is a Federal-State cooperative program that manages a national system
    of estuarine research reserves through long-term protection of the
    estuarine resources. This management provides a basis for research,
    enhancement of public awareness and education, and collection and
    provision of information for better management of regions.
        Weeks Bay, a small estuarine embayment of Mobile Bay, Alabama, was
    designated a Reserve in 1986. The Weeks Bay NERR encompasses a variety
    of habitat that provides support for a variety of organisms including
    critical nursery ground for fish and shellfish. Ongoing research
    programs include assessment and abatement of non-point source pollution
    and hydrodynamic modeling. The Reserve also has a volunteer program to
    enhance public involvement in estuarine protection. Activities in the
    Weeks Bay NERR are jointly funded by Federal and State dollars as well
    as grants.
        AGENCY: Office of Ocean and Coastal Resource Management; National
    Ocean Service; National Oceanic and Atmospheric Administration
        PROGRAM: Environmental Sensitivity Index
        CATEGORY: Science/Research
        SUBCATEGORY: Other (Environmental Mapping)
        DESCRIPTION: The most widely used approach to sensitive environment
    mapping in the United States is NOAA's Environmental Sensitivity Index
    (ESI) approach. This approach systematically compiles information in
    standard formats for coastal shoreline sensitivity, biological
    resources, and human-use resources. The ESI's are an important tool in
    spill response, to reduce the environmental consequences of the spill
    and cleanup efforts. Current work with the Environmental Protection
    Agency focuses on extending the ESI methodology to inland rivers, and
    smaller ponds and streams. While these Riverine Sensitivity Index maps
    were developed to assist in the development of inland spill response
    plans, both this work and the coastal EST's have broader applicability
    for resource management purposes.
        The ESI strategy emphasizes standard methods for shoreline
    sensitivity rankings, data structures for organizing resource
    information, and map formats, for both electronic and hard copy output.
    NOAA is developing advanced applications to apply the advantages of
    Geographic Information Systems (GIS) for data access by local resource
    managers. NOAA is undertaking a wide-ranging program to promote open
    ESI standards and develop digital ESI databases for high-priority
    coastal areas in partnership with individual States and other Federal
    agencies. NOAA and the State of Texas completed ESI mapping along the
    upper Texas coast in 1995. NOAA and the States completed in Alabama and
    Mississippi in 1996. The State of Florida recently completed ESI
    mapping for the entire state. The State of Louisiana plans to begin ESI
    work in 1997. The state of Texas will begin ESI work for the remaining
    coastal areas of the state in 1997.
        AGENCY: Office of Ocean and Coastal Resource Management; National
    Ocean Service; National Oceanic and Atmospheric Administration
        PROGRAM: Coastal Zone Management Program
        CATEGORY: Program/Policy
        SUBCATEGORY: Other (Assessment, Monitoring, and Management of
    Wetlands and Coastal Nonpoint Source Pollution; Education)
        DESCRIPTION: The National Ocean Service/Office of Ocean and Coastal
    Resource Management (NOS/OCRM) provides technical and programmatic
    assistance and grant funding to States/territories under the authority
    of the Coastal Zone Management Act (CZMA) of 1972. OCRM administers the
    Coastal Zone Management (CZM) Program in partnership with twenty-nine
    Federally approved programs, and five developing programs. Each fiscal
    year, CZM States/territories submit projects for OCRM approval, that
    are consistent with CZMA statutory program mandates, as they relate to
    coastal resource management. This allows CZM States/territories to
    develop and implement projects in a variety of national priorities
    areas; including, wetlands protection and coastal nonpoint source
    pollution. For States/territories in the Gulf Region (including
    Alabama, Florida, Louisiana, Mississippi, Puerto Rico and the U.S.
    Virgin Islands), annual CZM funding is a total of about $8.6 million.
    The state of Texas is in the process of seeking Federal program
    approval, and has also received CZM funding to support development of
    its program. To address the issue of hypoxia in the Gulf of Mexico,
    OCRM would encourage building upon the current or planned resource
    assessment, monitoring, education and management regimes of the
    Federally approved CZM programs for controlling nutrients and other
    nonpoint source pollution.
        AGENCY: Office of Ocean and Coastal Resource Management; National
    Ocean Service; National Oceanic and Atmospheric Administration
        PROGRAM: Coastal Zone Act Reauthorization Amendments of 1990
    Section 6217--Coastal Nonpoint Pollution Control Program
        CATEGORY: Nutrient Management
        SUBCATEGORY: Nutrient Source Management
        DESCRIPTION: NOAA and EPA are jointly responsible for the
    administration of the coastal nonpoint program established under
    section 6217 of the Coastal Zone Act Reauthorization Amendments of 1990
    (CZARA). Under CZARA, the 29 States and territories with coastal zone
    management programs which have received federal approval under section
    306 of the Coastal Zone Management Act are required to develop and
    implement programs to protect and restore coastal waters. The program
    requires States to implement management measures for nonpoint sources
    including agriculture, forestry, urban development, marinas, and
    hydromodification. Management measures must also be implemented for
    wetlands protection, riparian areas, and vegetated treatment systems.
    Section 6217 also requires that state programs include enforceable
    policies and mechanisms to ensure the widespread implementation of the
    management measures where education, voluntary programs and incentives
    do not result in management measure implementation. Alabama, Florida,
    Louisiana, and Mississippi all are developing coastal nonpoint source
    pollution controls as part of their state coastal management programs
    and Texas will also have a nonpoint program as part of its CZMA program
    when it receives final approval. Under section 6217, States and
    territories received funding for program development. From 1992 through
    1996, $13 million was provided to the 29 States and territories.
               g. united states department of agriculture (usda)
        AGENCY: United States Department of Agriculture (USDA)
        PROGRAM: Environmental Quality Incentives Program
        RESPONSE CATEGORY/SUBCATEGORY: Water Quality/Nutrient Management
        DESCRIPTION: The Environmental Quality Incentives Program (EQIP)
    provides in a single, voluntary program flexible technical, financial,
    and educational assistance to farmers and ranchers who face serious
    threats to soil, water, and related natural resources on agricultural
    land and other land, including grazing lands, wetlands, forest land,
    and wildlife habitat. Assistance will be provided in a manner that
    maximizes environmental benefits per dollar expended. Producers will be
    aided in malting beneficial, cost-effective changes to conserve and
    improve soil, water, and related natural resources on their farm and
    ranch operations. $200 million is to be made available for each of
    fiscal years 1997 through 2002. Fifty percent of the funding available
    for the program will be targeted at practices relating to livestock
    production.
    Needs Assessment and Selecting Priority Areas
        The program will primarily be available in priority conservation
    areas throughout the Nation. The priority areas will be watersheds,
    regions, or areas of special environmental sensitivity or having
    significant soil, water, or related natural resource concerns. The
    State Conservationist, with the advice of the State Technical
    Committee, sets priorities for the program. State approved priority
    areas are submitted to the Chief of NRCS, who consults with other
    national agencies and conservation partners to determine a priority for
    funding. The Chief makes funding decisions, with concurrence of Farm
    Service Agency for the priority areas. State Conservationists, with the
    advice of the State Technical Committee, may also determine that
    program assistance is needed by producers located outside of funded
    priority areas that are subject to environmental requirements, or who
    have other significant natural resource concerns. States establishing
    programs to accelerate adoption of cost-effective, special-emphasis
    practices will be given priority for these funds. Conservation Plan and
    Contract Program participation is voluntary and initiated by the
    producer who makes an application for participation. Contract
    applications will be accepted throughout the year. The Farm Service
    Agency county committee approves for funding the highest ranking
    applications. Approved applicants are responsible for developing and
    submitting a conservation plan encompassing the producer's farming or
    ranching unit of concern. The conservation plan, when implemented, must
    protect the soil, water, or related natural resources in a manner that
    meets the purposes of the program and is acceptable to NRCS and the
    conservation district.
        The contract, developed and administered by Farm Service Agency,
    provides for cost-sharing and incentive payments between the producer
    and the Secretary of the Department of Agriculture for applying the
    needed conservation practices and land use adjustments within a
    specified time schedule. Because fifty percent of the available EQIP
    funds are to be targeted at natural resource concerns relating to
    livestock production, it is expected that a significant portion of the
    program will be for conservation practices that address non-point
    source water quality concerns caused by animal manure. The program is
    expected to assist with the reduction of excess nutrient loading within
    the watershed. EQIP is expected to be operational in November, 1996, at
    which time the funding decisions for program delivery in priority areas
    and other locations will be made. Projections on the number of priority
    areas or the amount of funds to be expended in the Gulf of Mexico
    drainage basin cannot be estimated at this time.
        AGENCY: United States Department of Agriculture (USDA)
        PROGRAM: Forestry Incentives Program (FIP)
        RESPONSE CATEGORY/SUBCATEGORY: Program/Policy Activities
        DESCRIPTION: The Forestry Incentives Program (FIP) is jointly
    administered at the national and regional level by the Natural
    Resources Conservation Service (NRCS) and the Forest Service (FS), both
    agencies are located in the United States Department of Agriculture
    (USDA). The NRCS administers FIP at the State and county level in
    consultation with the State Forester. State forestry provides the
    technical assistance needed to install timber production practices on
    the land. FIP provides cost-share assistance, up to 65 percent of the
    cost of installing practices. Three timber production practices are
    available: FP1, Planting Trees; FP2, Improving a Stand of Forest Trees;
    and FP3, Site Preparation for Natural Regeneration. The U.S. Forest
    Service is responsible for determining the States, to receive funding
    for FIP, which have the greatest potential for producing the most
    efficient timber stands. The State Forester recommends the counties
    within the respective State where the program will be offered, to
    maximize the results of the cost-share funds. FIP participants in
    thirty-one of the thirty-three States in the Mississippi River drainage
    system, received $8,200,885.00, or 89 percent of the total FIP cost-
    share payments earned in the 1995 fiscal year. A total of 154,147
    acres, or 93 percent of the total FIP acres treated in the 1995 fiscal
    year were located in the Mississippi River drainage system. The funding
    level, nationally, for FIP in fiscal years 1996 and 1997 has been
    $6,325,000.00. FIP practices, especially tree planting, provides
    watershed protection by reducing soil erosion, filtering chemicals,
    providing forest cover for nutrient uptake and reducing runoff from
    entering into the streams flowing into the Mississippi River. Other FIP
    practices improve forest stands, preventing their conversion to
    agriculture land and increasing their nutrient uptake efficiency and
    productivity. These ``win-win'' actions would benefit the landowner by
    providing timber sales for the future and would reduce the soil erosion
    running off into the Mississippi River system and Gulf of Mexico.
        AGENCY: USDA--Natural Resources Conservation Service (NRCS)
        PROGRAM: Agroforestry ``Working Trees for Agriculture''
        RESPONSE CATEGORY/SUBCATEGORY: Program/Policy Activities
        DESCRIPTION: ``Working Trees for Agriculture'' is a national
    project involving numerous agencies and nongovernmental organizations
    to increase the understanding, acceptance, and use of agroforestry
    practices to attain more diverse and sustainable agricultural land-use
    systems. The project has two parts: (1) jointly develop and deliver a
    portfolio of agroforestry technology transfer and awareness activities
    to field specialists, so they understand the technologies, how to apply
    them and enable them to assist landowners to apply the practices; and
    (2) a privately-funded national program that involves local youth
    groups planting and maintaining agroforestry demonstration projects and
    using them for conservation education. The National Agroforestry
    Center, located at Lincoln, Nebraska, provides leadership for the
    ``Working Trees for Agriculture'' project. The National Agroforestry
    Center is a partnership of the USDA Forest Service and Natural
    Resources Conservation Service and provides National leadership in
    Agroforestry research and technology transfer. Agroforestry practices,
    such as, riparian buffer strips, streambank bioengineering, alley
    cropping, timberbelts, field windbreaks and animal waste disposal
    plantings intercept and store excess nutrients, filter chemicals,
    reduce soil erosion, improve water quality, and reduce runoff.
    Agroforestry can be a valuable alternative for providing watershed
    protection to keep our water clean and more suitable for recreational
    use, domestic water use, and fish and wildlife habitat.
        AGENCY: United States Department of Agriculture (USDA)
        PROGRAM: Conservation Reserve Program
        RESPONSE/CATEGORY/SUBCATEGORY: Water Quality/Nutrient Management
        DESCRIPTION: At the Federal level, the USDA-Farm Service Agency
    (FSA) administers the Conservation Reserve Program (CRP) which provides
    for the conversion of certain cropland to permanent vegetative cover,
    wildlife habitat, or tree plantings. Technical assistance for the CRP
    is provided by the Natural Resources Conservation Service (NRCS). There
    have been thirteen public sign-up/enrollment periods since the
    inception of the program in 1986. More than 33 million acres are
    currently enrolled. The 1996 Farm Bill established a cap of 36.4
    million acres eligible for enrollment at any time.
        Land eligibility requirements generally encourage the most highly
    erodible and the most environmentally sensitive lands to be enrolled
    into the CRP. As a result, land which likely is yielding substantial
    sediment, nutrients, and pesticides constitute the majority of land
    currently enrolled in the CRP. Changes in the 1996 Farm Bill are
    expected to allow better targeting of environmentally sensitive acres
    including riparian buffers, waterways, and grass filter strips. A
    provision to allow continuous sign-up and automatic approval for land
    enrolled in these and similar practices promise to make the CRP even
    more successful in coming years.
        Scope and extent of CRP to the Gulf of Mexico drainage: In the 33
    States contributing to the drainage to the Gulf of Mexico,
    approximately 31.4 million acres of cropland is currently enrolled in
    the Conservation Reserve Program. According to the latest Natural
    Resources Inventory (NRI), average soil loss reduction due to CRP
    participation in these States is approximately 17.6 tons per acre, per
    year. In 1996, annual contract payments for land enrolled in CRP from
    within the Gulf of Mexico drainage was $1,572,654,934.
        AGENCY: United States Department of Agriculture (USDA)
        PROGRAM: Wetlands Reserve Program (WRP)
        RESPONSE CATEGORY/SUBCATEGORY: Program/Policy Activities
        DESCRIPTION: The Natural Resources Conservation Service (NRCS), an
    agency located in the United States Department of Agriculture,
    administers the Wetlands Reserve Program (WRP). The WRP is a voluntary
    program through which a landowner agrees to the restoration and
    protection of agricultural wetlands on his or her land by selling a
    conservation easement to the United States. NRCS compensates landowners
    for the conveyance of the easement and provides cost-share assistance
    for the installation of practices that restore wetlands. Additionally,
    NRCS may enter into restoration cost-share agreements with landowners
    without acquiring an easement. NRCS provides up to 100 percent cost-
    share assistance for the restoration practices on lands enrolled
    through permanent easement, and up to 75 percent cost-share assistance
    for the restoration practices on lands enrolled through 30-year
    easements or restoration cost-share agreements.
        Landowners apply for enrollment in the program during an announced
    sign-up period. NRCS evaluates the eligibility of the acres offered,
    ranks the eligible offers according to environmental and cost criteria,
    and then extends offers to the landowners with the high priority lands.
    The NRCS administers WRP at the State level in consultation with the
    State Technical Committee, authorized by 16 U.S.C. 3861. The greatest
    enrollment of lands occurs in the Mississippi drainage system. The
    funding level, nationally, for WRP has been approximately $80 million
    annually. Enrollment of WRP acres in the Mississippi River drainage
    system provides watershed protection by reducing flood hazards,
    enhancing riparian buffer areas, filtering chemicals, increasing forest
    cover, and reducing runoff from entering into the streams flowing into
    the Mississippi River.
        AGENCY: United States Department of Agriculture (USDA)
        PROGRAM: Title XII Wetland Conservation Provisions
        RESPONSE CATEGORY/SUBCATEGORY: Program/Policy Activities
        DESCRIPTION: The Natural Resources Conservation Service (NRCS), an
    agency located in the United States Department of Agriculture,
    administers the wetland conservation (WC) provisions of the Food
    Security Act of 1985, as amended, 16 U.S.C 3821 et seq. The WC
    provisions link eligibility for certain USDA program benefits to land
    management measures. In particular, producers are ineligible for
    program benefits if they produce an agricultural commodity on a wetland
    converted after December 23, 1985, or, after November 28, 1990, convert
    a wetland that makes the production of an agricultural commodity
    possible. The WC provisions have helped reduce the number of wetland
    acres lost to agricultural conversion to a fraction of the acres that
    were converted prior to 1985. Due to the distribution of agricultural
    wetlands, most of the impact of the WC provisions occurs within the
    Mississippi River drainage system. The WC provisions protect the
    functions and values of wetlands within the Mississippi watershed by
    enhancing habitat for migratory birds and other wildlife, improving
    water quality, attenuating the water flows due to floods, and
    recharging ground water supplies.
        AGENCY: United States Department of Agriculture (USDA)
        PROGRAM: Water Quality Program
        RESPONSE/CATEGORY SUBCATEGORY: Water Quality/Nutrient Management
        DESCRIPTION: The USDA Water Quality Program provides funds for
    research, education, technical assistance, data collection, and program
    evaluation. These funds are allocated among five USDA agencies, and are
    used to address various aspects of water contamination by agricultural
    chemicals, including plant nutrients, from chemical fertilizers and
    animal manures. About one-half of the annual expenditures are made
    within agency for research (e.g., the Management Systems Evaluation
    Area projects conducted largely within the Mississippi drainage), and
    associated component-research programs conducted by the State
    Agricultural Experiment Stations. The other expenditures are used to
    implement specific State identified projects to address agriculture-
    related water quality problems. Of these, approximately 20 (of 74)
    Hydrologic Unit Area Projects and two (of 16) Demonstration Projects
    are located in the Mississippi drainage. Since 1990, the USDA Water
    Quality Program has invested some $60 million in such efforts in the
    Gulf of Mexico watershed.
        To address the hypoxia issue, USDA intends to build upon current
    voluntary, incentive-driven approaches. Specifically, USDA would
    encourage a renewed emphasis on nutrient management within the
    education, financial, and technical assistance components of the
    Program. Wider use of the Pre-Sidedress Nitrogen Test; increased soil
    testing for nutrient availability; improved management of animal
    manures applied to croplands; adoption of controlled drainage; and the
    use of improved irrigation management techniques, can reduce farmer
    costs and reduce inputs of nitrogen to the watershed. These ``win-win''
    actions would reduce the potential loadings to the river system and the
    Gulf of Mexico. USDA and its State cooperators will also share examples
    from other regions where such strategies have reduced input costs and
    nitrogen loads to the aquatic environment.
        AGENCY: United States Department of Agriculture (USDA)
        PROGRAM: Water Quality Initiative
        RESPONSE/CATEGORY SUBCATEGORY: Water Quality/Nutrient Management
        DESCRIPTION: Overview
        At the Federal level the USDA administers the USDA Water Quality
    Program, which provides funds for research, education, technical
    assistance, and program evaluation. These funds are allocated among
    five USDA agencies, and are used to address various aspects of water
    contamination by agricultural chemicals, including plant nutrients from
    chemical fertilizers and animal manures. About one-half of the annual
    expenditures are made within agency for research (most notably, the
    Management Systems Evaluation Area projects conducted largely within
    the Corn Belt and largely within the Mississippi drainage). These
    research programs are conducted in cooperation with the State
    Agricultural Experiment Stations. The other expenditures are used to
    implement specific State-identified projects to address agriculture-
    related water quality problems. Of these, approximately 20 (of 74)
    Hydrologic Unit Area Projects are located in the Mississippi drainage,
    along with two (of 16) Demonstration Projects.
        For addressing the hypoxia issue, USDA intends to build upon
    current voluntary, incentive driven approaches. Specifically, USDA
    would encourage a renewed emphasis on nutrient management within the
    education and technical assistance components of the Program. In
    particular, wider use of the Pre-Sidedress Nitrogen Test, deep soil
    sampling, and recognizing the nutrients in animal manure applied to
    croplands can reduce farmer input costs, and reduce inputs of nitrogen
    to the watershed. These ``win-win'' actions would reduce the potential
    loadings to the river system and the Gulf of Mexico. USDA and its State
    cooperators will also share examples from other regions where such
    strategies have reduced input costs and nitrogen loads to the aquatic
    environment. Since 1990, some $3 million has been expended on
    Demonstration Projects and Hydrologic Unit Area Projects in the
    watershed.
        AGENCY: United States Department of Agriculture (USDA)
        PROGRAM: Water Quality Initiative
        RESPONSE/CATEGORY SUBCATEGORY: Water Quality/Nutrient Management
        DESCRIPTION: Management System Evaluation Areas
        At the Federal level the USDA Water Quality Program provides funds
    for research through the Agricultural Research Service and the
    Cooperative State Research, Education and Extension Service. These
    funds are allocated among the agencies for component research and the
    Management System Evaluation Area program coordinated by five
    Midwestern States: Minnesota, Iowa, Nebraska, Missouri, and Ohio.
    Watershed, field, and plot sized research addresses various aspects of
    water contamination by agricultural chemicals, including plant
    nutrients from chemical fertilizers and animal manures. These research
    programs are conducted in cooperation with the State Agricultural
    Experiment Stations, USGS, and EPA. For addressing the hypoxia issue,
    USDA will continue support of the MSEA program which was funded at
    $17.8 million in 1996. Of this, $15 million was allocated to ARS, and
    $2.7 million to CSREES, USDA and its partners are continuing efforts to
    address agricultural, and environmental issues.
        AGENCY: United States Department of Agriculture (USDA)
        PROGRAM: Water Quality Initiative
        RESPONSE/CATEGORY SUBCATEGORY: Water Quality/Nutrient Management
        DESCRIPTION: Hydrologic unit assessment areas
        At the Federal level the USDA Water Quality Program provides funds
    for technical assistance and education through the Natural Resources
    Conservation Service and the Cooperative State Research, Education and
    Extension Service. In the early 1990's, the Farm Service Agency also
    assisted by proving financial assistance. Funds are allocated among the
    agencies for 78 hydrologic unit assessment areas located in every state
    except Nevada and Alaska. All sites were selected in 1990 and 1991 in
    cooperation with the U.S. Environmental Protection Agency. These
    projects address various aspects of water contamination by agricultural
    chemicals, including plant nutrients from chemical fertilizers and
    animal manures.
        For addressing the hypoxia issue, USDA will continue support of the
    HUA program which was funded at $16 million in 1996. Of this, $11
    million was allocated to ARCS, and $4.2 million to CSREES.
    Specifically, USDA would encourage a renewed emphasis on nutrient
    management within the education and technical assistance programs of
    the Water Quality Initiative. Since 1990, some $3 million has been
    expended in the Mississippi watershed.
        AGENCY: United States Department of Agriculture (USDA)
        PROGRAM: Water Quality Initiative
        RESPONSE/CATEGORY SUBCATEGORY: Water Quality/Nutrient Management
        DESCRIPTION: Demonstration Projects
        At the Federal level the USDA administers the USDA Water Quality
    Program, which includes funds for demonstration projects in 16 States.
    All were selected in 1990 and 1991. Four of the projects are within the
    Mississippi River drainage. They are located in Arkansas, Iowa,
    Nebraska, and South Dakota. Funds are allocated among two USDA
    agencies, the Cooperative State Research, Education and Extension
    Service and the Natural Resources Conservation Service. These large-
    scale projects are used to address various aspects of water
    contamination by agricultural chemicals, including plant nutrients from
    chemical fertilizers and animal manures.
        For addressing the hypoxia issue, USDA intends to build upon
    current voluntary, incentive driven approaches. Specifically, USDA
    would encourage a renewed emphasis on nutrient management within the
    education and technical assistance components of the Program. In
    particular, wider use of the Pre-Sidedress Nitrogen Test, deep soil
    sampling, and recognizing the nutrients in animal manure applied to
    croplands can reduce farmer input costs, and reduce inputs of nitrogen
    to the watershed. These ``win-win'' actions would reduce the potential
    loadings to the river system and the Gulf of Mexico. USDA and its State
    cooperators will also share examples from other regions where such
    strategies have reduced input costs and nitrogen loads to the aquatic
    environment. In 1996, some $6 million was expended on Demonstration
    Projects.
                                  appendix a-1
                            research tools available
        AGENCY: United States Environmental Protection Agency (EPA)
        PROGRAM: Office of Research and Development, National Risk
    Management Research
        RESPONSE CATEGORY/SUBCATEGORY: Science/Research/Research on
    restoration techniques
        DESCRIPTION: This Risk Management Research Plan for Ecosystem
    Restoration in Watersheds is still under development, although it is
    almost ready for external peer review. This plan is intended to
    describe the risk management research needed over the next five years
    to identify and develop ecosystem restoration practices and
    technologies that facilitate cost-effective decision-making by local
    communities and stakeholder groups engaged in watershed planning and
    place-based environmental protection. This multimedia, inter-
    disciplinary program integrates and coordinates a broad range of
    scientific and engineering capabilities focused on the risk management
    research needs of selected highly ranked risks. The scope of the plan
    is limited to the activities of the National Risk Management Research
    Laboratory, and further limited to Community-Based Environmental
    Protection and restoration of damaged or impaired aquatic ecosystems in
    a watershed planning context. While not excluding other areas, this
    plan places special emphasis on the developing fringe areas upstream of
    Metropolitan Statistical Areas, and developing coastal and estuarine
    areas. It does not contain specific projects. While this plan has no
    specific focus on the hypoxia issue, it is anticipated that some of the
    restoration techniques it encompasses will be applicable to the
    nutrient reduction needs of the Gulf of Mexico, and transferable to
    numerous watersheds within the Gulf's extensive drainage Basin.
        AGENCY: United States Environmental Protection Agency (EPA)
        PROGRAM: Office of Research and Development, National Exposure
    Research Laboratory, Ecosystem Research Division/Athens GA: (1)
    Hydrologic Simulation Model-FORTRAN, and (2) Water Analysis Simulation
    Program (WASP)
        RESPONSE CATEGORY/SUBCATEGORY: Science/Research/Understanding
    nutrient transport mechanisms and Loadings characterization
        DESCRIPTION: The Hydrologic Simulation Model-FORTRAN (HSPF) is
    complete and is not, as such, ``activities underway.'' HSPF has
    applicability in the Mississippi River Basin, but its application there
    would require extensive resource commitments. It is currently being
    applied to the Minnesota River Basin, for example, for nonpoint source
    modeling, and has been applied in the Iowa River Basin and Yazoo River
    Basin for pesticides. HSPF is currently being used for the Chesapeake
    Bay Watershed Model, as a tool in meeting the 40 percent nutrient
    reduction goal for the Bay. This model is only applicable to upland
    watersheds with free-flowing rivers. The Water Analysis Simulation
    Program (WASP) is a more advanced stream transport model, which is more
    applicable to large rivers with complex hydrodynamics, and can be used
    on regulated (not free-flowing) rivers. It has been used widely,
    including on Lake Erie, for nutrient reduction goals and elsewhere for
    fate and transport of pesticides and toxic substances. It is currently
    being developed for application in the Everglades for evaluating
    mercury.
        AGENCY: United States Environmental Protection Agency (EPA)
        PROGRAM: Office of Research and Development/National Health and
    Environmental Effects Research Laboratory (NERL)/Mid-Continent Ecology
    Division
        CATEGORY: Research related to Hypoxia
        SUBCATEGORY: Other
        DESCRIPTION: Research will be conducted to improve our
    understanding of the relationship between landscape characteristics,
    land-use patterns, and water quality. These relationships will include
    the effects of forest fragmentation and wetland distribution on the
    dynamics of nutrients in streams and rivers. Although the initial
    geographic focus of this research is the Great Lakes basin, the
    information obtained should be transferable to the upper Mississippi
    River basin. As the research develops, the focus of the effort will be
    expanded to include this portion of the Mississippi River. The
    information will assist in determining the extent to which land-use
    patterns in the upper Mississippi River effect nutrient loadings that
    may contribute to the hypoxia problem in the Gulf of Mexico as well as
    providing insights as to what modifications in current practices may
    assist in alleviating these loadings. This research is an in-house
    effort with approximately 6 person years expended annually starting in
    fiscal year 1997.
    [GRAPHIC] [TIFF OMITTED] TVA.012

    [GRAPHIC] [TIFF OMITTED] TVA.013

                                  Attachment 4

                     gulf of mexico hypoxia assessment plan
    1. Background
        Nutrient over-enrichment from anthropogenic sources (human
    activities) is one of the major stresses impacting coastal ecosystems.
    There is increasing concern in many areas around the world that
    nutrient enrichment from multiple sources is having pervasive
    ecological effects on shallow coastal and estuarine areas. These
    effects include reduced sunlight, loss of aquatic habitat, a decrease
    in dissolved oxygen, and impacts on living resources. Depending on the
    amount and types of nutrients in an ecosystem, algal production can be
    either limited or enhanced. Generally, excess nutrients lead to
    increased algal production and increased availability of organic carbon
    within an ecosystem, a process known as eutrophication. This algal
    ``over production'' may sink to the bottom and decay, consuming most
    (hypoxia), if not all (anoxia) of the available oxygen in these bottom
    waters. On a national scale, there are increasing concerns for the
    effects of nutrient over-enrichment and associated problems such as
    eutrophication, hypoxia, and increases in harmful algal blooms in
    coastal ecosystems. Because nutrient enrichment can have multiple
    impacts, which can include increases in ecosystem productivity as well
    as hypoxia, this underscores the need for careful assessment of the
    causes of and impacts of nutrient enrichment.
        There are multiple sources of excessive nutrients in watersheds,
    both point and non-point, and the transport and delivery of these
    nutrients is a complex process which is controlled by many factors
    including not only the chemistry, but also the ecology, hydrology, and
    geomorphology of the various portions of a watershed and that of the
    receiving system. Both the near-coastal hydrodynamics that generate
    water column stratification and the nutrients that fuel primary
    productivity contribute to the formation of hypoxic zones. Human
    activities on land can add excess nutrients to coastal areas or
    compromise the ability of ecosystems to remove nutrients either from
    the landscape or from the waterways themselves.
        Hypoxia occurs naturally in many parts of the world (e.g., Black
    Sea, Baltic Sea, Chesapeake Bay, New York Bight). While hypoxic and
    anoxic environments have existed throughout geologic time, their
    occurrence in shallow coastal and estuarine areas appears to be
    increasing, most likely accelerated by human-induced activities (Diaz
    and Rosenberg, 1995). As a result, ecological problems associated with
    the occurrence of low oxygen conditions are increasing on a global
    scale (Ortner and Dagg, 1995).
        Scientific investigations in the field and the laboratory have
    documented an enormous area of the Louisiana (USA) continental shelf
    with seasonally-depleted oxygen levels (<2mg/l) extending as much as 20
    meters from the bottom depending on the water depth (Figure 1). The
    oxygen depletion begins in late spring, reaches a maximum in mid-
    summer, and disappears in the fall. After the Mississippi River flood
    of 1993, the spatial extent of this zone doubled to over 18,000 km
    2 and has remained about that size each year since (through
    mid-summer 1997). Model simulations and research studies, including
    retrospective analyses, have produced considerable evidence that
    nutrient loading from the Mississippi and Atchafalaya river systems is
    the dominant factor in creating this hypoxia problem (Atwood et al.
    1994). The hypoxic zone forms in the middle of the most important
    commercial and recreational fisheries in the coterminous United States
    and threatens the economy of this region of the Gulf.
    [GRAPHIC] [TIFF OMITTED] TVA.014

        In response to a petition from the Earthjustice Defense Fund
    (formerly known as the Sierra Club Legal Defense Fund, Inc.), the Gulf
    of Mexico Program held a conference in December 1995 to outline the
    issue and identify potential actions. Following that conference, the
    Environmental Protection Agency (EPA) convened an interagency group of
    senior Administration officials (``the Principals'') to discuss
    potential policy actions and related science needs. After two meetings,
    the Principals asked an interim working group (IWG) to develop
    recommendations for action. The IWG made three recommendations that
    were endorsed by the Principals at a meeting in June 1997:
      --Establish a formal coordinating structure led by the Mississippi
            River/Gulf of Mexico Watershed Nutrient Task Force (the ``Task
            Force'');
      --Highlight and emphasize a series of existing programs and actions,
            focused on identifying immediate win-win, no-regret actions;
            and,
      --Support an initiative for both stewardship and scientific support
            elements.
        The Task Force has initiated a two-track effort to respond to the
    hypoxia issue. The first is an ecosystem/watershed management track, to
    identify near-term ``win-win'' actions to reduce excess nutrient loads.
    The second track is an assessment of the state of scientific knowledge
    and understanding of the problem. The plan presented here describes the
    science assessment track.
        As part of the process of developing potential actions, the EPA
    asked the White House Office of Science and Technology Policy to
    conduct a scientific assessment of the causes and consequences of Gulf
    hypoxia through its Committee on Environment and Natural Resources
    (CENR). While NOAA has been asked to lead this CENR scientific
    assessment, oversight involves several federal agencies and the
    assessment itself is being conducted by teams that include academic,
    federal, and state scientists from within and outside the Mississippi
    River watershed. The assessment of the causes and consequences of Gulf
    hypoxia is intended to provide scientific information that can be used
    to evaluate nutrient management strategies, and to identify gaps in our
    understanding of this problem. While the focus of the assessment will
    be on hypoxia in the Gulf of Mexico, the effects of changes in nutrient
    concentrations and loads and nutrient ratios on water quality
    conditions within the Mississippi-Atchafalaya riverine systems will
    also be addressed.
        Under the leadership of CENR, a Scientific Evaluation and Support
    Committee (SESC) was formed to conduct the hypoxia science assessment.
    The SESC or ``Hypoxia Work Group'' is comprised of representatives from
    the following governmental organizations:
        1. Dept. of Agriculture
        2. Dept. of Commerce/National Oceanic & Atmospheric Administration
    [LEAD]
        3. Dept. of Defense/Army Corps of Engineers
        4. Dept. of Defense/Office of Naval Research
        5. Dept. of Energy
        6. Dept. of Health & Human Services/National Institute of
    Environmental Health Services
        7. Dept. of Interior/Minerals Management Service
        8. Dept. of Interior/U.S. Geological Survey
        9. Dept. of State
        10. Environmental Protection Agency
        11. National Aeronautics and Space Administration
        12. National Science Foundation
        13. Smithsonian Institution
    2. Approach and scope of the scientific assessment
                2.1 The Mississippi watershed and hypoxia in the Gulf of
                        Mexico
        Seasonally severe and persistent hypoxia (low dissolved oxygen
    conditions) occurs on the continental shelf of the northern Gulf of
    Mexico to the west of the Mississippi River and Atchafalaya River
    deltas. The areal extent of the hypoxia zone has ranged from 16,000-
    18,000 km \2\ since 1993 (Rabalais et al., in press). Hypoxia occurs
    below the pycnocline (layer where water density increases rapidly with
    depth) from as early as late February through early October, but it is
    most widespread, persistent and severe in June, July, and August
    (Rabalais et al., 1996).
        There is spatial and temporal variability in the distribution of
    the hypoxia on the shelf which is, in part, related to the amplitude
    and timing of the Mississippi and Atchafalaya discharges. These waters
    originate in the vast Mississippi watershed which encompasses more than
    40 percent of the area of the conterminous 48 states (Figure 2). Two-
    thirds of the flow from this system enters the Gulf through the
    Mississippi River while the remaining third enters through the
    Atchafalaya River. Together, these two rivers account for 90 percent of
    the fresh water inflow to the Gulf of Mexico (Rabalais et al., 1996).
    [GRAPHIC] [TIFF OMITTED] TVA.015

        The linkages between the freshwater inflow from the Mississippi/
    Atchafalaya River systems (and subsequent nutrient flux) and net
    surface productivity and bottom water oxygen deficiency have been
    established (Atwood et al., 1994; Justice et al., 1993; Rabalais et
    al., 1996). Freshwater discharge and nutrient flux from the Mississippi
    and Atchafalaya Rivers strongly influence the distribution and
    intensity of the hypoxia, along with water column stratification and
    mixing (Rabalais et al. 1991). Analyses of sediment cores from the
    Louisiana shelf in the Mississippi River delta bight indicate that the
    increased eutrophication and hypoxia seen in the northern Gulf of
    Mexico are related to increased nutrient loadings from the Mississippi
    River (Rabalais et al., 1996).
        Nutrient loadings associated with eutrophication enter coastal
    marine systems via atmospheric, surface runoff, and groundwater
    pathways. Nutrient concentrations in the Mississippi River have
    increased dramatically in this century, and have accelerated since
    1950, coincident with increasing fertilizer usage (Turner and Rabalais,
    1991). Factors such as tile drainage (technique used to drain excess
    soil moisture from agricultural lands) and other changes on the
    agricultural lands of the Midwest U.S., atmospheric deposition of
    nutrients from airsheds within and outside of the Mississippi
    watershed, nonpoint discharges from urban and suburban areas, and point
    discharges throughout the Mississippi Watershed and in the Gulf of
    Mexico all have contributed to increases in nutrients.
        The nutrients delivered by the rivers and deposited directly in the
    Gulf of Mexico increase primary production and may also stimulate fish
    production locally in the Gulf. Carbon derived from this primary
    production sinks out of the upper water column, decomposes at depth,
    and leads to seasonally-severe oxygen depletion in the lower water
    column and at the seabed (Turner and Allen, 1982; Rabalais et al.,
    1991, 1992; Bierman et al., 1994; Justic et al. 1996, 1997). The
    oxygen-stressed bottom community is characterized by limited taxa,
    characteristic resistant fauna, and reductions in abundance, species
    richness and biomass. Effects of hypoxia on fishery resources include
    direct mortality, altered migration, reduction in suitable habitats,
    changes in food resources, increased susceptibility to predation, and
    disruption of life cycles including aspects of spawning, recruitment,
    and migration.
                2.2 Scientific goal and approach
        The goal of the hypoxia science assessment is to document the state
    of knowledge of the extent, characteristics, causes, and effects (both
    ecological and economic), of hypoxia in the northern Gulf of Mexico.
    The assessment will also compile existing information on nutrient
    sources, identify alternatives for reducing nutrient inputs, and
    examine the costs and benefits associated with reducing the nutrient
    loads. The assessment will build upon the outcomes of the December 1995
    Louisiana Hypoxia Conference and related efforts that have brought
    together scientists, managers, and regulators to discuss the Gulf of
    Mexico hypoxia problem.
        The effort will include a series of six interrelated reports,
    examining various aspects of the hypoxia issue. They will be developed
    by six teams with experts from within and outside government and will
    be reviewed by independent experts. The research teams will analyze
    existing data and will apply it to existing models of the watershed-
    gulf system to aid in identifying magnitudes of nutrient load
    reductions needed to effect a significant change in the extent and
    severity of the hypoxia. The teams will not conduct new research.
    However, if in the course of addressing these issues, researchers
    encounter obstacles due to the limitations of current understanding,
    they are encouraged to specifically identify what additional research
    or data would be needed to fill the gap. Results will be shared, as
    appropriate, among the teams to determine baseline boundaries, notably
    in topics where loadings estimates are related to responses. Once the
    individual topic papers are completed, they will be used to develop a
    final integrated assessment that will be used by the Task Force to
    evaluate alternative solutions to the hypoxia problem. The topic papers
    and integrated assessment will be subjected to a rigorous independent
    review. Public comments will be solicited and considered in both the
    topic paper and integrated assessment phases of the assessment process.
    Both the review process and public input are described in more detail
    in section 3 of this Plan.
        The six topic papers will address the following:
        Topic 1. Characterization of hypoxia: distribution, dynamics, and
    causes.--This report will describe seasonal, interannual, and long-term
    variation of hypoxia in the northern Gulf of Mexico, and its
    relationship to nutrient loadings. It will also document the relative
    roles of natural and human-induced factors in determining the size and
    duration of the hypoxic zone. Lead: Nancy Rabalais, Louisiana
    Universities Marine Consortium.
        Topic 2. Ecological and economic consequences of hypoxia.--This
    report will evaluate the ecological and economic consequences of
    nutrient loading, including impacts on Gulf of Mexico fisheries and the
    regional and national economy. It will articulate both ecological and
    economic consequences and, to the extent appropriate, their
    interaction. Ecological co-lead: Robert Diaz, Virginia Institute of
    Marine Science. Economics co-lead: Andrew Solow, Woods Hole
    Oceanographic Institution, Center for Marine Policy.
        Topic 3. Sources and loads of nutrients transported by the
    Mississippi River to the Gulf of Mexico.--This report will identify the
    sources of nutrients within the Mississippi/Atchafalaya system and
    within the Gulf of Mexico with two distinct components. The first is to
    identify where, within the basin, the most significant nutrient
    additions to the surface water system occur. The second, more difficult
    component, is estimating the relative importance of specific human
    activities in contributing to these loads. Lead: Donald Goolsby, U.S.
    Geological Survey.
        Topic 4. Effects of reducing nutrient loads to surface waters
    within the basin and Gulf of Mexico.--This report will estimate the
    effects of nutrient source reductions in the Mississippi-Atchafalaya
    Basin on water quality in these waters and on primary productivity and
    hypoxia in the Gulf of Mexico. Modeling analyses will be conducted to
    aid in identifying magnitudes of load reductions needed to effect a
    significant change in the extent and severity of the hypoxia. Upper
    watershed co-lead: Patrick Brezonik, University of Minnesota. Gulf of
    Mexico co-lead: Victor Bierman, Limno-Tech.
        Topic 5. Evaluation of methods to reduce nutrient loads to surface
    water, ground water, and the Gulf of Mexico.--The main focus of this
    report will be to identify and evaluate methods to reduce nutrient
    loads to surface water, ground water, and the Gulf of Mexico. The
    analysis will not be restricted to only reduction of sources. It will
    also include means to reduce loads by allowing the system to better
    accommodate those sources through, for example, modified hydraulic
    transport and internal cycling routes. Lead: William Mitsch, Ohio State
    University.
        Topic 6. Evaluation of social and economic costs and benefits of
    methods (identified in topic # 5) for reducing nutrient loads.--In
    addition to evaluating the social and economic costs and benefits of
    the methods identified in topic 5 for reducing nutrient loads, this
    analysis will include an assessment of various incentive programs and
    will include any anticipated fiscal benefits generated for those
    attempting to reduce sources. Lead: Otto Doering, Purdue University.
        These six topics will be addressed in the context of the following
    relationships within the Mississippi River watershed and the northern
    Gulf of Mexico:
      --the relationship between nutrient loads discharged at various
            places in the watershed and sub-watersheds of the Mississippi
            and the nutrient loads that appear in the mainstem and the
            relative contributions of point and nonpoint sources to the
            mainstem nutrient load;
      --the relationship between these nutrient loads and the water quality
            of the Mississippi-Atchafalaya Basin;
      --the relationship between the nutrient loads that are delivered to
            the mainstem and the loads that are delivered to the Gulf of
            Mexico;
      --the relationship between nutrient loads delivered to the northern
            Gulf of Mexico from sources other than the Mississippi/
            Atchafalaya systems; and,
      --the relationship between the nutrient loads delivered to Gulf of
            Mexico and the ecological responses and impacts (i.e., primary
            productivity, bottom hypoxia, ecological and economic effects).
                2.3 Assessment process
        In its early deliberations, the Hypoxia Work Group agreed on the
    six topics to be developed as outlined above, identified a point of
    contact in NOAA to lead/coordinate the overall effort, identified
    leaders for each of the topic paper teams, and recommended potential
    team members and reviewers for each topic paper. The Team Leads worked
    with these recommendations and their own ideas to construct teams of
    experts to address each topic. Team Leads then developed mini-proposals
    for each topic that were reviewed by the Hypoxia Work Group and were
    also reviewed by other Team Leads. The content and approaches to each
    topic paper were described and discussed at a meeting of the Team Leads
    and the Hypoxia Work Group in August 1997. At that workshop,
    participants identified linkages and noted where critical gaps existed
    among topics and determined an appropriate approach to complete an
    integrated assessment of the causes and consequences of Gulf hypoxia.
        The Hypoxia Work Group coordinated with the Team Leads to estimate
    costs and to identify sources of funds and in-kind support. A second
    workshop of the Hypoxia Work Group and Team Leads was held in October
    1997, where final adjustments were made to the proposals, the proposals
    were approved, and the review process outlined. The Hypoxia Work Group
    convenes periodic workshops (about every 2-3 months) to monitor
    progress of the assessment, resolve issues between teams, and recommend
    mid-course adjustments as necessary.
        All six proposals were initially reviewed by the interagency
    Hypoxia Work Group that was formed by the CENR to oversee the
    assessment, and by the five team leads for the other six reports in the
    series. The proposals were revised according to the Work Group and team
    lead comments, and were approved at the second meeting of the Work
    Group in October 1997.
        The topic papers and all other related products and reports will be
    provided in electronic and hardcopy form to the Gulf of Mexico Program
    Office copies to NOAA's Coastal Ocean Program Office. Review and
    oversight of the development of each topic paper will be through
    several steps: a review of the outline of the report, a presentation of
    initial findings to the Hypoxia Work Group, and a review of the draft
    report. The Hypoxia Work Group will review and recommend adjustments on
    the outlines in coordination with the Team Leads. Drafts of each report
    will be subjected to a rigorous independent peer-review facilitated by
    an independent Editorial Board.
        The primary and ultimate target audience for the integrated
    assessment is the Mississippi River/Gulf of Mexico Watershed Nutrient
    Task Force, currently led by EPA, and composed of senior management
    officials from State agencies and Tribal organizations as well as the
    following Federal Agencies:
      --Environmental Protection Agency
      --Department of Agriculture
      --Department of Defense/Army Corps of Engineers
      --Department of Commerce/National Oceanic and Atmospheric
            Administration
      --Department of the Interior
      --Department of Justice
      --White House Office of Science and Technology Policy
        The six individual reports, to be completed by fall/winter 1998,
    will be used to develop the final integrated assessment that will be
    used by the Task Force to evaluate alternative solutions. The
    Integration Team will be selected by the Hypoxia Work Group and will be
    composed of the assessment team leads and additional government and
    academic experts where necessary. A diagram that outlines the basic
    steps of the assessment process is shown in Figure 3. Specific detail
    on the review process, public and stakeholder input, and the functions
    of the Editorial Board are provided in Section 3 of this Plan.
    [GRAPHIC] [TIFF OMITTED] TVA.016

    3. Renew process
                3.1 Review of the Six Topic Papers
        The Hypoxia Work Group will select an Editorial Board to facilitate
    review and revision of the first six reports. The Editorial Board will
    be volunteer, independent, and composed of individuals who are
    considered experts in related fields, and will be selected by the
    Hypoxia Work Group from nominations provided by the Task Force and
    other organizations.
        The Editorial Board will work with the Hypoxia Work Group to select
    reviewers for the six team reports. The draft reports will be sent out
    for review and the results will be returned to the Hypoxia Work Group
    which will distribute them to the Editorial Board and the authors. The
    authors will modify their papers and otherwise respond to the reviews.
    Lead authors will be required to document in writing their rationale
    for incorporating or rejecting each significant comment received from
    reviewers. The Editorial Board will then be asked to compare the review
    comments and revisions to insure that the review comments have been
    addressed. If the comments are adequately addressed, the topic paper
    will be considered complete. If the comments require further revision,
    the Editorial Board members will serve as brokers between the lead
    authors and reviewers to ensure that recommended changes are addressed.
                3.2 Review of the Integrated Assessment
        When the Integration Team completes a draft of the Integrated
    Assessment, the Hypoxia Work Group will oversee an external review and
    public comment period. The Hypoxia Work Group, or designated federal
    personnel will be responsible for developing any recommendations based
    on the findings and public comments on the integrated assessment. Once
    the Integrated Assessment is acceptable to the Hypoxia Work Group, it
    will be delivered to the full CENR for review. It will be the
    responsibility of the Hypoxia Work Group, using whatever means
    necessary, to respond to the CENR comments.
                3.3 Public input
        Public input plays a critical role in the policy process. It was
    public concern and action, in fact, that brought national attention to
    the problem of hypoxia in the Gulf of Mexico and prompted CENR to
    undertake this scientific assessment. The CENR Hypoxia Assessment
    process has been designed to both keep the public informed and involved
    while ensuring accuracy and objectivity of the information that it
    provides. Thus, the reports will be developed by specialists, subject
    to rigorous peer review, then made available for public comment. Public
    input will be solicited via the World Wide Web as the final individual
    topic papers are completed.
        Once all the topic papers are complete, the written public comments
    will be included with them and given to the Integration Team. The
    Integration Team will address the public comments in the preparation of
    the Integrated Assessment. The six topic papers will also be made
    available at public meetings and other fora. Once the Integrated
    Assessment is complete, it will be made available for public comment. A
    public workshop (or series of workshops) will be held to obtain
    stakeholder input to the Integrated Assessment. Results of the workshop
    will be summarized and included as a part of the final Integrated
    Assessment.
    4. Timeline
                4.1 Topic papers
        The individual topic papers will be completed by fall/winter 1998.
    Schedules for these and intermediate steps are as follows:

    ----------------------------------------------------------------------------------------------------------------
                                                                                           Topic
                                                                     -----------------------------------------------
                                                                         1       2       3       4       5       6
    ----------------------------------------------------------------------------------------------------------------
    Start date......................................................    1/98    2/98   10/97    2/98    2/98    1/98
    Outline complete................................................    3/98    5/98    3/98    4/98    3/98    6/98
    Present findings................................................  ( \1\   ( \1\   ( \1\   ( \1\   ( \1\   ( \1\
                                                                           )       )       )       )       )       )
    Draft ready for review..........................................    7/98    9/98    8/98    9/98    6/98    9/98
    Review complete.................................................    9/98   11/98   10/98   11/98    8/98   11/98
    Final report....................................................   10/98   12/98   11/98   12/98    9/98   12/98
    ----------------------------------------------------------------------------------------------------------------
    \1\ TBD.

                4.2 Integrated assessment
        Initial synthesis and organization of the integrated assessment
    will begin in fall 1998 beginning with the results of topic papers that
    are complete at that time. A draft of the integrated assessment may be
    ready for review as early as winter 1998/99, though the actual schedule
    will be determined by the Hypoxia Work Group once the individual topic
    papers are completed. The review and revision periods for the draft
    integrated assessment will also be determined by the Hypoxia Work
    Group. Once complete, the final integrated assessment will be delivered
    to the Task Force.
    5. References
        Atwood, D.K., A. Bratkovich, M. Gallagher, and G. Hitchcock (eds.)
    1994. Papers from NOAA's Nutrient Enhanced Coastal Ocean Productivity
    Study--Special Dedicated Issue. ``Estuaries'' 17(4):729-911.
        Bierman, V.J., S.C. Hinz, W.J. Wiseman, Jr., N.N. Rabalais, and
    R.E. Turner. 1994. A preliminary mass balance model of primary
    productivity and dissolved oxygen in the Mississippi River plume/inner
    gulf shelf region. ``Estuaries'' 17: 886-899.
        Diaz, R.J., and R. Rosenberg. 1995. Marine benthic hypoxia: a
    review of its ecological effects and the behavioral responses of
    benthic macrofauna. ``Oceanography and Marine Biology: An Annual
    Review.'' Vol. 33:245-303.
        Justic, D., N.N. Rabalais, R.E. Turner and W.J. Wiseman, Jr. 1993.
    Seasonal coupling between riverborne nutrients, net productivity and
    hypoxia. ``Marine Pollution Bulletin'' 26(4): 184-189.
        Justic, D., N.N. Rabalais, and R.E. Turner. 1996. Effects of
    climate change on hypoxia in coastal waters: A doubled CO2
    scenario for the northern Gulf of Mexico. ``Limnology and
    Oceanography'' 41(5):992-1003.
        Justic, D., N.N. Rabalais and R.E. Turner. 1997. Impacts of climate
    change on net productivity of coastal waters: implications for carbon
    budgets and hypoxia. ``Climate Research'' 8:225-237.
        Ortner, P.B., and M.J. Dagg. 1995. Nutrient-enhanced coastal ocean
    productivity explored in the Gulf of Mexico. ``Trans. Amer. Geophys.
    Union'' 76(10).
        Rabalais, N.N., R.E. Turner, W.J. Wiseman, Jr., and Q. Dortch.
    1997. Consequences of the 1993 Mississippi River Flood in the Gulf of
    Mexico. ``Regulated Rivers'' (in press).
        Rabalais, N.N., R.E. Turner, D. Justic, Q. Dortch, W.J. Wiseman,
    Jr., and B.K. Sen Gupta. 1996. Nutrient changes in the Mississippi
    River and system responses on the adjacent continental shelf.
    ``Estuaries'' 19:286-407.
        Rabalais, N.N., R.E. Turner, and W.J. Wiseman, Jr. 1992.
    Distribution and characteristics of hypoxia on the Louisiana shelf in
    1990 and 1991, pp. 15-20. In Nutrient Enhanced Coastal Ocean
    Productivity. Publication number TAMU-SG-92-109, Sea Grant Program,
    Texas A & M University, Galveston, Texas.
        Rabalais, N.N., R.E. Turner, and W.J. Wiseman, Jr., and D.F.
    Boesch. 1991. A brief summary of hypoxia on the northern Gulf of Mexico
    continental shelf: 1985-1988, pp. 35-47. In: R.V. Tyson and T.H.
    Pearson (eds.), Modern and Ancient Shelf Anoxia. Geological Society
    Special Publication No. 58. London.
        Turner, R.E. and R.L. Allen. 1982. Bottom water oxygen
    concentrations in the Mississippi River Delta Bight. ``Contributions in
    Marine Science'' 25: 161-172.
        Turner, R.E., and N.N. Rabalais. 1991. Changes in Mississippi River
    water quality this century: implications for coastal food webs.
    ``BioScience'' 41:140-147.
    [GRAPHIC] [TIFF OMITTED] TVA.017

     TABLE 2.--SUMMARY OF FEDERAL AGENCY FUNDING FOR CENR HYPOXIA ASSESSMENT
    ------------------------------------------------------------------------
                                                              Scientific and
                                              Direct support   other support
                                                 of teams          staff
    ------------------------------------------------------------------------
    EPA.....................................        $234,000        $194,000
    NOAA....................................         112,900         255,000
    USGS....................................         150,000  ..............
    USDA....................................          65,000          60,000
    COE.....................................  ..............          10,000
                                             -------------------------------
          Total.............................         561,900         519,000
    ------------------------------------------------------------------------

                  small business compliance assistance efforts
        Question. On April 28, the Senate Committee on Small business held
    a hearing on Environmental Compliance Tools for Small Business.
    Witnesses placed great importance on compliance assistance programs
    ensuring the confidentiality of the information shared or discovered
    through the compliance assistance and of the source of the compliance
    assistance inquiry. Please describe EPA's policy regarding confidential
    treatment of the information exchange and the identity of small
    businesses seeking assistance from EPA's numerous hotlines,
    clearinghouses, Compliance Assistance Centers, Section 507 Small
    Business Assistance Program and other compliance assistance efforts.
        Answer. EPA has a strong commitment to providing compliance
    assistance to small businesses who contact the Agency's hotlines,
    clearinghouses and program experts located throughout EPA headquarters
    and regional offices. It is the Agency's policy and practice that these
    callers requesting compliance assistance may choose to remain
    anonymous. This means that the caller is not required to provide any
    information, such as his name, phone number, address or any other
    identifying information to the hotline staff in order to obtain the
    assistance he seeks.
        Compliance Assistance Centers, established in partnership with
    industry, academic institutions, and environmental groups, also allow
    callers to remain anonymous.
        EPA does not determine the practices of the Section 507 Clean Air
    Act Small Business Assistance Programs, which are developed and
    operated by the states. EPA believes that any policies concerning
    anonymity or confidentiality would vary by state. EPA does have a
    policy that applies to information obtained by state agencies during
    the course of delivering compliance assistance. The policy, called the
    Enforcement Response Policy for Treatment of Information Obtained
    Through Clean Air Act Section 507 Small Business Assistance Programs,
    allows a small business assistance program, if independent of the
    delegated state air enforcement program, to keep confidential
    information that identifies the names and locations of specific small
    businesses with violations revealed through compliance assistance.
                          sip: mobile source category
        Question. On April 28th, Mr. Benjamin Y. Cooper with the Printing
    Industries of America recommended that EPA provide State Implementation
    Plan credits for Section 507 programs and other small business
    compliance assistance activities. The credits would be based on good
    faith estimates of emission reductions to result from the various
    compliance assistance efforts.
        With credits already provided for the mobile source category, are
    there any legal impediments to providing such credits for compliance
    assistance programs?
        If the credits are applied to sources that are not identified as
    having federally enforceable permits, would any reductions gain be
    considered excess emission credits?
        Under the present system, what is your level of confidence in the
    accuracy of estimated emissions for areas sources contained in State
    Implementation Plans?
        Does the Masters Printers Program in Massachusetts provide any
    lessons that could be used to derive evaluation techniques for the SIP
    credit recommendation?
        Answer. For purposes of responding to this question, EPA assumes
    that ``credits'' refers to emission reduction credits given for
    purposes of demonstrating attainment or rate of progress.
        There are legal impediments to providing State Implementation Plan
    (SIP) credits for compliance assistance programs. It is not within the
    scope or intent of the Clean Air Act (CAA) to directly provide emission
    reduction credits for compliance assistance. The purpose of compliance
    assistance is to bring small businesses into compliance with the
    underlying standard.
        However, if sources are willing to voluntarily take on emission
    limitations, we could give credit for demonstrated emission reductions.
    In order to receive credit for reductions of National Ambient Air
    Quality Standards (NAAQS) pollutants, emission rate requirements must
    be enforceable through a permit or other means.
        Emission Inventories are compilations of emission estimates for
    sources in a specific geographic area such as an urban or metropolitan
    area or an entire state. These inventories allow air quality planners
    to account for the air pollution coming from different sectors
    (automobiles, industries, consumers, etc.) And to prepare plans for
    reducing emissions from specific sectors or source categories to
    improve air quality to acceptable levels.
        Emission inventories are composed of:
      --(1) point or major sources (e.g., power plants or manufacturing
            industries)
      --(2) stationary area sources (e.g., landfills or windblown dust)
      --(3) on-road mobile sources (e.g., automobiles and trucks)
      --(4) non-road mobile sources (e.g., construction equipment and
            boats)
      --(5) biogenic sources (e.g., forests)
        The highest confidence in emission estimates is in the point or
    major sources because of the greater focus on these sources in the past
    and the larger amount of test data available for such sources. The next
    highest level of confidence is in estimates of emissions from on-road
    mobile sources because of recent focus on these sources and on the
    relative accuracy of the MOBILE model and available activity data
    (vehicle miles traveled for roadways). Next would be stationary area
    and non-road mobile sources.
        While much work has been done to improve our understanding of
    emissions from all of these categories, emissions from stationary area
    and non-road mobile sources need the most work. There is a growing
    recognition of their contribution to air quality exceedences and much
    work remains to be done in order to improve our confidence in these
    estimates. Because of the complexity of many of these sources, we need
    to prepare emission models similar to the MOBILE model to account for
    the parameters that have the greatest impact on their emissions and we
    need to identify better sources of information on activity levels
    (e.g., amount of boat traffic along rivers and tributaries). The use of
    ambient air measurements will also help us to improve our understanding
    of and confidence in these emission estimates.
        In response to the final question, EPA has learned some lessons
    from the Massachusetts Printing Partnership (MPP) that could be
    transferred to a SIP credit program. For example, one way to calculate
    the impact of compliance assistance activities on emissions in the
    printing industry is to take a random-sample of chemical use at
    printing facilities and look at changes over time. The MPP program did
    this and calculated a 2,000 lb. reduction in VOC's that resulted from
    their program.
                         compliance assistance centers
        Question. Please explain what ongoing assistance and financial
    support EPA plans to provide the original four compliance assistance
    centers to ensure that each center is viable.
        Answer. The Compliance Assistance Centers Program is a reinvention
    initiative to provide regulated entities with easy access to
    environmental compliance information that is plain-language, sector-
    specific, and covers all environmental media. Information is provided
    through ``virtual'' means such as Internet web-sites, e-mail discussion
    groups, fax-back systems and toll-free numbers. Compliance Assistance
    Centers are developed through partnerships between EPA and the industry
    partners that represent the sectors served. In this partnership EPA
    offers credibility and industry brings access to clients.
        In addition, the Centers have coordinated with the states to assist
    them in their outreach efforts to industry, to facilitate their
    delivery of sector-specific regulatory information, to serve as the
    delivery mechanism for their pollution prevention and compliance
    assistance materials, and to build their capacity to meet the
    environmental needs of the businesses in their states and localities.
        Given the partnership nature of this program and limited resources,
    EPA has asked that the Centers, which are funded through cooperative
    agreements, attempt to move towards self-sustainability over a multi-
    year period. For those Centers whose primary audience is small
    businesses, EPA expects that if the industry served values the services
    of the Center, they will contribute to its long-term sustainability. We
    recognize that achieving financial sustainability is an incremental
    process that will take some time to achieve. Therefore EPA has decided
    to incrementally fund each of the original four Centers to help account
    for the shortfall between their actual annual operational costs and the
    funds raised from outside sources. Under this scenario, the Federal
    contribution will decrease over time as the partner contribution
    increases.
        The workplans for the remaining five centers will be reviewed as
    their present funding nears its end. As far as possible the approach
    will be the same as the original four; move towards long-term self-
    sustainability. However, for the Centers whose primary audience are
    states and local governments (Printers, Agriculture, and Local
    Governments centers), EPA realizes that the ability of these groups to
    raise funds is more limited and therefore EPA will continue requesting
    funding for these Centers as necessary.
                                     ______

                      Questions Submitted by Senator Burns

                     pm: visibility monitors class i areas
        Question. How many visibility monitors are now deployed in and
    around our mandatory class I Federal areas?
        Answer. There are currently 58 class I areas that have monitoring
    to measure PM-2.5 concentrations for visual air quality and other
    related data. A little over half of these monitoring sites (30) are
    part of the Interagency Monitoring of Protected Visual Environments
    (IMPROVE) network. The remaining sites are what we call ``protocol''
    sites. They are operated by the Federal Land Managers and follow the
    same IMPROVE data collection and analysis protocols.
        Question. Where are they? In what States? In what mandatory class I
    Federal areas?
        Answer. See attachment for the States and mandatory class I Federal
    areas.
        Question. What types of data do they collect?
        Answer. The IMPROVE sites collect a variety of visibility related
    data: aerosol (PM-2.5 and PM-10 mass and chemical composition), optical
    (light extinction and light scattering), and scene (35 mm photography).
    The ``protocol'' sites in some cases may not have the full suite of
    measurements. Standard techniques are used to calculate visual air
    quality (expressed in terms of light extinction, visual range, and
    deciviews) from aerosol data collected from each site.

            FEDERAL CLASS I AREAS SHOWING STATUS OF MONITORING CODES
                 [No Monitoring = 0; Improve = 1; Protocol = 2]
    ------------------------------------------------------------------------
             Land manager                State             Name         Code
    ------------------------------------------------------------------------
    FWS..........................  AK..............  Bering Sea......      0
    Nat'l Park Ser...............  AK..............  Denali Preserve       1
                                                      NP.
    FWS..........................  AK..............  Simeonof........      0
    FWS..........................  AK..............  Tuxedni.........      0
    Forest Service...............  AL..............  Sipsey                1
                                                      Wilderness.
    Forest Service...............  AR..............  Caney Creek           0
                                                      Wilderness.
    Forest Service...............  AR..............  Upper Buffalo         1
                                                      Wilderness.
    Nat'l Park Ser...............  AZ..............  Chiricahua NM...      1
    Forest Service...............  AZ..............  Chiricahua            0
                                                      Wilderness.
    Forest Service...............  AZ..............  Galiuro               0
                                                      Wilderness.
    Nat'l Park Ser...............  AZ..............  Grand Canyon NP.      1
    Forest Service...............  AZ..............  Mazatzal              0
                                                      Wilderness.
    Forest Service...............  AZ..............  Mount Baldy           0
                                                      Wilderness.
    Nat'l Park Ser...............  AZ..............  Petrified Forest      2
                                                      NP.
    Forest Service...............  AZ..............  Pine Mountain         0
                                                      Wilderness.
    Nat'l Park Ser...............  AZ..............  Saguaro NM......      2
    Forest Service...............  AZ..............  Sierra Ancha          0
                                                      Wilderness.
    Forest Service...............  AZ..............  Superstition          1
                                                      Wilderness.
    Forest Service...............  AZ..............  Sycamore Cany.        0
                                                      Wild..
    Forest Service...............  CA..............  Agua Tibia            0
                                                      Wilderness.
    Forest Service...............  CA..............  Caribou               0
                                                      Wilderness.
    Forest Service...............  CA..............  Cucamonga             0
                                                      Wilderness.
    Forest Service...............  CA..............  Desolation            2
                                                      Wilderness.
    Forest Service...............  CA..............  Dome Land             2
                                                      Wilderness.
    Forest Service...............  CA..............  Emigrant              0
                                                      Wilderness.
    Forest Service...............  CA..............  Hoover                0
                                                      Wilderness.
    Forest Service...............  CA..............  John Muir             0
                                                      Wilderness.
    Nat'l Park Ser...............  CA..............  Joshua Tree NM..      0
    Forest Service...............  CA..............  Kaiser                0
                                                      Wilderness.
    Nat'l Park Ser...............  CA..............  Kings Canyon NP.      0
    Nat'l Park Ser...............  CA..............  Lassen Volcanic       2
                                                      NP.
    Nat'l Park Ser...............  CA..............  Lava Beds NM....      0
    Forest Service...............  CA..............  Marble Mountain       0
                                                      Wild..
    Forest Service...............  CA..............  Minarets              0
                                                      Wilderness.
    Forest Service...............  CA..............  Mokelumne             0
                                                      Wilderness.
    Nat'l Park Ser...............  CA..............  Pinnacles NM....      2
    Nat'l Park Ser...............  CA..............  Point Reyes NS..      2
    Nat'l Park Ser...............  CA..............  Redwood NP......      2
    Forest Service...............  CA..............  San Gabriel           0
                                                      Wilderness.
    Forest Service...............  CA..............  San Gorgonio          1
                                                      Wilderness.
    Forest Service...............  CA..............  San Jacinto           0
                                                      Wilderness.
    Forest Service...............  CA..............  San Rafael            0
                                                      Wilderness.
    Nat'l Park Ser...............  CA..............  Sequoia NP......      2
    Forest Service...............  CA..............  South Warner          0
                                                      Wilderness.
    Forest Service...............  CA..............  Thousand Lakes        0
                                                      Wild..
    Forest Service...............  CA..............  Ventana               0
                                                      Wilderness.
    Forest Service...............  CA..............  Yolla Bolly           0
                                                      Middle Eel
                                                      Wilderness.
    Nat'l Park Ser...............  CA..............  Yosemite NP.....      1
    Nat'l Park Ser...............  CO..............  Black Canyon of       0
                                                      the Gunnison NM.
    Forest Service...............  CO..............  Eagles Nest           0
                                                      Wilderness.
    Forest Service...............  CO..............  Flat Tops             0
                                                      Wilderness.
    Nat'l Park Ser...............  CO..............  Great Sand Dunes      2
                                                      NM.
    Forest Service...............  CO..............  La Garita             0
                                                      Wilderness.
    Forest Service...............  CO..............  Maroon Bells-         0
                                                      Snowmass
                                                      Wilderness.
    Nat'l Park Ser...............  CO..............  Mesa Verde NP...      1
    Forest Service...............  CO..............  Mount Zirkel          2
                                                      Wilderness.
    Forest Service...............  CO..............  Rawah Wilderness      0
    Nat'l Park Ser...............  CO..............  Rocky Mountain        1
                                                      NP.
    Forest Service...............  CO..............  Weminuche             1
                                                      Wilderness.
    Forest Service...............  CO..............  West Elk              0
                                                      Wilderness.
    FWS..........................  FL..............  Chassahowitzka..      2
    Nat'l Park Ser...............  FL..............  Everglades NP...      2
    FWS..........................  FL..............  St. Marks.......      0
    Forest Service...............  GA..............  Cohutta               0
                                                      Wilderness.
    FWS..........................  GA..............  Okefenokee......      1
    FWS..........................  GA..............  Wolf Island.....      0
    Nat'l Park Ser...............  HI..............  Haleakala NP....      2
    Nat'l Park Ser...............  HI..............  Hawaii Volcanoes      0
                                                      NP.
    Nat'l Park Ser...............  ID..............  Craters of the        2
                                                      Moon NM.
    Forest Service...............  ID..............  Hells Canyon          0
                                                      Wilderness.
    Forest Service...............  ID..............  Sawtooth              2
                                                      Wilderness.
    Forest Service...............  ID..............  Selway-               2
                                                      Bitterroot
                                                      Wilderness.
    Nat'l Park Ser...............  KY..............  Mammoth Cave NP.      1
    FWS..........................  LA..............  Breton..........      0
    Nat'l Park Ser...............  ME..............  Acadia NP.......      1
    FWS..........................  ME..............  Moosehorn.......      2
    Nat'l Park Ser...............  MI..............  Isle Royale NP..      0
    FWS..........................  MI..............  Seney...........      0
    Forest Service...............  MN..............  Boundry Waters        1
                                                      Canoe Area.
    Nat'l Park Ser...............  MN..............  Voyageurs NP....      2
    Forest Service...............  MO..............  Hercules-Glades       0
                                                      Wilderness.
    FWS..........................  MO..............  Mingo...........      0
    Forest Service...............  MT..............  Anaconda-Pintler      0
                                                      Wilderness.
    Forest Service...............  MT..............  Bob Marshall          0
                                                      Wilderness.
    Forest Service...............  MT..............  Cabinet               0
                                                      Mountains
                                                      Wilderness.
    Forest Service...............  MT..............  Gates of the          0
                                                      Mountains
                                                      Wilderness.
    Nat'l Park Ser...............  MT..............  Glacier NP......      1
    FWS..........................  MT..............  Medicine Lake...      0
    Forest Service...............  MT..............  Mission               0
                                                      Mountains
                                                      Wilderness.
    FWS..........................  MT..............  Red Rock Lakes..      0
    Forest Service...............  MT..............  Scapegoat             0
                                                      Wilderness.
    FWS..........................  MT..............  UL Bend.........      0
    Forest Service...............  NC..............  Joyce-Kilmer-         0
                                                      Slickrock
                                                      Wilderness.
    Forest Service...............  NC..............  Linville Gorge        0
                                                      Wilderness.
    Forest Service...............  NC..............  Shining Rock          1
                                                      Wilderness.
    FWS..........................  NC..............  Swanquarter.....      0
    FWS..........................  ND..............  Lostwood........      0
    Nat'l Park Ser...............  ND..............  Theodore              0
                                                      Roosevelt NP.
    Forest Service...............  NH..............  Great Gulf            2
                                                      Wilderness.
    Forest Service...............  NH..............  Presidential          0
                                                      Range-Dry River
                                                      Wilderness.
    FWS..........................  NJ..............  Brigantine......      1
    Nat'l Park Ser...............  NM..............  Bandelier NM....      2
    FWS..........................  NM..............  Bosque del            0
                                                      Apache.
    Nat'l Park Ser...............  NM..............  Carlsbad Caverns      0
                                                      NP.
    Forest Service...............  NM..............  Gila Wilderness.      2
    Forest Service...............  NM..............  Pecos Wilderness      0
    FWS..........................  NM..............  Salt Creek......      0
    Forest Service...............  NM..............  San Pedro Parks       0
                                                      Wilderness.
    Forest Service...............  NM..............  Wheeler Peak          0
                                                      Wilderness.
    Forest Service...............  NM..............  White Mountain        0
                                                      Wilderness.
    Forest Service...............  NV..............  Jarbridge             1
                                                      Wilderness.
    FWS..........................  OK..............  Wichita               0
                                                      Mountains.
    Nat'l Park Ser...............  OR..............  Crater Lake NP..      1
    Forest Service...............  OR..............  Diamond Peak          0
                                                      Wilderness.
    Forest Service...............  OR..............  Eagle Cap             0
                                                      Wilderness.
    Forest Service...............  OR..............  Gearhart              0
                                                      Mountain
                                                      Wilderness.
    Forest Service...............  OR..............  Kalmiopsis            0
                                                      Wilderness.
    Forest Service...............  OR..............  Mount Hood            0
                                                      Wilderness.
    Forest Service...............  OR..............  Mount Jefferson       0
                                                      Wilderness.
    Forest Service...............  OR..............  Mt. Washington        0
                                                      Wilderness.
    Forest Service...............  OR..............  Mountain Lakes        0
                                                      Wilderness.
    Forest Service...............  OR..............  Strawberry            0
                                                      Mountain
                                                      Wilderness.
    Forest Service...............  OR..............  Three Sisters         2
                                                      Wilderness.
    FWS..........................  SC..............  Cape Romain.....      1
    Nat'l Park Ser...............  SD..............  Badlands NP.....      2
    Nat'l Park Ser...............  SD..............  Wind Cave NP....      0
    Nat'l Park Ser...............  TN..............  Great Smoky           1
                                                      Mount. NP.
    Nat'l Park Ser...............  TX..............  Big Bend NP.....      1
    Nat'l Park Ser...............  TX..............  Guadalupe             2
                                                      Mountains NP.
    Nat'l Park Ser...............  UT..............  Arches NP.......      0
    Nat'l Park Ser...............  UT..............  Bryce Canyon NP.      1
    Nat'l Park Ser...............  UT..............  Capitol Reef NP.      0
    Nat'l Park Ser...............  UT..............  Canyonlands NP..      1
    Nat'l Park Ser...............  UT..............  Zion NP.........      0
    Forest Service...............  VA..............  James River Face      2
                                                      Wilderness.
    Nat'l Park Ser...............  VA..............  Shenandoah NP...      1
    Nat'l Park Ser...............  VI..............  Virgin Islands        2
                                                      NP.
    Forest Service...............  VT..............  Lye Brook             1
                                                      Wilderness.
    Forest Service...............  WA..............  Alpine Lake           0
                                                      Wilderness.
    Forest Service...............  WA..............  Glacier Peak          0
                                                      Wilderness.
    Forest Service...............  WA..............  Goat Rocks            0
                                                      Wilderness.
    Forest Service...............  WA..............  Mount Adams           0
                                                      Wilderness.
    Nat'l Park Ser...............  WA..............  Mount Rainier NP      1
    Nat'l Park Ser...............  WA..............  North Cascades        0
                                                      NP.
    Nat'l Park Ser...............  WA..............  Olympic NP......      0
    Forest Service...............  WA..............  Pasayten              0
                                                      Wilderness.
    Forest Service...............  WV..............  Dolly Sods            1
                                                      Wilderness.
    Forest Service...............  WV..............  Otter Creek           0
                                                      Wilderness.
    Forest Service...............  WY..............  Bridger               1
                                                      Wilderness.
    Forest Service...............  WY..............  Fitzpatrick           0
                                                      Wilderness.
    Nat'l Park Ser...............  WY..............  Grand Teton NP..      0
    Forest Service...............  WY..............  North Absaroka        0
                                                      Wilderness.
    Forest Service...............  WY..............  Teton Wilderness      0
    Forest Service...............  WY..............  Washakie              0
                                                      Wilderness.
    Nat'l Park Ser...............  WY..............  Yellowstone NP..      2
    Canada/US....................  ................  Roosevelt             0
                                                      Campobello.
    ------------------------------------------------------------------------

    Totals by code:
        No site.......................................................    98
        IMPROVE.......................................................    30
        Protocol...................................................... 28777
                        pm: cost of visibility monitors
        Question. What does it cost to install a visibility monitor on
    average?
        Answer. Purchase and deployment cost is $20,000 per site.
        Question. What does it cost to operate one of these monitors each
    year?
        Answer. The Federal Land Managers (NPS, FS and FWS) provide the
    field personnel to operate the monitors at an approximate cost of
    $5,000 per site. The operation cost to EPA and the States is zero.
        Question. What does it cost to analyze and store the data from a
    visibility monitor each year?
        Answer. Filter procurement and laboratory analysis is $30,000 per
    site for a total of $900,000 per year for the 30 site IMPROVE network.
    An additional $12,000 per site or $350,000 national total per year
    provides support for data analysis, storage and quality assurance.
        Question. How much of these costs are paid by EPA and how much by
    the States?
        Answer. 100 percent of the costs are paid by EPA and none by the
    States.
                       pm: additional visibility monitors
        Question. How many additional visibility monitors does EPA plan to
    deploy?
        Answer. EPA plans to deploy an additional 78 sites in or near
    Federal class I areas. Twenty additional sites will be established in
    1998 and the other 58 in 1999. The existing 30 IMPROVE monitors will
    also be upgraded to new equipment standards. In total, the expanded
    IMPROVE network will consist of 108 monitors.
        Question. Where will they be located? In what States? In what
    mandatory class I Federal areas?
        Answer. The locations of the first 20 sites are currently under
    discussion among the Federal Land Managers and the States. A list of 30
    candidate class I Areas for new 1998 monitoring has been prepared. See
    BUR-Attachment B.
        Question. Will they collect the same types of data as the current
    monitors?
        Answer. Current plans and funding only allow for aerosol
    monitoring. The new aerosol measurements will utilize an upgrade to the
    existing IMPROVE sampler which will facilitate more frequent data
    collection while maintaining consistency with the historical
    measurements. Standard techniques are used to calculate visual air
    quality (expressed in terms of light extinction, visual range, and
    deciviews) from aerosol data collected from each site.
        Question. Will the costs for new monitors be the same as for
    existing monitors? If not, what are the differences?
        Answer. The procurement cost for new monitors will be slightly
    higher than the older costs. This reflects technology upgrades in
    addition to costs associated with inflation.
        Question. How much of these costs are paid by EPA and how much by
    the States?
        Answer. One hundred percent of the cost will be paid by EPA.
        Question. How much of these funds for existing and future monitors
    are reflected in EPA's budget request fiscal year 1999?
        Answer. The fiscal year 1999 budget request reflects 100 percent of
    the cost to analyze and store data from the 1999 operational network
    and to establish new 58 sites in 1999.
                                     ______

                                  Attachment B

    List of 30 Candidate Class I Areas for 1998 IMPROVE Deployment
        The following list is the result of a selection process by the
    Forest Service, National Park Service, and Fish and Wildlife Service
    which met on January 29th to review sites for consideration for the
    expanded IMPROVE monitoring in scheduled for 1998. One of the primary
    basis for selecting the sites listed below was to fill geographic gaps
    in the current aerosol monitoring program. Sites are organized by FLM
    and represent each FLM's top 10 priority list.

       ATTACHMENT B.--LIST OF 30 CANDIDATE CLASS I AREAS FOR 1998 IMPROVE
                                   DEPLOYMENT
    ------------------------------------------------------------------------
                   FEW                        NPS                 FS
    ------------------------------------------------------------------------
    Breton, LA......................  Theodore            Eagle Cap, OR.
                                       Roosevelt, ND.
    St Marks, FL....................  North Cascades, WA  Sawtooth, WA.
    Mingo, MO.......................  Joshua Tree, CA...  Cohutta, GA.
    Witchita Mount., OK.............  Guadalupe           Great Gulf, NH.
                                       Mountains, TX.
    Bosque del Apache, NM...........  Capital Reef, UT..  San Gabrial, CA.
    Seney, MI.......................  Bad Lands, SD.....  Anaconda-Pintler,
                                                           MT.
    Tuxedni, AK.....................  Grand Tetons, WY..  Bridger, WY.
    Swanquarter, NC.................  Petrified Forest,   Wheeler Peak, NM.
                                       AZ.
    UL Bend, MT.....................  Zion, UT..........  Mt. Hood, OR.
    Salt Creek, NM..................  Olympic, WA.......  Sycamore Canyon,
                                                           AZ.
    ------------------------------------------------------------------------

                  regional haze: visibility research spending
        Question. To what extent has EPA coordinated the dissemination of
    visibility and PM-2.5 monitors?
        Answer. EPA recognizes the importance in coordinating the
    monitoring networks for visibility and PM-2.5. Visibility impairment in
    class I areas is caused primarily by fine particles. Measurements of
    fine particles in class I and rural areas can help characterize the
    regional transport of fine particles. The visibility aerosol monitor
    (called the IMPROVE PM-2.5 sampler) is very comparable to the PM2.5
    Federal Reference Method (FRM) monitor which will be utilized in the
    new PM2.5 network. In fact, the PM-2.5 monitoring regulations provide
    for coordination between the two networks by allowing the States to use
    the IMPROVE PM2.5 sampler in lieu of the PM-2.5 FRM at regional
    background/transport monitoring sites (2 required per State). This
    allows the visibility monitors to provide background and regional
    transport information to the PM-2.5 program in a format which is
    comparable to the PM-2.5 aerosol measurements.
        EPA Regional Offices are working closely with the States to
    coordinate the development and review of PM-2.5 network designs; an
    important component of which is regional transport and regional
    background monitoring, with existing and potential new IMPROVE
    visibility monitoring site locations.
        Furthermore, EPA chairs the Interagency IMPROVE Steering Committee
    which oversees the development of the nation's visibility network. This
    committee consists of representatives of State agencies, Federal Land
    Management Agencies, EPA, and NOAA. All parties are working very
    closely to meet their mutual needs for PM-2.5 and visibility
    monitoring. EPA has an interagency agreement with the National Parks
    Service. Through this cooperative mechanism, together with the advice
    and oversight of the Interagency IMPROVE Steering Committee, visibility
    monitors are procured and deployed in the field; and data are
    collected, analyzed and disseminated.
        Question. How can the visibility monitors be used to provide
    background data for the PM-2.5 network?
        Answer. The visibility aerosol monitor (called the IMPROVE PM2.5
    sampler) is very comparable to the PM-2.5 Federal Reference Method
    (FRM) monitor which will be utilized in the new PM-2.5 network. In
    fact, the PM2.5 monitoring regulations allow the States to use the
    IMPROVE PM-2.5 sampler in lieu of the PM-2.5 FRM at regional
    background/transport monitoring sites (2 required per State). This
    allows the visibility monitors to provide background and regional
    transport information to the PM-2.5 program in a format which is
    comparable to the PM-2.5 aerosol measurements.
        Question. How much value is lost to the PM-2.5 network if
    visibility monitors are used as background sites?
        Answer. The IMPROVE visibility monitors are located in rural,
    remote areas of the country which are ideal to characterize regional
    background concentrations. Therefore, the IMPROVE monitors represent an
    important and integral part of the national PM monitoring network and
    that their use as background sites obviates the need for funding other
    monitors for essentially the same purpose. They also provide important
    supplementary information regarding regional transport.
        Question. What can be learned about visibility from the PM-2.5
    monitors?
        Answer. Visibility-related information can be derived from PM-2.5
    monitors. Fine particles are principally responsible for visibility
    impairment and a statistical relationship exists between fine particle
    mass and light extinction. In addition, all PM-2.5 monitors permit at
    least limited chemical speciation. Speciated data provides a basis for
    developing reliable estimates of seasonal and annual average visibility
    conditions. Accordingly, the dense network of PM-2.5 monitors which is
    currently under development will help identify the extent of regional
    haze and contributing sources. Although the monitors will largely be
    located in urban areas, the trends in urban air quality and related
    urban visibility will help track reductions in regional emissions which
    are responsible for impairment of visual range in rural areas. In
    addition, many of the PM-2.5 network's regional transport and regional
    background monitors are expected to provide the capability for full
    chemical speciation. This will supplement the characterization of
    particles in rural areas which affect visual range.
                  regional haze: visibility research spending
        Question. How much money has EPA spent on visibility research since
    1990? Pleas break down your estimate by:
      --calendar year starting with 1991 and provide separate line items
            for Project MOHAVE, the Grand Canyon Visibility Transport
            Commission, and each of the other mandatory class I Federal
            areas. State in a two dimensional matrix showing how much was
            spent on each of the six factors listed in Sec. 169B(a) in each
            air shed containing mandatory class I Federal areas.
        Answer. Best estimates for visibility research since 1990 are:
    By Calendar year
        1991: Project MOHAVE: $2,766,000.--Visibility Monitoring for all
    Class I areas: $500,000; Contribution to National Academy of Sciences
    review of Visibility Science $100,000.
        1992: Project MOHAVE: $724,000.--Visibility Monitoring for all
    Class I areas: $1,000,000; Castnet Visibility Monitors: $207,000;
    Inter-Agency Workgroup on Air Quality Modeling: $700,000.
        1993: Project MOHAVE: $450,000.--Visibility Monitoring Support for
    all Class I areas: $1,000,000; Castnet Visibility Monitors: $486,000;
    Inter-Agency Workgroup on Air Quality Modeling: $290,000.
        1994: Project MOHAVE: $117,000.--Grand Canyon Visibility Transport
    Commission: $1.4 million; Visibility Monitoring Support for all Class I
    areas: $900,000; Visibility Impairment and Process and Measurement
    Research: $550,000; Castnet Visibility Monitors: $429,000.
        1995: Project MOHAVE: $290,000.--Visibility Monitoring Support for
    all Class I areas: $1,000,000; Castnet Visibility Monitors: $226,000.
        1996: Visibility Monitoring Support for all Class I areas:
    $1,000,000; Castnet Visibility Monitors: $186,000.
        1997: Project MOHAVE $300,000.--Visibility Monitoring Support for
    all Class I areas: $1,200,000; Castnet Visibility Monitors: $343,000.
        1998: Visibility Monitoring Support for all Class I areas:
    $2,300,000; Castnet Visibility Monitors: $300,000.
        NOTE: The work itemized above does not include substantial
    resources to develop new regional modeling platforms, such as MODELS3.
    EPA has spent approximately $6.1 million on regional particulate model
    development. These air quality models will be used by EPA and the
    States for strategy assessment during the coordinated implementation of
    ozone, fine particulate matter, and regional haze programs.
    By State
        No specific research was conducted by EPA specifically on a State-
    by-State basis.
    By research area
        There are four categories of research noted in Sec. 169B(a) of the
    Clean Air Act. Because Sec. 169B did not require, and EPA did not
    specifically address, research on these categories by air shed the
    following summary is simply presented by the four categories:
        (A) Expansion of current visibility related monitoring in class I
    areas; $8.9 million on expand Class I visibility monitoring including
    expansion of eastern mandatory Federal Class I areas. $4.6 million on
    Project MOHAVE field study and follow-up analysis work to support the
    Grand Canyon visibility Transport Commission. EPA has funded
    approximately $2.2 million for Castnet Visibility monitors.
        (B) Assessment of current sources of visibility impairment
    pollution and clean air corridors: $1.4 million.
        (C) Adaptation of regional air quality models for the assessment of
    visibility: $700,000 directly on visibility models plus work on new
    regional model platforms, such as MODELS3 (approximately $6.1 million).
        (D) Studies of atmospheric chemistry and physics of visibility:
    $650,000.
                         regional haze: non-epa funding
        Question. If any of the research offered as responsive to this
    congressional directive came from budgets other than EPA's, please
    indicate how much came from which agencies by year and by account.
        Answer. None of the funds identified above came from any other
    agency. However, significant funding has been committed each year by
    the Department of the Interior to collect and analyze visibility
    information. The Department of the Interior, National Park Service
    spends approximately $1.9 to $2.5 million per year on visibility
    monitoring in mandatory Federal Class I areas, totaling approximately
    $18 million over the period 1991-1998. Also within the Department of
    Interior, the Fish and Wildlife Service has spent approximately $90,000
    per year since 1993 on monitoring of visibility in wilderness areas.
    Funding for visibility monitoring has been supported by the Department
    of Agriculture for their mandatory Class I wilderness areas. Their
    support averages approximately $400,000 per year over the period 1995
    through 1998, totaling approximately $1.6 million. In addition the
    Department of the Interior contributed significantly to the work
    conducted under Project MOHAVE, which also supported the Grand Canyon
    Visibility Transport Commission.
                      regional haze: visibility knowledge
        Question. What has EPA learned about visibility since 1990? Please
    present your answer in a two-dimensional matrix with six factors from
    Sec. 169B(a) defining one dimension and the air sheds containing the
    mandatory class I Federal areas defining the other dimension?
        Answer.
        [GRAPHIC] [TIFF OMITTED] TVA.018

                  regional haze: publication date of findings
        Question. When does EPA plan to publish its final findings from its
    visibility research performed to date?
        Answer. The EPA (Environmental Protection Agency), as required by
    Sec. 169B(a), issued its interim findings on visibility research in
    October 1995. The EPA has been working on research related to
    visibility, particularly focusing on fine particulate modeling, since
    that time. The EPA shares its research findings periodically, but does
    not currently have specific plans to publish a compendium of such
    findings. However, much information is routinely included in EPA's
    periodic revisions to the criteria documents for particulate matter and
    other pollutants related to visibility impairment.
                      regional haze: research in air sheds
        Question. What research needs to be performed in the air sheds
    around the country on the six factors listed in Sec. 169B(a) to support
    the development of the data, methods, and other regulatory tools needed
    by the States to implement the visibility protection program?
        Answer. No research is needed before the States can begin to
    implement the visibility protection program. As the National Academy of
    Sciences (NAS) noted in its 1993 report ``Protecting Visibility in
    National Parks and Wilderness Areas,'' page 11; ``Current scientific
    knowledge is adequate and control technologies are available for taking
    regulatory action to improve and protect visibility''. The NAS goes on
    to state that continued regulatory progress will need more research on
    items related to atmospheric processes, monitoring, and emissions
    control strategies. All of these items are also being worked on and are
    directly related to programs to protect the human health from exposure
    to fine particulate matter as well as to visibility protection. The
    Environmental Protection Agency (EPA) has committed to providing the
    funding for visibility monitoring in Class I Federal areas and will be
    working with the States on technical issues such as the refinement of
    existing air quality models refinement and the development of
    appropriate emissions factors as the States implement the regional haze
    program.
        Question. How much will this follow-up research cost?
        Answer. As indicated above, there is no need for additional basic
    research before implementing a regional haze visibility protection
    program and therefore no associated costs for follow-up research. As
    noted by the NAS and other organizations, better technical information
    and more refined tools will be needed over time in order to continue to
    implement the program. The EPA will be consulting with the States on
    the technical needs to implement control programs and will allocate
    available funds to ensure the best support for addressing these
    technical needs.
        Question. How long will it take to perform this research and to
    develop the tools needed by the States?
        Answer. The tools are available now to begin implementation of the
    program. Refinement of the tools and the building of databases, with
    information regarding emissions inventories, emissions factors,
    particle data, and other atmospheric conditions data will be an ongoing
    process that has been and will be supported by the EPA to the extent
    funds are available.
        Question. Is this schedule and budget reflected in your budget
    request for fiscal year 1999?
        Answer. Yes. The EPA has requested funds to address visibility
    monitoring and technical tool refinement. The EPA will also assist
    States through the State Grant process to meet further needs identified
    by the States.
                            169(b): report findings
        Question. When did EPA publish its report under Sec. 169B(b)? Did
    this report cover all regions of the country?
        Answer. The 169B(b) report, entitled ``Effects of the 1990 Clean
    Air Act Amendments on Visibility in Class I Areas: An EPA Report to
    Congress,'' was published in October 1993. (EPA-452/R-93-014). A copy
    of this report is attached.
        Question. What were the findings of that report as to trends in
    emissions and visual air quality for each air shed containing a
    mandatory Class I Federal area?
        Answer. The report conducted a preliminary assessment for the
    entire country in order to identify the geographic areas of the country
    likely to see changes in visibility impairment due to existing Clean
    Air Act requirements. These geographic areas are shown in Figure ES-3
    (page vi) at the beginning of the report. More detailed assessment were
    performed for the Eastern United States and for the Southwestern United
    States. For these areas, the Environmental Protection Agency conducted
    an analysis comparing emissions and visibility for two scenarios: a
    baseline (1985 for the Eastern States, 1988 for the Southwest) and
    predictions for the year 2010. These calculations showed, as displayed
    in Figure ES-7 and discussed in greater detail in chapter 4 of the
    report, that much of the East should experience perceptible
    improvements by the year 2010, largely from reductions expected under
    title IV of the Clean Air Act (Act). The calculations for the
    Southwestern U.S., discussed in Chapter 5, show that perceptible
    improvements in visibility are not expected in the Southwestern U.S.
    from existing Act programs.
        Question. How well do these findings compare with actual trends in
    emissions and visual air quality?
        Answer. Because the report looked forward only to the year 2010, it
    is too early to make a direct comparison to the emission and air
    quality projections in the report. However, for further information we
    are attaching a copy of our most recent air quality trends report--
    chapter 3 of this report discusses recent trends in visibility.
        Question. What were the reasons for the disparities between EPA's
    projections and actual trends?
        Answer. Because no direct comparison has yet been made, it is too
    early to judge whether or why disparities will occur.
        Question. What provisions of the CAA, as amended, and what
    regulations promulgated under the CAA did that report address?
        Answer. The Clean Air Act programs whose effects were included in
    the comparison are shown in Table 4-1 (page 22) of the report.
        Question. Did that report address the Kyoto protocol or the
    Administrations's plans for mitigating the effect of the emissions of
    greenhouse gases?
        Answer. Because those efforts were not known at the time it was
    prepared, the report did not address the effects of global warming or
    greenhouse gas programs.
                  169(b): provisions, regulations and programs
        Question. What provisions (e.g., Title III), regulations (e.g., the
    new ambient standards for ozone and PM-2.5), and Administration
    programs should EPA address in the Agency's next attempt to satisfy the
    Sec. 169B(b) requirement?
        Answer. Section 169B(b) requires that every 5 years after the first
    report (the report noted above) that the Environmental Protection
    Agency (EPA) must ``conduct an assessment of actual progress and
    improvement in visibility in class I areas.'' Because the report is to
    be based on actual progress and improvement, such an assessment can be
    performed using monitoring data and we do not believe that the types of
    analyses that EPA performed for the first report are required. As EPA
    prepares the next report on the actual status and trends in air
    quality, we will consider whether and to what extent such analyses
    would be useful as a matter of discretion.
                            169(b): report and cost
        Question. When can EPA prepare a comprehensive report under
    Sec. 169B(b), and how much will it cost? Is this cost reflected in your
    current budget request?
        Answer. Section 169B required a report on progress and improvements
    in visibility that are likely to result from implementation of the
    Clean Air Act Amendments of 1990 other than the provisions of section
    169B. Subsequent reports are required by section 169B to assess actual
    progress and improvements in visibility and do not call for further
    analyses of other Clean Air Act provisions. The EPA plans to deliver
    the report on 5-year progress and improvements in visual air quality
    later this year, and the costs of preparing this report are included in
    the budget request.
                            169(b): trend assessment
        Question. The CAA's Sec. 169B(b) requires EPA to assess the actual
    trends in emissions and visual air quality in mandatory class I Federal
    areas from 1970 to the present for all regions of the country
    containing mandatory class I Federal areas. Has EPA responded to this
    commitment? If so, please provide us with a copy of the response when
    you respond to this letter.
        Answer. The EPA has not assessed actual trends from 1970 to the
    present.
        Question. If not, why not?
        Answer. Section 169B(b) requires the Environmental Protection
    Agency to ``conduct an assessment of the progress and improvements in
    visibility in class I areas that are likely to result from the
    implementation of the provisions of the Clean Air Act Amendments of
    1990 other than * * * (the visibility provisions).'' This section does
    not require an assessment of the effects of the Clean Air Act (Act)
    overall (i.e., since 1970) but only the effects of those changes that
    were made to the Act in 1990. As noted above, the attached October 1993
    report fulfills EPA's initial commitment under section 169B(b).
                    169(b): trend assessment date and report
        Question. When does EPA plan to conduct the assessment and prepare
    the comprehensive report under Sec. 169B(b) regarding actual trends,
    both of which were required by 1997? How much will it cost to respond?
    Is this cost reflected in your current budget request?
        Answer. The Environmental Protection Agency plans to deliver the
    report on 5-year progress and improvements in visual air quality later
    this year, and the costs of preparing this report are included in the
    budget request.
                 regional haze: report on visibility monitoring
        Question. The CAA's section 169A(3) requires EPA to publish in a
    Report to Congress the visibility monitoring, modeling, and assessment
    tools that the Agency is required to include in final visibility rules.
    This provision of the CAA requires EPA to provide Congress with this
    Report six months before those rules go final. When does EPA plan to
    send us that report?
        Answer. Section 169A(3) called for the Environmental Protection
    Agency (EPA) to complete within 18 months of enactment of section 169A
    a study and report to Congress describing available methods for
    visibility monitoring, modeling, and assessment of strategies to make
    progress toward the national goal of remedying existing and preventing
    future visibility impairment. This report was issued by EPA in October
    1979 and is entitled ``Protecting Visibility: An EPA Report to
    Congress'' (EPA-450/5-79-008).
        The availability of technical methods for visibility monitoring,
    modeling, and strategy assessment is also discussed in the National
    Academy of Sciences 1993 report entitled ``Protecting Visibility in
    National Parks and Wilderness Areas.'' One of the important findings in
    this report is that: ``Current scientific knowledge is adequate and
    control technologies are available for taking regulatory action to
    improve and protect visibility.'' Another important conclusion is the
    following:

              Visibility impairment can be attributed to emission sources
            on a regional scale through the use of several kinds of models.
            In general, the best approach for evaluating emission sources
            is a nested progression from simpler and more direct models to
            more complex and detailed methods. The simpler models are
            available today and could be used as the basis for designing
            regional visibility programs; the more complex models could be
            used to refine those programs over time.

        Question. Does EPA intend to delay the regional haze rules until
    six months after we have received this report?
        Answer. The dates established in section 169A for reporting on
    methods and for adopting rules establish two independent requirements.
    While section 169A(3) called for the Environmental Protection Agency
    (EPA) to report on available methods and technical tools, section
    169A(4) calls for EPA to promulgate regulations to assure reasonable
    progress toward meeting the national visibility goal. As noted above,
    EPA's report was issued in October 1979. The regulations called for
    under section 169A(4) were promulgated on December 2, 1980 and
    addressed impairment of visibility that was reasonably attributable to
    a single source or small group of sources. The rules proposed on July
    31, 1997 are designed to address the remainder of the visibility
    problem, that is, the impairment of visibility over broad geographic
    areas as the result of transport of emissions from numerous sources
    within large transport regions.
                 regional haze: tools for visibility monitoring
        Question. What tools for visibility monitoring, modeling, natural
    conditions assessments, and source analyses does EPA plan to provide
    for the States before they are put on deadlines to develop visibility
    SIP's?
        Answer. Consistent with the National Academy of Sciences report,
    the Environmental Protection Agency (EPA) believes that many technical
    tools are already available to address regional haze. For example, data
    related to air quality and visibility for 30 sites has been collected
    under the Inter-Agency Monitoring of Protected Visual Environments
    (IMPROVE) program since 1988. In addition, the EPA is also funding a
    significant expansion of the IMPROVE network and has a visibility
    monitoring guidance document under development. This expanded network
    will help the States, Federal land managers, and EPA to better estimate
    natural conditions. Furthermore, EPA has a number of technical tools
    and guidance under development for implementing the program which
    should be available before States are required to develop, assess, and
    adopt control strategies. The EPA is developing the REMSAD and MODELS3
    regional models which will help the States to estimate fine particles,
    their constituents, and the associated visibility levels for different
    scenarios. These models will be useful for developing future control
    strategies designed to attain the PM-2.5 standards to make reasonable
    progress under the regional haze program.
        Question. How much will it cost to develop these tools? Is this
    cost reflected in your current budget request?
        Answer. With respect to visibility monitoring, seventy new
    visibility sites in or near Federal Class I areas are planned for
    deployment in 1998 and 1999. The estimated costs are $2.5 million for
    1998, and $4.4 million for 1999. Starting in the year 2000,
    approximately $3.6 million per year will be needed for the expanded
    network of 100 visibility sites. With respect to modeling, the EPA has
    spent more than $6.1 million during fiscal year 1997 and fiscal year
    1998. The estimated budget request for continued development and
    evaluation of these models in fiscal year 1999 is $2.3 million.
                        visibility transport commissions
        Question. The CAA's Sec. 169B addresses visibility transport
    regions and commissions and works with other provisions to explain the
    lead role that States have on defining the substantive content of
    reasonable progress. What are the conditions under which EPA should
    establish visibility transport commissions?
        Answer. Under section 169B(c), the Administrator may establish a
    transport region when petitioned by two or more Governors of affected
    States, or when the Administrator herself has reason to believe that
    the current or projected interstate transport of air pollutants from
    one or more States contributes significantly to visibility impairment.
    If a transport region is established, the Clean Air Act (Act) requires
    the Administrator to establish a transport Commission. In addition, the
    Act specifically required the establishment of a commission for the
    region affecting visibility in the Grand Canyon National Park.
        Question. How many visibility transport commissions has EPA
    established?
        Answer. One. The Grand Canyon Visibility Transport Commission.
        Question. Why did EPA decide to organize these visibility transport
    commissions and not others?
        Answer. The purpose of commissions, as provided by section 169B(d),
    is to assess scientific and technical data and other available
    information pertaining to adverse impacts on visibility and to make
    recommendations to the Environmental Protection Agency (EPA) on what
    measures should be taken to remedy such impacts. Since EPA has proposed
    rules, based on the established science and technical information
    identified in part by the National Academy of Sciences, which would
    establish programs in each State and encourage States to work together
    to address visibility impairment, EPA did not deem it necessary to
    establish additional transport commissions. Furthermore, the
    Administrator has not been petitioned by any Governors to establish a
    transport region and therefore a commission.
                       grand canyon visibility commission
        Question. The Grand Canyon Visibility Transport Commission. How
    much money did the GCVTC spend each year?
        Answer. The Grand Canyon Commission Visibility Transport Commission
    (Commission) relied on the Western Governors' Association for its
    financial operations which should have complete records of the
    expenditures made by the Commission.
        Question. What were the sources of these funds (e.g. EPA grants
    from discretionary funds, line items from Federal appropriations bills,
    or State funds)?
        Answer. The Environmental Protection Agency (EPA) contributed
    $250,000 per year for fiscal years 1991 through 1996 for Administrative
    functions. The EPA also funded approximately $1,400,000 in fiscal year
    1994 to support policy analysis needed to develop the strategies
    options of the commission. To EPA's knowledge there were no line items
    from Federal appropriations bills. Over the life of the Commission the
    Western Governors' Association contributed approximately $15,000 and
    the Western Petroleum Institute contributed approximately $25,000.
        Question. How much of these funds were spent on administrative
    matters, and how much on substantive matters?
        Answer. The base funding of $250,000 per year was primarily for
    administrative functions and to ensure that all stakeholders were able
    to attend various meetings sponsored by the Grand Canyon Visibility
    Transport Commission. The one-time grant of approximately $1,400,000 to
    the Commission provided it with the funds to build an Integrated
    Assessment System to model visibility changes and costs associated with
    various emissions control strategies. In addition that one-time money
    allotment contributed to qualitative studies of effects on factors
    related to health, social and economic impacts.
        Question. How much of these funds were spent on travel and expenses
    for personnel from the Federal Government, State Governments, the
    Tribes and environmental groups.
        Answer. None of these funds were used for travel by any Federal
    Government personnel. The Western Governors' Association would have
    records on exact amounts for travel by State, Tribal and Environmental
    group participants.
               multi-state organizations of visibility protection
        Question. What is the value of a multi-state organizations during
    the post-regulation phase of the visibility protection program?
        Answer. After the Environmental Protection Agency sets the
    requirements for States to address regional haze visibility impairment
    as part of their State Implementation Plans, a multi-State organization
    will provide one means for States to communicate on issues related to
    the transport of pollutants, including policies to address that
    transport. Given the regional character of visibility impairment, the
    EPA believes that these organizations serve very important consultative
    and coordination functions.
                             gcvtc's recommendation
        Question. One of the GCVTC's recommendations was for a successor
    body to carry the Commissions's work forward. What are EPA's views as
    to the sensibility of that recommendation?
        Answer. The Environmental Protection Agency (EPA) supports the
    States' and Tribes' desires to organize a successor body to the GCVTC.
    The Western Regional Air Partnership was officially formed in
    September, 1997, and EPA has been a full participant in the process at
    the request of the States and Tribes.
                    multi-state organization post-regulation
        Question. Does EPA intend to fund this post-regulation multi-state
    organization.
        Answer. The Environmental Protection Agency (EPA) has set aside
    approximately $369,000 this year for funding the Western Regional Air
    Partnership (WRAP) through the Western Governors' Association. The EPA
    is planning to fund the WRAP for approximately $150,000 in fiscal 1999.
    Additionally, EPA will work with the States participating in the WRAP
    in allocating available grant funding as the States request to fund the
    WRAP in future years.
                       multi-state organization criteria
        Question. What discretion do the Western States have to configure
    their multi-state organization to implement the regional haze rules and
    still attract Federal funds?
        Answer. The Environmental Protection Agency does not intend to
    dictate the particular structure or configuration of multi-state
    organizations to implement the regional haze rule. Western States may
    configure an organization for the purposes of discussing how each State
    or Tribe may implement the requirements of the regional haze rule, and
    those efforts could be supported by Federal funds to the extent allowed
    by law. For instance, if those multi-state organizations want to
    include all stakeholders (including non-governmental participants),
    then the exclusive use of Federal funds to conduct such a process may
    subject that process to the requirements of the Federal Advisory
    Committee Act.
        Question. What criteria does EPA intend to use to decide how much
    money the Agency will give to this multi-state organization?
        Answer. The States may choose to fund from Environmental Protection
    Agency (EPA) grants regional groups the States deem necessary for
    implementing the Clean Air Act. In fiscal year 1999 and beyond, EPA
    intends to consider funding of multi-state organization based on the
    consent of the States involved. However, EPA has not at this time
    established specific criteria for future funding of multi-state
    organizations. The EPA anticipates that decisions will be based in part
    on the combination of available funds and the scope and purposes for
    which State organizations request them.
        Question. Has the EPA consulted with all of the Western States
    about the scope of these criteria?
        Answer. The Environmental Protection Agency (EPA) has coordinated
    with the organization representing all of the States, the State and
    Territorial Air Pollution Program Administrators (STAPPA), on many
    issues regarding future funding of multi-state organizations. As noted,
    at this time EPA has no set of criteria regarding the future funding of
    multi-state organizations.
        Question. If no, why not; and when will that consultation take
    place?
        Answer. Consultations with STAPPA/ALAPCO and the Association of
    Local Air Pollution Control Officials are ongoing. Additionally, the
    Environmental Protection Agency will consult with any group of States
    wishing to discuss the funding of a particular multi-state
    organization.
                        multi-state organization budget
        Question. What budget does the Western multi-state organization
    have for its work?
        Answer. The Western Regional Air Partnership (WRAP) is still in its
    formative stage and has a preliminary budget of approximately $408,000
    for fiscal year 1998 that includes mainly administrative functions.
    Main items in the fiscal year 1998 budget include approximately
    $200,000 for travel, and $100,000 for support of the Western Governors'
    Association in its role as administrative co-chair.
        Question. What level of support does EPA plan for the Western
    multi-state organization?
        Answer. The Environmental Protection Agency (EPA) has approximately
    $369,000 set aside for a grant application from the Western Governors'
    Association.
        Question. If the Federal Government does not provide funds for the
    budget of the Western multi-state organization, will we have imposed an
    unfunded mandate on the Western States?
        Answer. While the EPA strongly encourages and supports multi-state
    coordination and planning, EPA is neither imposing a specific
    requirement for multi-state organizations, nor requiring that such
    organizations be created.
        The Western Regional Air Partnership is a voluntary organization
    formed by the States and Tribes and EPA participates at the request and
    consent of the States and Tribes. No unfunded mandate issues are
    implicated by the Western Regional Air Partnership.
        Question. Is the financial need of the Western multi-state
    organization reflected in your budget request?
        Answer. The proposed budget for the EPA includes an allocation for
    State grants. Currently EPA is planning to distribute $150,000 of those
    fund to the Western Regional Air Partnership in fiscal year 1999. The
    EPA will work with States participating in the Western Regional Air
    Partnership in getting agreement from them on the proper level of
    funding from the remaining State grant allocations for use by the WRAP.
    In addition, EPA will work with the States on their level of support
    for the WRAP in future years.
               visibility transport commissions in other regions
        Question. What is the value of visibility transport commissions in
    other regions?
        Answer. Establishment of a visibility transport commission does not
    impose a statutory duty to develop a long-term regional haze strategy
    for the transport region. The EPA applauds the efforts of the Grand
    Canyon Visibility Transport Commission in going beyond the minimum
    statutory goals in developing a comprehensive long-term strategy for
    the Colorado Plateau. EPA believes that integrated efforts by regional
    planning bodies are needed to develop the long-range strategies.
    However, because there is a critical need for States to coordinate
    efforts to address long-range transport of PM 2.5 and ozone precursors,
    as well as visibility impairment, EPA does not believe that visibility
    transport commissions are the best approach to achieving this regional
    coordination.
           multi-state organization post-regulation in other regions
        Question. What is the value of multi-state organizations during the
    post-regulation phase of the visibility protection program where there
    have been no visibility transport commissions?
        Answer. The Environmental Protection Agency (EPA) believes that
    regional planning between States will be an important aspect of
    implementing the new regional haze program. EPA used the Federal
    Advisory Committee Act (FACA) process to establish the Subcommittee on
    Ozone, Particulate Matter, and Regional Haze under the Clean Air Act
    Advisory Committee. EPA agrees with its recommendations that certain
    planning activities could be effectively integrated across programs.
    The planning work of multi-state organizations could involve a number
    of activities, including the enhancement of PM-2.5 emissions
    inventories and the assessment of regional strategies through
    application of regional modeling tools.
        However, EPA does not propose to establish a requirement for States
    to undertake regional planning. While EPA strongly encourages States to
    collaborate in regional planning, EPA has proposed to leave it to the
    States' discretion to decide whether to petition the Administrator for
    the creation of visibility transport commissions, pursue some other
    approach using existing or new organizations, or choose to not conduct
    regional planning at all.
        Question. Does EPA intend to fund post-regulation multi-state
    organizations in other regions?
        Answer. The EPA intends to use its funding to support the
    implementation efforts of States and multi-state organizations in a
    number of ways. The EPA will continue to provide Federal funds to
    States under authority of section 105 of the Clean Air Act to be used
    for direct implementation of air quality programs, including the
    regional haze program. The EPA will consult with groups of States
    wishing to discuss support for funding a particular multi-state
    organization. Any decision by EPA to fund regional organizations will
    only be made with the support and concurrence of the affected States.
                   multi-state organization and regional haze
        Question. What discretion do the States have to configure their
    multi-state organizations to implement the regional haze rules and
    still attract Federal funds?
        Answer. The Environmental Protection Agency (EPA) does not intend
    to dictate the particular structure or configuration of multi-state
    organizations. States may configure an organization for the purposes of
    discussing how each State or Tribe may implement the requirements of
    the regional haze rule, and those efforts could be supported by Federal
    funds to the extent allowed by law. For instance, if those multi-state
    organizations want to include all stakeholders (including non-
    governmental participants), then the exclusive use of Federal funds,
    other than grant funds, to conduct such a process may subject that
    process to the requirements of the Federal Advisory Committee Act.
                   multi-state organization funding criteria
        Question. What criteria does EPA intend to use to decide how much
    money EPA will give to these multi-state organizations? Has EPA
    consulted with all of the States about the scope of these criteria? If
    not, why not; and when will that consultation take place?
        Answer. At present, the Environmental Protection Agency (EPA) has
    not earmarked any specific funds, or developed specific criteria for
    allocating any funds to multi-state organizations conducting regional
    haze planning. The States may choose to fund from EPA grants any
    regional groups the States deem necessary for implementing the Clean
    Air Act. The EPA intends to fund multi-State organizations only with
    the consent of the States involved. The EPA has held discussions with
    State representatives on many issues regarding future funding of multi-
    state organizations, and EPA will continue to consult with interested
    groups of States to explore the most effective approaches for multi-
    state planning.
        Question. Are these criteria spelled out in EPA's proposed rules?
    If not, why not?
        Answer. The Environmental Protection Agency (EPA) did not include
    specific criteria in the proposed regional haze rule for allocating any
    funds to multi-state organizations conducting regional haze planning.
    One reason for this is that at the time the proposed rule was under
    development, EPA, the States, and other stakeholders were participating
    in discussions (as part of the Clean Air Act Advisory Committee and its
    Subcommittee on Ozone, Particulate Matter, and Regional Haze process)
    about the most appropriate ``institutional mechanism'' for the conduct
    of regional air quality planning. The EPA intends to continue working
    with the States to explore the most effective approaches for multi-
    state planning.
               multi-state organization criteria vs. sip criteria
        Question. Will EPA fund a State that chooses to work alone as it
    develops its record and SIP?
        Answer. States are currently funded under section 105 to conduct
    activities such as visibility planning and implementation. To the
    extent that multi-state organizations are funded from section 105 grant
    allocations, a State choosing not to participate in such an
    organization would not be asked to forfeit section 105 grant funds
    allocated to it for the purpose of preparing visibility plans.
        Question. Will the criteria be different for this funding decision
    from those criteria used for multi-state organizations?
        Answer. As noted above, the Environmental Protection Agency has not
    developed specific criteria for allocating any funds to multi-state
    organizations or to individual states conducting regional haze
    planning, but EPA anticipates that it would establish such criteria
    based on equitable considerations.
                multi-state organization budget in other regions
        Question. What budget does EPA intend for the multi-state
    organizations in other regions?
        Answer. The States may choose to fund from Environmental Protection
    Agency (EPA) grants regional groups the States deem necessary for
    implementing the Clean Air Act. In fiscal year 1999 and beyond EPA
    intends to consider funding of multi-state organization based on the
    consent of the States involved. However, EPA has not at this time
    established specific criteria for future funding of multi-state
    organizations. The EPA anticipates that decisions will be based in part
    on the combination of available funds and the scope and purposes for
    which State organizations request them.
        Question. If the Federal Government does not provide funds for the
    budget of these multi-state organizations, will we have imposed an
    unfunded mandate on the States?
        Answer. The Environmental Protection Agency is encouraging, but not
    requiring, the formation of multi-State organizations. EPA, therefore,
    is not imposing an unfunded mandate on the States.
        Question. Is the financial need of the multi-state organizations
    for other regions reflected in your budget request?
        Answer. The States may choose to fund from Environmental Protection
    Agency (EPA) grants regional groups the States deem necessary for
    implementing the Clean Air Act. In fiscal year 1999 and beyond EPA
    intends to consider funding of multi-state organization based on the
    consent of the States involved. However, EPA has not at this time
    established specific criteria for future funding of multi-state
    organizations. The EPA anticipates that decisions will be based in part
    on the combination of available funds and the scope and purposes for
    which State organizations request them.
                visibility transport plan revision under 169(b)
        Question. In his floor statement introducing Sec. 169B in 1990,
    Senator Adams, who authored the provision, explained that only States
    included in a visibility transport region would be expected to revise
    their plans in order to implement any supplemental requirements added
    by the EPA under Sec. 169B(e)(1). Why has EPA required all States to
    prepare visibility SIP's when only 8 sat on the Grand Canyon Visibility
    Transport Commission?
        Answer. The Environmental Protection Agency (EPA) agrees that
    States should not be bound by control strategy decisions made by other
    States or organizations without an opportunity to participate in the
    assessment and planning process. However, all states are obligated by
    section 169A to address the causes of visibility impairment. In 1980,
    EPA issued visibility rules under section 169A of the Act to address
    impacts on Class I areas that could be attributed to single sources or
    small groups of sources. In that rulemaking, EPA stated it would issue
    rules dealing with regional haze when better technical information on
    the pollutants and sources responsible for haze became available. The
    science of regional haze is now well understood and the tools necessary
    to address the problem of regional haze now exist. Section 169A directs
    EPA to develop a program to address visibility impairment in all of the
    mandatory Federal Class I areas. Because this obligation had yet to be
    fulfilled for regional haze, the 1990 Clean Air Act Amendments gave EPA
    a statutory deadline for issuing regional haze rules: 18 months after
    EPA received the GCVTC report. The EPA received the report in July 1996
    and is committed to finalizing the rule as soon as possible. In its
    July 1997 action setting the particulate matter standards, EPA
    highlighted the regional nature of visibility effects, and that the
    regional haze program would be needed to address the visibility effects
    associated with PM.
                visibility transport plan to convene commission
        Question. Now that 44 States have filed comments asking that the
    proposed rule not be implemented in their jurisdictions, does EPA plan
    to convene visibility transport commissions before a visibility rule is
    applied to States outside the GCVTC and to mandatory class I Federal
    areas not on the Colorado Plateau?
        Answer. States submitting comments on the proposed rule requested a
    variety of changes to the rule, but only a few of them questioned
    whether emissions from sources within their borders caused or
    contributed to visibility impairment such that they should be required
    to participate in regional haze planning. The Environmental Protection
    Agency (EPA) noted in its proposal that available evidence indicated
    that emissions from sources within each State contribute to impairment
    of visibility in at least one Class I area located within another
    State. Thus, participation by all States in more refined planning and
    assessment will be needed to confirm or refute this evidence. The EPA
    has no current plans to establish additional transport commissions.
    Section 169B gives EPA the discretion to create transport commissions,
    but does not require that EPA establish them. Where such a commission
    is established, the Commission's statutory charge is to develop a
    report to the Administrator on recommendations regarding (1) clean air
    corridors, (2) requirements for new and major sources in such
    corridors, and (3) EPA regulations to address long term strategies.
    Hence, even if a Commission is established, there is no requirement
    that the result will be a long-term regional haze strategy for the
    region.
                   regional haze: implementation using sesarm
        Question. In the Southeastern U.S., the States--in a spirit of
    cooperation--have proposed using its SESARM to implement the regional
    haze program. Does EPA plan to fully fund this effort?
        Answer. The States may choose to fund from Environmental Protection
    Agency (EPA) grants regional groups the States deem necessary for
    implementing the Clean Air Act. In fiscal year 1999 and beyond EPA
    intends to consider funding of multi-state organization based on the
    consent of the States involved. However, EPA has not at this time
    established specific criteria for future funding of multi-state
    organizations. The EPA anticipates that decisions will be based in part
    on the combination of available funds and the scope and purposes for
    which State organizations request them.
        Question. Does EPA's proposed budget include full funding for
    SESARM's work?
        Answer. The States may choose to fund from Environmental Protection
    Agency (EPA) grants regional groups the States deem necessary for
    implementing the Clean Air Act. In fiscal year 1999 and beyond EPA
    intends to consider funding of multi-state organization based on the
    consent of the States involved. However, EPA has not at this time
    established specific criteria for future funding of multi-state
    organizations. The EPA anticipates that decisions will be based in part
    on the combination of available funds and the scope and purposes for
    which State organizations request them.
        Question. If we decide not to fund EPA to complete its tasks under
    Sec. 169 A and B, but to give the money instead to the States as they
    work together in visibility transport commissions or other multi-state
    organizations, what will be the costs of this alternative effort?
        Answer. Because the geographic size, nature and scope of activities
    by multi-state organizations could vary substantially, as could the
    technical efforts needed to support them, it is not possible to
    estimate the costs of such activities.
        Question. Would a failure to fund either EPA or the States for
    these tasks impose an unfunded mandate on the States?
        Answer. Since the Environmental Protection Agency has neither
    mandated the formation of such organizations nor established specific
    requirements for them to carry out, this would not constitute an
    unfunded mandate.
             regional haze: budget for fiscal year 1998, 1999, 2000
        Question. What is EPA's budget for the regional haze program in
    fiscal year 1998, fiscal year 1999, and fiscal year 2000?
        Answer. Funding for the regional haze program has been constant
    over the three year period of fiscal year 1998-fiscal year 2000 and is
    funded at $1,930,000 per year.
        Question. What will these funds be spent on?
        Answer. For all three years, these funds will be spent to support
    visibility monitoring in Class I areas via the IMPROVE network
    ($1,250,000); support for the Southern Appalachian Mountain Initiative
    (SAMI) to continue their efforts in assessing acid deposition and
    visibility impairment ($380,000) and for general regional haze support
    ($300,000).
        Question. Compare these proposed funding levels with the States
    visibility budgets and with the funding that EPA plans to offer to
    support the States on visibility.
        Answer. With the initial State Implementation Plan revisions for
    visibility not due until possibly late in fiscal year 1999, EPA has not
    seen State budgets for visibility work. These are currently being
    negotiated with States as part of the fiscal year 1999 grant
    negotiations process. EPA does not anticipate a large funding effort
    regarding visibility with this initial SIP revision. As individual
    States prepare more specific SIP revisions addressing regional haze, we
    do anticipate more resources being directed towards this program.
        Question. Has EPA assessed the adequacy of the Federal grants to
    the States with respect to the visibility issue in light of the other
    demands on the States' resources?
        Answer. The current effort regarding visibility SIP preparation in
    the States is fairly minimal. Accordingly present funding for regional
    haze support has been a lower priority than funding for the ozone
    program and the fine particle program. Following the submission of the
    States initial visibility SIP's, EPA will reassess its grant funding
    priorities to consider additional needs for regional haze along with
    its need to support the fine particle monitoring network as well as
    expanded efforts in the air toxics program.
                   visual air quality: fires on federal lands
        Question. During your testimony before the Committee, you indicated
    that the visual air quality associated with prescribed fire would be
    excluded from the data base. I interpret this remark to mean that there
    will be no States supervision over the visual air quality effect in
    mandatory class I Federal areas of fire on Federal lands and that the
    effect on visual air quality of emissions from fire on Federal lands
    would not alter the rights and responsibilities of other source owners.
    Is the interpretation consistent with the intent of the visibility
    protection program and the manner in which the EPA plans to implement
    it?
        Answer. The Environmental Protection Agency has provisions in its
    regulations which allow States determining whether they are violating
    national ambient air quality standards to exclude high values that
    occur as a result of certain natural events, such as wildfires and dust
    storms. In addition, recognizing that wildfires can produce unhealthful
    concentrations of pollution, EPA has taken steps to work with Federal
    land managers to craft policies which recognize that controlled burning
    is carried out in many instances to reduce the likelihood, frequency,
    and severity of wildfires, thereby contributing to improved air
    quality. The policy recently announced by EPA, the Department of
    Interior, and the Department of Agriculture is intended to address this
    issue with regard to the role of fire in the implementation of PM2.5
    air quality standards, and is intended to encourage practices which
    both reduce the need for burning and which reduce the emissions
    resulting from fire when burning must be conducted. We expect to pursue
    additional efforts with these agencies to address the role of fire in
    the achievement of reasonable progress for visibility.
        Section 169A does not require actions to eliminate all sources of
    visibility impairment, but rather directs EPA and States to remedy and
    prevent impairment of visibility that is ``man-made.'' Thus it is
    important to distinguish between impairment that would result from
    fires which are an important part of natural ecological processes, and
    fires which are a consequence of a long history of fire suppression in
    this country and current efforts to conduct prescribed burning to
    restore the natural fire cycle. EPA is working with Federal land
    managers to identify ways to account for and discount, for visibility
    analyses, impairment from prescribed fire which is equivalent to that
    which would have occurred naturally and therefore would not be
    considered ``man-made.'' This degree of impairment would thus not
    affect State obligations to provide for reasonable progress in their
    SIP's. Some prescribed burning is conducted for reasons other than
    restoring the natural fire cycle and reducing the risk of wildfire. The
    effects of such burning will need to be addressed if it hinders
    reasonable progress.
                     class i federal areas prescribed fires
        Question. How much impairment in the mandatory class I Federal
    areas is derived from prescribed fire (by mandatory class I Federal
    area) and how much is it expected to grow?
        Answer. The Environmental Protection Agency does not have estimates
    of how much visibility impairment is due to prescribed fire by each
    class I area. For some regions of the country, the major pollutant from
    prescribed fire, elemental carbon, is usually less than 10 percent of
    the total visibility impairment. This include impacts from wildfire
    which emit much more elemental carbon than prescribed fires over a
    multi-year period. Estimates of growth for prescribed fire range up to
    a 5-fold increase in some areas of the western United States where fire
    suppression has been based on work completed for the Grand Canyon. Use
    of prescribed fire is not expected to grow that much in other areas of
    the country. The effect on visual air quality of this increase is
    difficult to predict since there may be an associated decrease in
    wildfire emissions.
                   class i federal areas visitors experience
        Question. Given the impairment associated with fire, how serious is
    EPA in its commitment to improve the visitors' experience in the
    mandatory Class I Federal areas if the Agency plans to exclude fire
    data from the data base that State regulators will use?
        Answer. It is important to note that the wildland fire policy which
    the Environmental Protection Agency (EPA) recently issued is an interim
    policy. One of the primary reasons for this was the fact that the
    regional haze program is not final. The EPA intends to re-examine this
    policy when the regional haze program is finalized to insure
    consistency of approach in dealing with the issue of wildland fires.
    The EPA does not plan to exclude the data from fire from the visual air
    quality data base but, as noted above, intends to distinguish, in
    assessing the degree of visibility improvement that may be needed,
    between that which is natural (not ``man-made'' or its equivalent) and
    that which would not have occurred under a natural fire cycle. Thus,
    EPA expects States to consider the causes of visibility impairment and
    develop strategies which are responsible to those contributions.
                        exclude fire data from data base
        Question. Did EPA include in its proposal the notion of excluding
    fire data from the data base and the methodology for excluding fire
    data?
        Answer. In its existing visibility regulations and in the preamble
    to its proposed rule Environmental Protection Agency (EPA), in fact,
    identified fire emissions as one of a variety of sources which must as
    a general matter be considered in strategies to achieve reasonable
    progress.
        Question. If not, why not?
        Answer. Since, except as described above, the EPA is not intending
    to exclude data from fire events in the tracking visibility in the
    mandatory Class I Federal areas, it was not necessary to make this a
    part of its proposed rule.
        Question. How can EPA take comment on an issue if it is not noticed
    in proposed rules?
        Answer. The EPA solicited comment on all aspects of its proposed
    rule. However, EPA proposed no specific regulatory requirements or
    exemptions for fire emissions, but rather left to States' discretion
    the selection of appropriate sources to include in their control
    strategies, commensurate with the nature and extent of visibility
    impairment in their class I areas.
                        regional haze: federal agencies
        Question. Congress has a long history of requiring Federal agencies
    to live by the same rules that State and private sector live by. (e.g.,
    the Federal Facilities Compliance Act (Public Law 102-386)). Please
    explain how the regional haze rule proposal honors, if at all, this
    policy?
        Answer. The proposed regional haze rule is structured so States
    determine a set of strategies to make reasonable progress toward the
    national goal. As section 118 of the Clean Air Act establishes,
    requirements to address air quality which the State impose on sources
    within that state, such as a strategy to address all prescribed fire,
    would apply to Federal management practices in the same manner as they
    would apply to any nongovernmental entity.
                        use of fire in national forests
        Question. Please explain why EPA focuses on the use of fire in the
    national forests rather than more benign methods of addressing the fuel
    crisis, such as mechanical treatment?
        Answer. The Environmental Protection Agency (EPA) worked closely
    and cooperatively with Federal Land Managers (FLM's) and other
    stakeholders in the development of the Interim Wildland Fire Policy. As
    a part of this process it became apparent that FLM's base their
    decision to use a land management tool such as prescribed fire on
    several factors, but the needs of the ecosystem are the primary
    motivating factors. Mechanical treatment is not always desirable or
    feasible. Some ecosystems require fire to achieve and maintain a
    sustainable state because fire performs some functions that other
    treatments cannot. For example, some species of trees cannot reproduce
    without fire because their seeds will not open any other way. Fire also
    returns nutrients to the soil which is a function no other treatment
    can duplicate. Mechanical removal (or thinning) of trees and forest
    debris is performed sometimes in preparation for a prescribed burn to
    reduce the intensity of the fire and thus reduce smoke. It is also done
    alone as a fuels reduction treatment where it is physically possible to
    do so. However, in some cases the site is too remote, the forest too
    dense, and/or the slope of the land too great to allow the use of the
    heavy equipment needed to perform mechanical removal. Mechanical
    removal can also be more expensive than prescribed fire. If the
    management goal is to kill insects that destroy trees (another function
    fire performs), pesticide use may be banned and has adverse
    environmentally consequences that must be considered.
        The EPA supports the responsible use of prescribed fire under a
    smoke management program as one of the most effective land management
    tools available to restore our ecosystems to a healthy state.
                    regional haze: federally funded highways
        Question. How, if at all, will the regional haze rules, as
    proposed, affect the pre-construction review process for Federally
    funded highways?
        Answer. The regional haze rule, as proposed, does not mandate any
    changes to the pre-construction review process for Federally funded
    highways.
        Question. Please describe the process the States will have to
    include in their SIP's to handle the FLM's involvement in this review
    process.
        Answer. Under the existing visibility protection program
    established in 1980, States must consult with Federal Land Managers in
    revising SIP's to address visibility, including revisions to the long-
    term strategies. The proposed regional haze provisions do not change
    this basic existing SIP requirements.
        Question. Is this process described in the proposed rules? If not,
    why not? When does EPA plan to solicit public comment on this process?
        Answer. The existing visibility protection program established the
    requirement for States to consult with the Federal Land Managers. The
    regional haze proposal applies that requirement for consultation to the
    strategies to address regional haze and to elements of the State
    Implementation Plans requiring the technical expertise of the Federal
    Land Managers. These provisions were noticed in the regional haze
    proposal. Again, the regional haze rule does not require Federal Land
    Manager review of transportation projects unless the State wants to
    establish such review as part of its strategy make reasonable progress
    toward the national visibility goal.
        Question. What assurances do we have that the additional level of
    bureaucratic review by the Park Service or the Forest Service to assess
    regional haze impacts from highway construction or use will not be as
    intrusive as it has become in the context of new source review for
    major stationary sources?
        Answer. The States may choose the strategies needed for making
    reasonable progress including more review of transportation plans, but
    there is no requirement in the regional haze rule to require such
    reviews. Moreover, while Federal Land Managers have an important
    consultative role, nothing in the propose rule establishes a Federal
    new source review requirement for highway construction independent from
    the normal environmental review and air quality planning requirements
    which already exist under the Clean Air and National Environmental
    Policy Acts.
                                     ______

                     Questions Submitted by Senator Shelby

                          pm: congressional directive
        Question. What actions has your agency taken to comply with
    Congress's directive? It is my understanding that only $8 million
    dollars have been utilized to this point? How did you spend the
    funding? Why have you elected not to use the rest of the funds? How
    much of the $49.6 million will be obligated in fiscal year 1998? On
    what programs?
        Answer. The agency has taken and continues to take extensive
    actions to address the congressional directive. First, the EPA base
    program, which includes intramural research and investigator-initiated
    grants, has proceeded without delay. The intramural base program is
    funding research including exposure assessment with intensive
    monitoring of ambient air in several cities, health studies including
    identification of key components of PM and mechanisms by which PM
    elicits toxicity, epidemiology studies of sensitive sub-populations,
    and source characterization studies to identify the contribution to
    ambient PM from less well understood sources. The base grants program
    is anticipated to fund complementary research on mechanisms of
    toxicity, epidemiology and exposure error. EPA published a Request for
    Applications for the base grants program at the end of September 1997,
    and in May 1998 an external scientific peer panel reviewed submitted
    applications. Selection of recipient organizations is anticipated to
    occur this summer. We expect the major portion of the base program
    funding, including the grants program, to be obligated during this
    fiscal year.
        Secondly, as directed by Congress in Appropriations bill, EPA
    entered into a contract with the National Academy of Sciences (NAS) to
    develop a report on research priorities for particulate matter. The
    first report was received on schedule on March 31, 1998, in which NAS
    recommended a number of high priority research areas. The agency is
    currently evaluating ongoing research efforts and obligating funds
    consistent with the NAS recommendations. With the exception of funds
    for the NAS contract and for expansion of research efforts by the
    Health Effects Institute, and consistent with the appropriations
    language, the remaining fiscal year 1998 funds were held in reserve
    until the NAS report was delivered.
        At this time, the Agency intends to obligate $47.4 million in
    fiscal year 1998. The $8 million for PM Research Centers will not be
    obligated in fiscal year 1998. The PM Research Centers Request for
    Applications was developed after receipt of the NAS report, consistent
    with Congressional direction that the Centers be targeted to priority
    needs. Funds cannot be obligated for these Centers in fiscal year 1998
    due to the time required for university investigators to develop
    Centers proposals (a period of 5 months is allowed) and to peer review
    and select the recipient organizations.
                        pm: schedule for implementation
        Question. In the EPA's October Federal Register Notice, your agency
    did recognize that scientific uncertainties associated with the health
    and environmental effects of PM and the means of reducing such effects
    remained. Doesn't the narrow time frame of the schedule for
    implementation limit the use of any new research? Considering the
    controversy surrounding this rule, isn't it imperative that your agency
    consider the results of this directed and objective science prior to
    full implementation of the rule? If not, please explain.
        Answer. Based on the President's implementation memorandum that was
    published along with the revised PM and ozone standards on July 18,
    1997, full implementation of the PM standards is expected by 2012-2017.
    Clearly, this is not a ``narrow'' schedule. In the initial stages, the
    fine particle monitoring network will be established to collect air
    quality data to designate areas. At the same time the next periodic (5
    year) review of the standards will be conducted, concluding in 2002.
    Designation of nonattainment areas will take place after that review is
    completed, in 2002-2005, and State Agencies will submit implementation
    plans for meeting the new standards during the years 2005-2008.
    Therefore, still a further periodic review of the NAAQS is required
    before the time the new PM standards are fully implemented.
        During these years, EPA anticipates receiving numerous reports of
    research findings on the health and environmental effects of PM. The
    results of new studies will be reviewed during the course of upcoming
    PM NAAQS reviews, as has been done in previous NAAQS criteria reviews.
    EPA has numerous efforts underway to obtain input from scientists
    outside the agency on issues related to PM implementation, such as the
    development of research-oriented PM monitoring sites. EPA is also
    actively working to address the issues and recommendations made by the
    National Academy of Sciences' Committee on Research Priorities for
    Particulate Matter. EPA will clearly be able to give full consideration
    to the results of new scientific studies prior to the full
    implementation of the new PM NAAQS.
                   pm: nas recommendation of highest priority
        Question. The National Academy of Sciences has stated that the
    President's Budget request is insufficient to support the particulate-
    matter research agenda recommended in its report for addressing the
    highest priority research needs. The Committee recommended that
    Congress set funding at the $49M level for the next several years.
    Isn't funding of that level needed to assure progression in the
    research? If not, please explain.
        Answer. As indicated by the NRC and recognized by the Agency, a
    substantial level of funding is needed for particulate matter (PM)
    research, and the Agency is committing substantial resources in fiscal
    year 1998 and fiscal year 1999 to address the research needs. Below is
    a comparison of the Environmental Protection Agency's (EPA's) estimated
    fiscal year 1998 Enacted Budget and fiscal year 1999 President's Budget
    Request to the National Research Council (NRC)/National Academy of
    Sciences (NAS) recommendations for PM Research. To summarize, the NRC
    recommends $39.6M in fiscal year 1998 and $45.7M in fiscal year 1999 be
    spent on PM research to address their highest priority research areas
    for a total of $85.3M. EPA has in its fiscal year 1998 Enacted Budget
    $50.2M for PM research (plus an additional $5.2M in certain
    Congressional ``add-ons'' as listed below). For fiscal year 1999, the
    President's Budget Request includes $28.7M for PM research within EPA's
    Office of Research and Development and $15M for monitoring ``super
    sites'' within EPA's Office of Air and Radiation; a total of $43.7M
    related to PM research needs in fiscal year 1999. EPA's combined PM
    research-related budget for these two years is $93.9M (plus an
    additional $5.2M in certain Congressional ``add-ons'').
        The $8M funding for five university-based research centers focusing
    on PM-related health effects, as provided for in the fiscal year 1998
    Appropriations, will be funded in fiscal year 1999. The Agency waited
    for the NRC's recommendation of priority research areas before issuing
    a Request for Applications for PM research centers to focus on these
    priority research areas. Upon receipt of the NRC's recommendations, EPA
    immediately prepared the Request for Applications, which was announced
    May 19, 1998 and provides a five-month period for submitting
    applications. As a result, grants supporting the centers will not be
    awarded until the beginning of fiscal year 1999. Therefore, we expect
    fiscal year 1998 funding of PM research to be $42.2 (plus the $5.2M in
    certain Congressional ``add-ons''.) Whereas, the fiscal year 1999
    funding for EPA's PM research efforts, including the fiscal year 1998
    resources for the centers, will be $51.7M.
        Additional support for PM-related research in fiscal year 1998 come
    from $5.2M Congressional ``add-ons'' which are not strictly focussed on
    PM research but which provide support for such research through
    activities in allied fields. These funds are listed at the bottom of
    the following table.

            COMPARISON OF EPA ESTIMATED FISCAL YEAR 1998 AND FISCAL YEAR 1999 BUDGETS TO NRC RECOMMENDATIONS
                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                      NRC recommendations--      EPA
                                                                           fiscal year        estimated  President's
                                                                                                            budget
                                                                    ------------------------- enactment  fiscal year
                                                                                                fiscal       1999
                                                                         1998        1999     year 1998
    ----------------------------------------------------------------------------------------------------------------
    I. NRC highest priority research areas.........................        39.6        45.7        42.7        22.6
    II. Implementation-related research, not identified in NRC       ...........  ..........        7.5         6.1
     report as among highest priorities............................
                                                                    ------------------------------------------------
          Subtotal of Sections I and II............................  ...........  ..........       50.2        28.7
                                                                    ================================================
    III. OAR Monitoring ``super sites''............................  ...........  ..........  .........        15.0
                                                                    ------------------------------------------------
          Subtotal of Sections I, II, and III......................  ...........  ..........       50.2        43.7
                                                                    ================================================
    IV. Five University-based Research Centers: Centers (earmarked   ...........  ..........       -8.0         8.0
     in fiscal year 1998; grants awarded in fiscal year 1999)......
                                                                    ------------------------------------------------
          Total....................................................  ...........  ..........       42.2        51.7
                                                                    ================================================
    Other fiscal year 1998 Enacted Congressional ``Add-ons:''
        Lovelace...................................................  ...........  ..........        2.0  ...........
        Johns Hopkins..............................................  ...........  ..........        1.5  ...........
        Jewish Lung Ctr............................................  ...........  ..........        1.7  ...........
                                                                    ------------------------------------------------
          Total....................................................  ...........  ..........        5.2  ...........
    ----------------------------------------------------------------------------------------------------------------
    Note: The research in the Congressional ``Add-ons'' (above) broadly supports Air-related research, including PM.

                     air standards: industry air emissions
        Question. Over the last year, the EPA has promulgated or proposed
    several rules that effect air emissions by industry. These include the
    recently promulgated Cluster Rule which imposes Maximum Achievable
    Control Technology on air emissions, the new ozone and particulate
    matter rules, the proposed regional haze rule and the NOx
    SIP Call rule which further controls air emissions from mid-western
    states, including Alabama, that are carried by air current to the
    Northeast. Has the EPA reviewed the big picture to view the cumulative
    effect of these rules?
        Answer. Final action on the review of the ozone standard was
    published July 18, 1997. The standard will provide increased protection
    to the public, especially children and other at-risk populations,
    against a wide range of ozone-induced health effects, including
    decreased lung function, primarily in children active outdoors;
    increased respiratory symptoms, particularly in highly sensitive
    individuals; hospital admissions and emergency room visits for
    respiratory causes, among children and adults with pre-existing
    respiratory disease such as asthma; inflammation of the lung, and
    possible long-term damage to the lungs. The new standard will provide
    increased protection to the public welfare against ozone-induced
    effects on vegetation, such as agricultural crop loss, damage to
    forests and ecosystems, and visible foliar injury to sensitive species.
    The next review of the ozone standard is scheduled to be completed mid-
    2002.
        Final action on the new suite of primary standards for Particulate
    Matter (PM) was also published July 18, 1997. The primary standards
    will provide increased protection against a wide range of PM-related
    health effects, including premature mortality and increased hospital
    admissions and emergency room visits, primarily in the elderly and
    individuals with cardiopulmonary disease; increased respiratory
    symptoms and disease, in children and individuals with cardiopulmonary
    disease such as asthma; decreased lung function, particularly in
    children and individuals with asthma; and alterations in lung tissue
    and structure and in respiratory tract defense mechanisms. The new
    secondary standards, in conjunction with a regional haze program, will
    provide appropriate protection against PM-related public welfare
    effects including soiling, material damage, and visibility impairment.
    The next review of the PM standards is scheduled to be completed mid-
    2002.
        EPA integrated the development of the Paper and Pulp Manufacturing
    Cluster rules to address the emissions of hazardous air pollutants and
    toxic pollutants to the water to provide greater protection of human
    health and the environment, reduce the cost of complying with the
    wastewater regulations and air emissions controls, promote and
    facilitate coordinated compliance planning by industry, promote and
    facilitate pollution prevention, and emphasize the multimedia nature of
    pollution control.
        The Agency envisioned a long-term approach to environmental
    improvement that is consistent with sound capital expenditures. This
    approach stemmed from extensive discussions with a range of
    stakeholders. The effluent limitations guidelines and standards and air
    emissions standards are only one component of the framework to achieve
    long-term environmental goals. The overall regulatory framework
    includes incentives to reward and encourage mills that implement
    pollution prevention beyond regulatory requirements.
        The EPA attempts to account for the cumulative cost and benefit
    impacts of its rules to the extent possible. For example, the
    Regulatory Impact Analysis (RIA) for Particulate Matter (PM) and Ozone
    national ambient air quality standards (NAAQS) and proposed Regional
    Haze rule included an assumption of the likely reductions which would
    result from the proposed rule to require 22 states and the District of
    Columbia to submit state implementation plans (SIP) that address the
    regional transport of ground-level ozone, the main component of smog.
    In addition, it looked at the implementation of those three rules
    jointly because of the similarities in the pollutants that contribute
    to these problems (particulate matter, nitrogen oxides, and organics)
    and sources of those pollutants. Similarly, the same analysis included
    an assumption of the likely reductions resulting from the Paper and
    Pulp Manufacturing Cluster Rule. Both the regional ozone transport rule
    and the Cluster rule will precede the full implementation of the PM and
    Ozone NAAQS and Regional Haze rule. However, both of these rules
    changed since the assumptions were developed for the NAAQS analysis so
    that the benefit and cost estimates done for the NAAQS do not reflect
    the most recent version of these other rules. EPA is now revising the
    analyses for the proposed regional ozone transport rule and the
    proposed regional haze rule which will better characterize the
    interactions between these various rules. Because of the changes to the
    various rules since the analyses were started it is not appropriate to
    just add the monetized costs and benefits of these rules together to
    come up with an overall cost and benefit of them collectively.
        Also under Section 812(b) of the 1990 CAAA, Congress required EPA
    to look at the prospective costs (from 1990 into the future) of the
    Clean Air Act. This work is now underway. This analysis should be able
    to address the question about cumulative costs and benefits associated
    the Clean Air Act.
                  regional haze: cost of visibility standards
        Question. The proposed new regional haze rule is a major new
    regulatory initiative which will have a significant impact on numerous
    states, including Alabama. Why is the EPA so actively pursuing the
    Regional haze State Implementation Plan by 1999 when the health based
    PM 2.5 standards are scheduled to go into effect in 2005?
        Answer. Section 169B of the Clean Air Act calls for State to submit
    an Implementation Plan (SIP) on year from the promulgation of the
    regional haze regulation. Recent legislation has changed that one-year
    SIP submittal requirement to a varying schedule which is tied to
    designations of areas as attainment or unclassifiable for PM-2.5 or to
    plan revisions needed to address nonattainment areas. In the proposal
    EPA had established a schedule of commitments under the one-year SIP
    requirement which envisioned States developing control strategies in
    coordination with plan requirements for PM-2.5. The recent legislation
    is intended to authorize EPA to directly coordinate these SIP
    requirements. As with the original proposal, EPA's intent continues to
    be one of coordinating regional haze rule SIP control strategies dates
    with those for PM-2.5 implementation.
        Question. How much would it cost to fully implement these new EPA
    visibility standards nationwide?
        Answer. The proposed regional haze program would not establish a
    firm visibility ``standard'' to be achieved across the country, and
    measures to achieve progress in improving visibility will be determined
    by the States. As a result, it is not possible to do more than estimate
    the costs of implementation at this time. The draft regulatory impact
    analysis for the proposed regional haze program recognized the
    flexibility provided by the proposed rule by describing costs and
    benefits in terms of a likely range. The estimated annual costs range
    from $0.0 to $2.7 billion, and the estimated annual benefits range from
    $0.0 to $5.7 billion (in 1990 dollars). As EPA considers appropriate
    revisions to its rule the regulatory impact analysis will be revised to
    take such changes into account.
                regional haze: state implementation plan by 1999
        Question. Realizing that visibility issues are currently being
    addressed by the PM-10, PM-2.5, ozone, and acid rain rules, what
    additional reductions over the next 10 years does your science predict
    from the regional haze rule? Please list the additional public health
    benefits of the proposed ruling that are new to the benefits of the
    rulings listed above.
        Answer. Reductions from other air quality programs will lead to
    improvements in visibility and can be taken into account in
    establishing progress targets. The recent transportation bill clarifies
    that the schedule for submissions of state plans addressing regional
    haze should be harmonized with the schedule for PM-2.5 SIP submissions.
    As noted in the response to the previous question, however, the States
    would have flexibility in establishing progress targets under the haze
    program, including the flexibility to take reductions from other air
    quality programs into account in establishing these targets. It is
    accordingly difficult to predict the extent of additional emission
    reductions that would be achieved over the next 10 years due to the
    regional haze program. The draft regulatory impact analysis (RIA) for
    the proposed regional haze rule evaluated a scenario in which targets
    of 1 deciview improvement in the worst visibility days over the next 10
    years were achieved in all class I areas. In the RIA the annual
    benefits due to the regional haze program alone were estimated to range
    from $0 to $5.7 billion, including $4.5 billion attributed to
    additional public health benefits incremental to the PM-2.5 standard.
    The EPA intends to revise the RIA in conjunction with the final rule,
    and these estimates may change as a result of any changed assumptions
    in the proposed rule or proposed RIA.
        Question. If this proposed rule is truly driven by public health
    concerns, why does it target areas in attainment?
        Answer. The purpose of the proposed regional haze program, as
    required under section 169A of the Clean Air Act, is to improve
    visibility in mandatory class I Federal areas. These areas are
    primarily national parks and wilderness areas which are generally
    located in attainment areas. Because additional reductions in fine
    particles may result in additional public health benefits beyond what
    are expected from the PM-2.5 NAAQS for certain locations, these
    benefits were included in the regulatory impact analysis prepared for
    the proposed regional haze rule.
                            regional haze: deciview
        Question. What is the EPA's definition of a deciview? Why are
    national state parks used for the Mandatory Class I areas?
        Answer. The deciview scale is a scale for measuring haze, just like
    the Celsius scale is a scale for measuring temperature or the decibel
    scale is a scale for measuring noise levels. The deciview scale is set
    so that zero deciview is equal to no haze, just like zero degrees
    Celsius is set at the temperature that water freezes, and zero decibel
    is often set to quiet conditions. A change of 1 deciview in either very
    hazy conditions or very clean conditions is considered just perceptible
    by the average person for many of the complex views of terrain and sky
    experienced from class I areas, just like a 1 decibel change in sound
    is considered perceptible whether in a quiet or loud room. Thus, the
    deciview scale characterizes visibility in constant increments related
    to human perception across the range of possible conditions (for
    example, from clear to hazy conditions). In general, an improvement of
    1 deciview in a hazier environment will require a greater amount of
    emission reductions than an equivalent perceived change in a cleaner
    environment. This is analogous to having to shout to be heard in a
    noisy room versus speaking normally to be heard in a quiet room. The
    original paper describing the scientific basis for the deciview was
    published in Atmospheric Environment, a peer-reviewed journal
    (Pitchford (EPA) and Malm (NPS), ``Development and Application of a
    Standard Visual Index,'' Atmospheric Environment, Vol. 28, No. 5,
    1994).
        The EPA includes national parks on the list of mandatory Class I
    areas because section 162 defines mandatory Federal Class I areas as
    all international parks, national wilderness areas and national
    memorial parks exceeding 5,000 acres, and national parks exceeding
    6,000 acres, and which were in existence on August 7, 1972.
                   regional haze: industry emissions standard
        Question. Is it possible that the proposed regional haze rule could
    result in emission standards being applied to industrial sources that
    are more stringent than standards that would be required under the
    ozone and particulate matter standards? If so, please explain.
        Answer. The proposed regional haze rule would require that States
    develop a regional haze program to meet the Clean Air Act's (Act's)
    requirement for ``reasonable progress,'' taking into account the
    factors set forth in the statute, i.e., the costs of compliance, the
    time needed for compliance, energy and nonair quality impacts of
    compliance, and the remaining useful life of existing sources. In light
    of these statutory factors, EPA believes that the Act provides States
    with considerable discretion regarding the regional haze program. Under
    the proposal, States would be able to develop integrated and
    coordinated programs for regional haze at the same time as they are
    developing plans for the new particulate matter standards, and to
    determine the best mix of strategies that meet the needs of both
    programs. Depending on the degree to which strategies to achieve PM 2.5
    standards also contribute to visibility improvements, additional
    controls could be required for some number of sources. It is not
    possible for the Environmental Protection Agency to estimate at this
    time what sources might be affected or to what extent, as these
    questions depend upon decisions to be made by the States.
                   regional haze: changes proposed by states
        Question. It is my understanding that the EPA has received over
    1,200 comments on the proposed rule. At least 43 states requested major
    changes to the proposal, including flexibility in control strategies,
    the use of regional planning efforts to implement the program,
    additional time to develop the SIP's and the alignment of the regional
    haze implementation schedule with that of PM 2.5 schedule. Will you
    take the additional time to make the changes, re-propose the rule, and
    allow for additional time for public comment?
        Answer. The Environmental Protection Agency (EPA) is still in the
    process of evaluating the comments from States and all other
    stakeholders on the proposed rule and is considering options for
    several issues. If EPA decides based on these comments that significant
    changes to the rule are warranted, EPA would consider the need for
    reproposal at that time.
                             global warming: kyoto
        Question. Under Secretary of State Eizenstat testified before the
    Senate that there is no administration intent to implement the Treaty
    without ratification. Additionally, he stated that no new authority is
    needed to implement the administration's plan to address global
    warming, except for the emissions trading program. What is your view of
    these comments?
        Answer. As Administration witnesses have stated in recent
    Congressional hearings on this topic, the Administration will not
    implement the Kyoto Protocol before the Senate has provided advice and
    consent to its ratification. The President has, however, proposed that
    the United States take steps now that represent good environmental,
    economic, and energy policy. These steps include the domestic programs
    and tax credits in the fiscal year 1999 budget to help develop and
    deploy energy efficient and low pollution technologies. These voluntary
    measures, if fully funded and enacted, will go a long way to turn
    around the trend of increasing U.S. emissions of greenhouse gases. They
    represent an economically prudent insurance policy against climate
    change risks, and our win-win initiatives.
        As discussed in the attached legal opinion of the General Counsel
    of the Environmental Protection Agency, existing authority to address
    greenhouse gases does not easily lend itself to establishing a ``cap-
    and-trade'' emissions trading program, which the Administration
    believes would be the most flexible and cost-effective way to address
    greenhouse gas emissions across the economy. In his October 22, 1997,
    climate policy speech, the President proposed such an approach (based
    on our positive experience in controlling acid rain), but not for
    implementation before 2008.
                                 global warming
        Question. What programs is the EPA currently involved with that
    relate to global warming? Please include a description of any direct
    funding to the states for programs. What is the funding level for these
    programs? How does this compare to last year's levels?
        Answer. Below is a table outlining the programs the EPA is
    currently involved with that relate to Global Warming as well as the
    enacted spending plan for fiscal year 1998 and the fiscal year 1999
    President's request.

    ------------------------------------------------------------------------
                                                                   1999
                                               1998 Enacted     President's
                                                   plane          budget
    ------------------------------------------------------------------------
    EPM Account.............................       $72,478.9      $158,502.1
        Industry Initiatives................        20,893.9        51,600.0
        Buildings...........................        38,785.0        78,100.0
        Carbon Removal......................  ..............         3,400.0
        Transportation......................         4,800.0        12,002.1
        Engaging Developing Countries.......         5,000.0         8,400.0
        State and Local Outreach............         3,000.0         5,000.0
    S&T Account.............................        16,950.7        46,905.5
        Transportation......................        16,950.7        46,905.5
                                             -------------------------------
          Total.............................        89,429.6       205,407.6
    ------------------------------------------------------------------------

        Since 1991, EPA has provided funding to states for global warming
    projects including analyzing the impacts of climate change on states,
    demonstrating energy efficient technologies and policies that result in
    greenhouse gas (GHG) reductions, conducting GHG emissions inventories
    and mitigation options, and educating stakeholders on the risks of
    climate change. In fiscal year 1997 and fiscal year 1998 the funding
    level was $2.0 million.
                   global warming: climate change information
        Question. Has the administration, including the EPA, expanded
    climate change information in its public outreach efforts, such as
    agency web sites, publications and workshops? Please detail your
    Agency's activities pertaining to climate change information last year
    and all planned activities for 1998 and 1999. Please explain the
    organization and goals of the climate change workshops? How many
    taxpayer dollars are being spent on these activities?
        Answer. In fiscal year 1998, EPA expanded its climate outreach
    program by improving our existing web site and increasing the number of
    regional conferences. Our outreach efforts were expanded in order to
    reach certain populations that are particularly vulnerable to or
    interested in the risks of climate change. EPA's material reflects
    their information needs.
        The current outreach budget of $2.25 million provides outreach for
    five constituency areas: costal communities, innovative businesses,
    medical and public health professions, and meteorologists. Additional
    funding in fiscal year 1999 would include outreach to other at-risk
    areas, including agriculture, forestry, education, travel and tourism,
    and insurance. Such funding would also develop more in-depth workshops
    around the country to reach people unable to travel to the 10 EPA
    regional office locations where all workshops have been held to date.
                global warming: fiscal year 1998 external budget
        Question. How much of your fiscal year 1998 budget for climate
    change is used in the form of grants or contracts to outside
    organizations? In dollars, what is the growth over the last three
    fiscal years? Please identify the organizations, the amount awarded and
    the purpose of the award.
        Answer. Of the $90 million appropriated for fiscal year 1998 to EPA
    by Congress for the Climate Change Action Plan, approximately $75.6
    million will be used in the form of extramural expenditures for grants
    and contracts. There has been no growth in this area over the last
    three fiscal years, in fact, levels have gone down since fiscal year
    1995. Attached please find a listing of contracts and grants issued in
    fiscal year 1995, fiscal year 1996 and fiscal year 1997.
                          global warming: conferences
        Question. How much has the EPA spent in fiscal year 1998 funds to
    set-up or co-sponsor Conferences on implementation?
        Answer. EPA has spent no fiscal year 1998 funds to set-up or co-
    sponsor conferences on implementation of the Kyoto Protocol. EPA does
    conduct climate change outreach activities in fulfillment of its
    commitment under the 1992 Framework Convention on Climate Change (Rio
    Treaty), as well as our broader obligation to educate the public about
    the environment. These activities are authorized under section 103 (a),
    (b) and (g) of the Clean Air Act, section 102(2)(F) of the National
    Environmental Policy Act, and section 1103 of the Global Climate
    Protection Act of 1987. The U.S. is also a Party, as ratified by the
    Senate, to the United Nations Framework Convention on Climate Change.
    Article 6 of the Convention specifically states the following:
        In carrying out their commitments under Article 4, paragraph 1(i),
    the Parties shall:
        (a) Promote and facilitate at the national and, as appropriate,
    subregional and regional levels, and in accordance with national laws
    and regulations, and within their respective capacities:
      --(i) the development and implementation of educational and public
            awareness programs on climate change and its effects;
      --(ii) public access to information on climate change and its
            effects;
      --(iii) public participation in addressing climate change and its
            effects and developing adequate responses.
        EPA's climate change outreach efforts are designed to educate the
    American public about the science, economics, diplomacy, and technology
    regarding global warming. These efforts have been under way since
    fiscal year 1996.
                global warming: flexible phase in from 2008-2012
        Question. Administration officials have argued that the flexible
    phase in from 2008-2012 will give the U.S. enough time to adopt the
    technology and new practices necessary to meet the targets with little
    economic sacrifice. However, the protocol stipulates that each
    participating nation shall, by 2005, have made demonstrable progress in
    achieving its commitments under the protocol. Doesn't achieving this
    goal require immediate implementation in order to obtain the
    reductions?
        Answer. The Kyoto Protocol provides a decade of lead-time before
    any binding commitments take effect. During this time the Senate will
    have ample opportunity to consider whether to give advice and consent
    to implementing the Kyoto Protocol. The Protocol's call for
    ``demonstrable progress'' by 2005 is, by intention, not a specific,
    binding obligation like the emission limitation commitment for the
    period 2008-2012. In this respect, the 2005 goal is more like the 1992
    Framework Convention's non-binding aim for the year 2000. Independent
    of the Kyoto Protocol, the Administration is pursuing a host of actions
    as a matter of good environmental and good energy policy--including
    efforts to promote energy efficiency, to increase the use of renewable
    forms of energy, to improve air quality, and to develop new
    technologies. Our efforts in these areas make sense with or without the
    Kyoto Protocol and will be good for businesses and consumers and good
    for our environment in either case. If the Protocol is ultimately
    ratified, these programs will easily fulfil any contemplated
    interpretation of the Protocol's 2005 goal.
                            tri: correct information
        Question. What action is the EPA taking to assure that information
    available to the public through the Toxic Release Inventory (TRI) and
    the Sector Facility Indexing Project is correct?
        Answer. EPA has extensive quality assurance procedures in place to
    assure the accuracy of its TRI data. They include:
        The TRI reporting software (the AFR, or Automated Form R), which is
    used for over 60 percent of forms, has a large variety of edit checks
    built in to check the data as they are entered and to prompt the user
    to correct errors as they occur. When the data are submitted
    electronically like this, the possibility of keying errors is
    eliminated. Approximately two-thirds of the reports are submitted
    electronically.
        For data that come in on paper and are keyed, there is also a
    variety of edit checks for the keyers.
        Once the data are entered (or electronically uploaded), a number of
    other quality assurance/quality control steps are taken. These include:
      --The Emergency Planning and Community Right to Know Act (EPCRA)
            Reporting Center performs duplicate/revision processing to
            ensure that Form R information that might have been sent in as
            a revision or a duplicate is not double-counted.
      --EPA performs checks on all submissions that show annual release
            values of 500,000 pounds or greater per facility. We also check
            large increases or decreases based on previous years reporting.
      --EPA mails to each TRI state contact State Reconciliation Reports,
            which are listings of facility-level data received for each
            state for the top 30 facilities with the highest releases for
            each environmental media; states can request listings for more
            facilities. We ask each state contact to check these reports
            and let us know if any information is missing or inaccurate. We
            also compare the holding of the state and Federal TRI
            collections to make sure that both have the same sets of
            facilities and chemicals.
      --In order to check overall data entry, EPA takes a 3 percent
            sampling of hardcopy Form R data as represented on the system
            and compares them to actual submitted information. The EPCRA
            Reporting Center (EPA contractor) does a similar review: it
            checks 6 percent of the hardcopy forms. The Reporting Center
            also checks a small sampling of magnetic media data to make
            sure they translate correctly from the submitted diskettes to
            the system during Aupload.
        The EPCRA Reporting Center notifies submitters of errors and gives
    them opportunities to submit revisions.
        Release Value Reports are sent out for each form that is submitted.
    They display all the release values for the submitter's own review.
    (About 110,000 are sent to 38,000 facilities).
        Finally, after all of these steps occur and the data are nearly
    ready for release to the public, Agency and contractor programmers make
    various runs against the database looking for anomalous situations for
    investigation. (For example, once we discovered that a facility
    reported that it had released several million pounds of metal to air,
    whereas in previous years it had reported 250 or 500 pounds; there was
    no keying error. There was, however, a reporting error that the
    facility then corrected.) When errors are found, they are investigated
    and the issue resolved.
        In order to assess the quality of the data and to determine how to
    improve guidance to facilities subject to EPCRA section 313 reporting,
    EPA has undertaken voluntary data quality site surveys. The surveys are
    designed to assess how well facilities understand the TRI reporting
    requirements and, therefore, how well they prepare their TRI reports.
    The TRI data quality report that was produced with data collected from
    site visits for Reporting Years 1994 and 1995 is available on the
    Internet and can be accessed through the TRI home page. (www.epa.gov/
    opptintr/tri).
        When facilities request to withdraw their data from the TRI
    database, EPA reviews their request to assess whether it is merited.
    EPA is considering instituting a similar procedure for requests to
    revise TRI data already in the database.
        EPA worked for three years to identify the facilities to be
    included in the SFIP and to collect and verify the data. Each facility
    received a copy of its compliance and enforcement data for review to
    make sure that any problems were identified before the information was
    distributed through the SFIP. We also sent the corrections to EPA
    Regions and states to correct the underlying databases.
        Prior to the industry data review, EPA specifically asked the
    states to review the data and make changes as appropriate. Based on
    these data reviews, EPA believes that the information in the underlying
    databases is generally of high quality.
        The accuracy of the data depends upon reliable reporting by states,
    local agencies, and industry. Accuracy also depends on correct
    recording of information by regulatory agencies at local, state, and
    Federal levels. EPA will continue to work with stakeholders to ensure
    the highest quality and consistency of data in the SFIP.
                        tri: educate public on emissions
        Question. I was disturbed to learn that in one known instance, a
    group misused information available through TRI as part of a fund
    raising scheme. What is the EPA doing to educate the public that these
    emissions are fully reviewed by the EPA and are within the limitations
    set by Federal Government as posing no significant health risk or harm
    to the public?
        Answer. The Toxics Release Inventory (TRI) is a key element of
    EPA's right-to-know program. One of the key TRI documents available to
    the public, both electronically and in hard copy, is the annual TRI
    data release book. This book summarizes and explains the TRI data for a
    given year and includes information on trends over time. In explaining
    the TRI data, the Agency points out that the releases that are reported
    to TRI include both those that are the subject of permits under
    Federal, state or local statutes and those that are not. The Agency
    does not make assurances when issuing the TRI data that there are no
    significant health risks associated with the releases. The purpose of
    the TRI program is to provide communities with information to make
    assessments and decisions at the local level. The Agency is working to
    provide more and more tools to allow communities to assess the impact
    of releases reported to TRI.
        Question. The Internet is a wonderful resource if properly managed.
    How is the EPA safe-guarding the integrity of its data and assure that
    it is not misused?
        Data quality assurance procedures are the most important way in
    which EPA assures the integrity of its TRI data. A summary of these is
    provided as Attachment A below. In addition, to educate the public and
    to prevent misuse of the data the Agency provides the public with
    explanations of the TRI data and their limitations through a variety of
    media, including the annual data release book, brochures, newsletters,
    conferences and the internet. In addition to explaining the limitations
    associated with the data, these materials also explain how best to use
    the data, and direct the reader to other sources of information that
    are available to help users assess the potential impact of releases.
    The Agency also has TRI user support services that the public can
    access by phone or e-mail. These outreach materials and support
    services represent the Agency's concerted efforts toward assuring
    appropriate uses of TRI data, and preventing the misuse of the data.
                                     ______

              Attachment A: TRI Data Quality Assurance Procedures
        EPA has extensive quality assurance procedures in place to assure
    the accuracy of its TRI data. They include:
        The TRI reporting software (the AFR, or Automated Form R), which is
    used for over 60 percent of forms, has a large variety of edit checks
    built in to check the data as they are entered and to prompt the user
    to correct errors as they occur. When the data are submitted
    electronically like this, the possibility of keying errors is
    eliminated. Approximately two-thirds of the reports are submitted
    electronically.
        For data that come in on paper and are keyed, there is also a
    variety of edit checks for the keyers.
        Once the data are entered (or electronically uploaded), a number of
    other quality assurance/quality control steps are taken. These include:
      --The Emergency Planning and Community Right to Know Act (EPCRA)
            Reporting Center performs duplicate/revision processing to
            ensure that Form R information that might have been sent in as
            a revision or a duplicate is not double-counted.
      --EPA performs checks on all submissions that show annual release
            values of 500,000 pounds or greater per facility. We also check
            large increases or decreases based on previous years reporting.
      --EPA mails to each TRI state contact State Reconciliation Reports,
            which are listings of facility-level data received for each
            state for the top 30 facilities with the highest releases for
            each environmental media; states can request listings for more
            facilities. We ask each state contact to check these reports
            and let us know if any information is missing or inaccurate. We
            also compare the holding of the state and Federal TRI
            collections to make sure that both have the same sets of
            facilities and chemicals.
      --In order to check overall data entry, EPA takes a 3 percent
            sampling of hardcopy Form R data as represented on the system
            and compares them to actual submitted information. The EPCRA
            Reporting Center (EPA contractor) does a similar review: it
            checks 6 percent of the hardcopy forms. The Reporting Center
            also checks a small sampling of magnetic media data to make
            sure they translate correctly from the submitted diskettes to
            the system during Aupload.
        The EPCRA Reporting Center notifies submitters of errors and gives
    them opportunities to submit revisions.
        Release Value Reports are sent out for each form that is submitted.
    They display all the release values for the submitter's own review.
    (About 110,000 are sent to 38,000 facilities)
        Finally, after all of these steps occur and the data are nearly
    ready for release to the public, Agency and contractor programmers make
    various runs against the database looking for anomalous situations for
    investigation. (For example, we discovered one year that a facility
    reported that it had released several million pounds of metal to air,
    whereas in previous years it had reported 250 or 500 pounds; there was
    no keying error. There was, however, a reporting error that the
    facility then corrected.) When errors are found, they are investigated
    and the issue resolved.
        In order to assess the quality of the data and to determine how to
    improve guidance to facilities subject to EPCRA section 313 reporting,
    EPA has undertaken voluntary data quality site surveys. The surveys are
    designed to assess how well facilities understand the TRI reporting
    requirements and, therefore, how well they prepare their TRI reports.
    The TRI data quality report that was produced with data collected from
    site visits for Reporting Years 1994 and 1995 is available on the
    Internet and can be accessed through the TRI home page. (www.epa.gov/
    opptintr/tri).
        When facilities request to withdraw their data from the TRI
    database, EPA reviews their request to assess whether it is merited.
    EPA is considering instituting a similar procedure for requests to
    revise TRI data already in the database.
        EPA worked for three years to identify the facilities to be
    included in the SFIP and to collect and verify the data. Each facility
    received a copy of its compliance and enforcement data for review to
    make sure that any problems were identified before the information was
    distributed through the SFIP. We also sent the corrections to EPA
    Regions and states to correct the underlying databases.
        Prior to the industry data review, EPA specifically asked the
    states to review the data and make changes as appropriate. Based on
    these data reviews, EPA believes that the information in the underlying
    databases is generally of high quality.
        The accuracy of the data depends upon reliable reporting by states,
    local agencies, and industry. Accuracy also depends on correct
    recording of information by regulatory agencies at local, state, and
    Federal levels. EPA will continue to work with stakeholders to ensure
    the highest quality and consistency of data in the SFIP.
                    tri: environmental information to public
        Question. At one point, I recall an effort by the EPA's enforcement
    office under the GPRA to qualify violations in the variety of reports
    you release by including with the fine amount of information, whether
    there was human or environmental harm from the violation, what the
    company did to rectify the violation, whether the violation was
    voluntarily reported, etc. It is important that this information is
    included in the databases to more fully inform the public. What is the
    status of that proposal? What is the EPA's time frame to accomplish it?
        Answer. EPA has moved forward with this proposal. The Agency is
    conducting a pilot project on case conclusion data sheets (CCDS) as a
    result of recommendations made by the Measures of Success Workgroup in
    March 1995. Under this project, EPA collects the following information
    for concluded administrative and judicial enforcement actions:
      --Expected costs of compliance (i.e. injunctive relief costs);
      --Type of actions taken to comply (e.g. industrial process change,
            emissions reduction, training);
      --Names and amounts of pollutants to be reduced, prevented or
            controlled;
      --Qualitative nature of the impact (e.g. human health or ecosystem
            protection); and,
      --Details on Supplemental Environmental Projects, including costs and
            environmental benefits such as above.
        In fiscal year 1995, EPA collected information on all concluded
    judicial orders and on compliance orders with penalties. In fiscal year
    1996, EPA expanded the collection to include all administrative and
    judicial actions regardless of accompanying penalty.
        Information from the data sheets was compiled and included with end
    of year reporting for 1995, 1996, and 1997. This information has been
    summarized and widely distributed to managers in the Agency. It has
    also been released publicly.
        Additionally, one of the tasks under the National Performance
    Measures Strategy, which grew from a series of national stakeholders
    meetings with industry, environmental, community, academic,
    governmental and media groups (announced with the end-of-year press
    release in December 1997), is to conduct an evaluation of the case
    conclusion or expected environmental benefit data and the processes for
    creating that information, and to enhance its comprehensiveness and
    accuracy. The majority of this evaluation will be concluded by the end
    of fiscal year 1998.
                         tri: global warming potential
        Question. To what extent will your Agency's risk management
    activities take account of the global warming potential (GWP) of
    chemicals, production processes or facilities? Will the Sector Facility
    Indexing Project include GWP among the factors it examines?
        Answer. The programs within the Office of Prevention, Pesticides
    and Toxic Substances under the authority of the Toxic Substances
    Control Act (TSCA) and the Pollution Prevention Act (PPA) include the
    New, Existing and Chemical Testing programs. These programs screen and
    manage the risks chemicals pose to human health and the environment.
    Risks to human health and the adverse effects on wildlife and
    ecosystems are the primary focus of the TSCA risk assessment. Risk
    screens focus on human toxicity, hazard and exposure.
        The authority, granted under TSCA is the ultimate embodiment of
    pollution prevention, as it allows EPA to prevent the introduction of
    unacceptable toxic chemicals into the marketplace before they can harm
    public health or the environment. This pre-commercial evaluation also
    provides incentives for the swift introduction of safer alternatives to
    toxic chemicals. Through the Premanufacture Notification, Design for
    the Environment, Green Chemistry, and other efforts, EPA encourages the
    chemical industry at the earliest stages of research and design to
    produce and use safer, less polluting chemicals. EPA works with
    industry to identify methods to reduce all types of pollution in
    production process, and to prevent the transfer of pollution from one
    media to another. The Design for the Environment program, the Green
    chemistry program and the Environmentally Preferable Products program
    target separate audiences--manufacturers, chemistry researchers, and
    Federal purchasing agents--to promote and encourage safer products to
    preserve and protect human health and the environment.
        The Sector Facility Indexing Project has no plans at this time to
    include GWP among the factors it examines. SFIP draws upon existing
    databases (i.e., AFS, PCS, RCRIS) which do not currently provide
    information regarding greenhouse effects.
                   clean water: section 106 grant priorities
        Question. The Section 106 Operating Grant is the principal water
    quality operating grant received by the states from EPA. A part of this
    grant is for Ground Water Quality Management which in Alabama is
    unfunded by the state. Section 106 has been historically used to
    provide broad based assistance to the states. Since the decision to
    reallocate the funds is not statutory based, what prompted the EPA to
    act at this time?
        Answer. Section 106(b) of the Clean Water Act (CWA) requires that
    the `` * * * Administrator shall make allotments to the several States
    and interstate agencies * * * on the basis of the extent of the
    pollution problem in the respective States.'' EPA developed the current
    formula following passage of the 1972 Federal Water Pollution Control
    Act (FWPCA) Amendments. EPA determined that a fixed formula, rather
    than a yearly appraisal of needs would be the most effective way to
    allocate Section 106 funds. Four factors were selected as components of
    the formula: (1) number of industrial dischargers; (2) number of
    municipal dischargers; (3) number of nuclear, oil, coal and gas power
    plants; and (4) number of feedlots of more than 1,000 head. Population
    was also a determining factor in the formula. These factors are no
    longer appropriate, as they do not reflect the full range of concerns
    in water quality programs today and because the data used for each
    factor are more than 20 years old. EPA was prompted to revise the
    Section 106 formula at this time, to ensure that the fiscal year 1999
    increase in requested 106 grant funds is distributed in a manner
    reflective of current State water quality programs and problems.
                   clean water: state position on priorities
        Question. This reallocation would eliminate a major component of
    Ground Water Management, for which no non-Federal dollars are available
    in Alabama and other states to fill in for the loss of these vital
    funds. What considerations are being given to the states' position on
    this matter.
        Answer. Groundwater protection continues to be a major priority for
    EPA. We expect to continue the Section 106 funding set-aside for
    groundwater. In addition, the Section 106 Formula State-EPA Revision
    Workgroup has recommended that groundwater be included as a factor in
    the revised Section 106 allocation formula. In addition to EPA Senior
    Management, seven States are represented on this workgroup to ensure
    full consideration of State positions on all components of the Section
    106 program.
                         clean water srf: funding level
        Question. I am very concerned about the EPA's planned cuts to the
    Clean Water State Revolving Funds (CWSRF). This has been a very
    successful program across the country, including Alabama. Why does the
    EPA want to reduce funding to a program that is so positively embraced
    by the states?
        Answer. The Agency agrees that the Clean Water SRF program has been
    very successful in providing low cost financing for communities with
    critical wastewater infrastructure and other needs. The fiscal year
    1999 President's Budget request of $1.075 billion in no way compromises
    the Administration's long-term goal of capitalizing the Clean Water SRF
    so that it will provide at least $2 billion annually in assistance to
    communities to help fund critical water quality infrastructure projects
    on a continual basis.
        The attached chart displays the cumulative capitalization of the
    Clean Water SRF assuming President's Budget funding levels and the
    cumulative loan assistance provided by the SRF using those same
    assumptions. As the chart indicates, the SRF will have provided over
    $64 billion in loan assistance by the year 2016 under the President's
    Budget funding assumptions (figures are in constant 1996 dollars). The
    cumulative loan assistance provided includes state revolving fund
    sources of funding in addition to the Federal capitalization, such as
    state match, loan repayments, bond proceeds and fund earnings. As
    already stated, the fiscal year 1999 Clean Water SRF request will help
    achieve the Administration goal of providing at least $2 billion in
    annual financial assistance through 2016 and well beyond. Also, when
    combined with the Drinking Water SRF request, the Administration will
    meet its goal of providing a total of $2.5 billion a year to
    communities for both wastewater and drinking water needs.
    [GRAPHIC] [TIFF OMITTED] TVA.019

                    clean water srf: fees as program income
        Question. Fees are paid to the states by borrowers, such as
    municipalities and water boards, for administrative expenses. States
    need to retain flexibility in the utilization to support services to
    these same borrowers. If designated program income by the EPA then
    restrictions, conditions and prohibition will come into effect which
    will eliminate flexibility by the states. Realizing the effects on the
    states, please explain why the EPA is proposing designating CWSRF fees
    as program income? Is the EPA also considering making this ruling
    retroactive? If so, please identify the year.
        Answer. The use of fees paid by borrowers of Clean Water State
    Revolving Fund (CWSRF) loans is governed by EPA's general grant
    regulations at 40 C.F.R Part 31, which in turn are based on U.S.
    government-wide OMB circulars. The general grant regulations define
    program income as income received by a grantee of Federal funds that is
    directly generated by a grant supported activity. 40 C.F.R. 31.25(b).
    Under the general grant regulations, fees paid on CWSRF loans made from
    Federal capitalization grant funds are program income.
        Under the general grant regulations, states retain the flexibility
    to use fees for administrative expenses of the CWSRF, for other
    purposes of the CWSRF program (funding publicly-owned treatment works,
    nonpoint source and estuary projects) and for state match. However,
    such fees may not be used to fund state activities unrelated to the
    CWSRF program. It has recently come to EPA's attention that some states
    may have already used some of these fees for purposes unrelated to the
    CWSRF program. EPA is currently assessing the extent to which fees have
    been used by states for unrelated purposes, and, in collaboration with
    the states, expects to complete the review and make a determination on
    this matter by the end of the fiscal year. Any necessary corrective
    action will be based on the results of the review.
                                     ______

                    Questions Submitted by Senator Campbell

                       colorado's environmental audit law
        Question. Why is the EPA attempting to stop this program when it
    has shown that it does help to protect the environment?
        Answer. EPA is working with Colorado to ensure that the Colorado
    audit privilege and immunity law meets minimum Federal requirements for
    the administration of Federally-approved environmental programs. EPA
    has a statutory duty to ensure that states meet minimum Federal legal
    enforcement and information gathering requirements in order to maintain
    Federally-approved programs. Thus, EPA has worked with a number of
    states (i.e., Utah, Texas, Michigan, Virginia, and Wyoming) to resolve
    the legal issues with the respective states' audit privilege and
    immunity laws so that these laws would no longer pose a barrier to
    state administration of Federally-approved environmental programs.
    While the Agency is opposed to audit privilege and immunity laws as a
    matter of policy, when a state's audit privilege and immunity law meets
    minimum Federal requirements, EPA will not serve as a barrier to
    Federal authorization of state environmental programs to which it
    applies. EPA will continue to make every effort to work with Colorado
    officials to find a resolution that accommodates the interests of the
    State while meeting minimum Federal requirements.
        According to information provided to EPA by state officials, since
    the Colorado audit privilege and immunity law became effective in 1995,
    Colorado has received 28 disclosures under the audit law and has
    resolved 23 of these, granting full immunity in 17 of the cases.
    Because Colorado's law contains evidentiary privilege provisions,
    however, an untold number of violations may be hidden in company files.
    This privilege denies Colorado regulators the information they need to
    determine the cause of violations, the environmental harm resulting
    from violations, and the steps needed to correct the violation and
    prevent recurrence. Additionally, in situations where citizens are
    threatened or harmed, the State should have immediate and unencumbered
    access to the best available information which may be present in an
    audit report. Any documents or other data related to environmental
    compliance under Colorado's law would have to be treated as
    presumptively privileged, denying the State and the public relevant
    information in emergency situations. Thus, the audit privilege law
    interferes with the State's ability to obtain the information it needs
    to protect human health and the environment with the public's right to
    know.
        Colorado's audit privilege and immunity law also immunizes serious
    violations, including unpermitted discharges and those violations that
    are a result of criminal negligence. For example, under Colorado's law,
    a company can discharge pollutants into a stream without a permit and
    if the company performs an audit and promptly discloses the violation,
    the company will receive immunity for the unpermitted discharges. EPA
    has expressed the concern that these immunity provisions do not meet
    minimum Federal regulatory requirements for the administration of
    Federally-approved environmental programs. In addition, as a matter of
    public policy, EPA opposes statutory immunities such as Colorado's
    because they eliminate the important deterrent effect of penalties and
    allow companies that violate environmental laws to gain a competitive
    advantage over companies that invest in environmental compliance.
                    national commission on higher education
        Question. How do you feel about the Cost Commission's
    recommendation that separate regulations should exist?
        Answer. The Agency is aware of the problems faced by small
    universities in disposing of their laboratory wastes. EPA is currently
    putting together options on how to revise the hazardous waste manifest
    and related standards under the Resource and Recovery Act's (RCRA)
    program. As part of these manifest revisions, the Agency is studying
    ways to reduce the financial and paperwork burden placed on educational
    laboratories. To that end, EPA hopes to propose a system whereby wastes
    at university laboratories could be transported to a central
    consolidation point at the university under reduced requirements. These
    reduced requirements would include a more streamlined paper system and
    reduced record keeping as the waste moves from the various university
    buildings to the central consolidation site. After the material is
    consolidated it would be shipped offsite to a licensed treatment,
    storage, or disposal facility (or TSDF).
        The Agency is currently reviewing a Project XL proposal from the
    New England Universities Laboratories that relates to this issue. If
    approved, the project would demonstrate one option for addressing the
    concern that existing RCRA regulations may not always be a good fit for
    university laboratories.
                         fqpa: pesticide cancellations
        Question. Colorado produced $4.2 billion in agricultural sales in
    1996, in large part because of the use of pesticides. A long list of
    pesticides used in Colorado to produce crops face immediate
    restrictions and or cancellations, and there are many new pesticides
    that have not been registered. What is the EPA proposing to do to
    insure that the farmers in Colorado will have some form of pesticide to
    use to produce their crops before the old ones are removed, and will
    they be as cost effective as the old pesticides?
        Answer. EPA is committed to making every effort to ensure that
    farmers have the critical tools they need to grow our food. EPA wants
    all affected growers to be able to anticipate and plan for our actions.
    We are balancing tolerance reassessment with the introduction of new
    products and pest control methods to help ensure that both chemical and
    non-chemical alternatives are available.
        EPA has stepped up its efforts to provide better, safer choices for
    pesticides for farmers. In the past few years, EPA has created two new
    programs aimed at expediting reviews and ultimately market entry of
    lower risk products and safer substitutes. The Agency created the
    Biopesticides and Pollution Prevention Division. The types of products
    registered in this Division generally have a non-toxic mode of action.
    By combining the risk managers with the review scientists in one
    division, we have been able to streamline the entire review process.
    About half of post-Food Quality Protection Act (FQPA) new active
    ingredients have been for biopesticides.
        The second program, known as the Reduced-Risk Pesticide Program,
    has been in place since 1994. Applications that come in under the
    Reduced-Risk Program are placed at the head of the review queue. To
    date, 17 new chemicals have been approved as reduced risk alternatives.
    This program clearly provides an incentive for companies to develop
    lower-risk products and safer substitute products. Among the 13
    chemicals currently under review as part of this program, 5 new active
    ingredients are potentially significant substitutes for some
    organophosphate registered uses for which reviews should be completed
    before tolerance reassessment on organophosphate pesticides is
    completed. As stated in the Vice President's April 8 memorandum on food
    safety, EPA is establishing an advisory process to ensure broad
    stakeholder involvement in the development and implementation of an
    approach to tolerance reassessment for organophosphate pesticides.
        In addition, EPA works with USDA on a regular basis to ensure that
    the impact of its regulations and decisions on farmers is considered.
    EPA and USDA also have a Memorandum of Understanding to foster
    cooperative efforts to provide replacements for pesticides that are
    likely to be subject to cancellation or suspension by EPA, or are
    subject to voluntary cancellation based on risk or economic concerns.
    This program is particularly important for minor use crops, such as
    fruits and vegetables, which may face a lack of safe and effective pest
    management alternatives.
                              fqpa: delaney clause
        Question. When the Food Quality Protection Act was passed, the EPA
    said that an extra margin of safety, put in place to protect infants
    and children, would be imposed only with evidence of health effects.
    But, already the provision has triggered the denial of two
    registrations for crop protection products used on cotton, even though
    cotton is not a food crop and any chemical applied to it would result
    in little, if any, additional food exposure. Is this section of the act
    effectively replacing the Delaney clause and zero risk?
        Answer. Although the main purpose for producing cotton is to
    produce fiber, cotton products such as seed and oil are used in food
    products. Also, pesticide residues found on cotton by-products used as
    animal feed may end up in meat and milk products. Risks from these
    sources cannot be assumed to be inconsequential. These pesticide
    residues must meet the same standard as any other pesticide residues
    found in food, the Food Quality Protection Act's (FQPA) ``reasonable
    certainty of no harm.''
                   fqpa: hypothetical vs actual pesticide use
        Question. Why are decisions being based on unrealistic hypothetical
    situations rather than on actual pesticide use?
        Answer. EPA uses the best data available and does not base
    regulatory decisions on unrealistic, hypothetical situations. The law
    anticipates that the Agency would use real world data where available,
    and it does. EPA routinely uses monitoring data, field trials and other
    data to obtain a more accurate picture of actual use. The Agency also
    utilizes data on the actual percent of crop treated, which is often
    available. Where data are incomplete, EPA may compensate by using an
    additional uncertainty factor or making a reasonable health-protective
    assumption. This has long been EPA practice and the Food Quality
    Protection Act (FQPA) emphasizes the importance of uncertainty factors
    where data are incomplete. Where risk estimates are used, EPA relies on
    actual data supplemented with scientifically reviewed models and not on
    worst-case assumptions.
                         regional haze: technical tools
        Question. Why didn't EPA include any technical tools in its
    regional haze proposal (e.g. to estimate the natural contribution to
    visibility impairment; allocate to sources the visibility impairing
    material measured in the mandatory Federal class I areas; or to
    quantify the ratio of costs and visibility benefits for incremental
    emission reductions)?
        Answer. The Environmental Protection Agency believes that many
    technical tools are available already to address regional haze, and
    further guidance on the use of these tools is currently under
    development and expected to be available in time for States to prepare
    their control strategies. The availability of technical methods for
    visibility monitoring, modeling, and strategy assessment is discussed
    in the National Academy of Sciences 1993 report entitled ``Protecting
    Visibility in National Parks and Wilderness Areas.'' This report was
    discussed in the preamble to EPA's proposed rule. One of the important
    findings in this report is that: ``Current scientific knowledge is
    adequate and control technologies are available for taking regulatory
    action to improve and protect visibility.'' Another important
    conclusion is the following:

              Visibility impairment can be attributed to emission sources
            on a regional scale through the use of several kinds of models.
            In general, the best approach for evaluating emission sources
            is a nested progression from simpler and more direct models to
            more complex and detailed methods. The simpler models are
            available today and could be used as the basis for designing
            regional visibility programs; the more complex models could be
            used to refine those programs over time.

        In addition, monitoring data has been collected from 1988 to the
    present for 30 class I sites under the IMPROVE program. Chemical
    composition and trends data is available for each of these sites,
    providing important information needed to begin any process to estimate
    natural conditions, to perform source attribution studies, and to
    conduct modeling analyses. EPA also has a number of technical tools and
    guidance under development for implementing the program. The EPA is
    funding a significant expansion of the IMPROVE network and has a
    visibility monitoring guidance document under development. This
    expanded network will help the States, Federal land managers, and EPA
    to better estimate natural conditions. The EPA is developing the REMSAD
    and MODELS3 regional models which will help the States to estimate fine
    particles, their constituents, and the associated visibility levels for
    different scenarios. These models will be useful for developing future
    control strategies designed to attain the PM-2.5 standards and make
    reasonable progress under the regional haze program.
                   regional haze: funding for regional models
        Question. How much money is being allocated by the agency to
    develop regional models?
        Answer. The United States Environmental Protection Agency (U.S.
    EPA) has spent $6.1 million dollars in the latest two fiscal years
    (1997 and 1998) to develop regional models for fine particulates and
    regional haze. The majority of these funds were spent in the
    development of a scientifically advanced, but resource intensive
    regional model called MODELS3. A smaller amount of funds were spent in
    the development of a less scientifically rigorous and resource
    intensive regional model called REMSAD. U.S. EPA has budgeted an
    additional $2.3 million in fiscal year 1999 for the development and
    evaluation of these two regional models.
                          regional haze: gcvtc's wrap
        Question. The Grand Canyon Visibility Transport Commission has
    established a successor organization, the Western Regional Air
    Partnership (WRAP) which includes State and Tribal leaders and Federal
    Agencies. The WRAP is struggling to develop many of the technical tools
    (e.g. emissions inventories, regional models, etc.) that should have
    been developed by EPA. Since the agency has failed to develop these
    tools, as required by Congress, should money be diverted from the
    agency and directed to the states or to regional organizations such as
    the WRAP, especially since these tools will be necessary to implement
    the very prescriptive regional haze program by the agency?
        Answer. The Environmental Protection Agency worked closely with the
    Grand Canyon Visibility Transport Commission, the predecessor to the
    WRAP, in the application of modeling and assessment tools. The Agency
    has more recently developed a regional modeling system and is ready to
    work with the WRAP in applying it to their area. The proposed regional
    haze program does not require immediate strategies to be adopted by the
    States, but rather envisions a period of assessment and strategy
    development that is coordinated with implementation of the health
    standards. Such time will allow the States and EPA, perhaps through
    organizations of like the WRAP, to address all the technical needs in
    developing a strategy to make reasonable progress toward the national
    visibility goal.
                      regional haze: gcvtc recommendations
        Question. Given the fact that the GCVTC states have done a study
    and have developed recommendations for improving visibility on the
    Colorado Plateau, why didn't the agency indicate in the regional haze
    proposal that following through with the Commission's recommendations
    would constitute reasonable progress toward the national visibility
    goal?
        Answer. The Environmental Protection Agency did summarize the
    strategies developed by the Commission explicitly in the preamble of
    the proposed regional haze rule. The Agency specifically requested
    comment on how to address these strategies, which are specific to
    certain states and applicable to only 16 of 156 mandatory Federal Class
    I areas nationwide, within its national rule. At the time of the
    proposal, the Agency did not believe that it would be appropriate to
    mandate the GCVTC strategies for all States to follow across the
    country in its national rule. The EPA is currently evaluating all
    comments received on this issue and intends to be responsive to them in
    the final rule.
                   regional haze: additional improve monitors
        Question. Why did the agency instead decide to propose a one
    deciview target when that approach was rejected by Congress in 1990?
    What are the agency's plans for deploying additional IMPROVE monitors
    (especially in urban centers or intermediate transport centers) to fill
    the data gaps to validate regional haze models?
        Answer. Some comments have characterized the 1 deciview improvement
    every 10 or 15 years in the proposed regional haze rule as an absolute
    standard, similar to the Environmental Protection Agency's (EPA's) air
    quality standards. This is not accurate. In the proposal, EPA proposed
    to give the States flexibility to propose alternate targets that would
    be more suitable to their situation. Because of this flexibility, the
    proposed 1 deciview target would not be a mandatory target.
        The EPA plans to deploy an additional 78 IMPROVE sites in or near
    Federal Class I areas. Twenty additional sites will be established in
    1998 and the other 58 in 1999. In addition, visibility-related
    information can be derived from PM 2.5 monitors. Fine particles are
    principally responsible for visibility impairment and a statistical
    relationship exists between fine particle mass and light extinction. In
    addition, all PM 2.5 monitors permit at least limited chemical
    speciation. Speciated data provides a basis for developing reliable
    estimates of seasonal and annual average visibility conditions.
    Accordingly, the dense network of PM2.5 monitors which is currently
    under development will help identify the extent of regional haze and
    contributing sources. Although the monitors will largely be located in
    urban areas, the trends in urban air quality and related urban
    visibility will help track reductions in regional emissions which are
    responsible for impairment of visual range in rural areas. In addition,
    many of the PM 2.5 network's regional transport and regional background
    monitors are expected to provide the capability for full chemical
    speciation. This will supplement the characterization of particles in
    rural areas which affect visual range.
                                     ______

                      Questions Submitted by Senator Craig

                              coeur d'alene basin
        Question. Can you tell me whether EPA has expanded the site beyond
    the 21 square mile ``Superfund Box'' designated by EPA nearly 5 years
    ago? If it has been done, can you tell me exactly when that was done
    and whether the public was invited to participate in the decision
    making process? Please cite the statutory and regulatory authority used
    to complete this action and provide the legal reasoning used to apply
    this authority to the instant case. Please provide any scientific
    evidence used as a basis for EPA action in this area with an
    explanation as to how the relied upon evidence supports EPA's action.
        Answer. EPA has not ``expanded'' the Bunker Hill site. Pursuant to
    section 105 of the Comprehensive Environmental Response, Compensation
    and Liability Act (CERCLA), 42 U.S.C. Sec. 9605(c), implemented through
    the National Contingency Plan (NCP), 40 C.F.R. Part 300, EPA listed the
    ``Bunker Hill Mining and Metallurgical'' complex on the National
    Priorities List (NPL) in 1983. See 40 C.F.R. Part 300, App. B, Table 1.
    In the Hazard Ranking System (HRS) evaluation supporting the NPL
    listing, the Bunker Hill facility was described by reference to
    releases of hazardous substances in the South Fork of the Coeur d'Alene
    River, down the Coeur d'Alene River to Coeur d'Alene Lake.
    Documentation Records for Hazard Ranking System, Bunker Hill Smelter,
    at 10 (June 28, 1982). In accordance with the NCP, the HRS
    documentation supporting the Bunker Hill NPL listing was made available
    for public comment prior to the final listing in 1983. Public comments
    were received from a number of parties, and EPA prepared a written
    response to these comments. See EPA Office of Solid Waste and Emergency
    Response, Support Document for the National Priorities List at 11-3
    (Sept. 1983).
        Nowhere in the HRS documentation for Bunker Hill is the NPL
    facility limited to the 21 square mile ``Superfund box'' commonly known
    as the ``Bunker Hill Superfund Site.'' This area was identified by EPA
    after the 1983 NPL listing as the priority for EPA's efforts based on
    concerns for human health related largely to the areal deposition of
    emissions from the lead smelter. Because the original NPL listing for
    Bunker Hill was not limited to the ``Superfund box,'' there is no cause
    now for formally ``expanding the site.'' There is, however, a need for
    determining--with finality--the extent of this contamination, the risks
    associated with this contamination, and the actions to address any
    identified risks. These determinations will be made through the
    Remedial Investigation/Feasibility Study (RI/FS) that EPA has begun for
    the Coeur d'Alene Basin. The results of this RI/FS will be documented
    in a Record of Decision, which will be supported by scientific evidence
    and take into account a number of other factors, including cost
    effectiveness and community concerns. EPA is currently involved in
    developing a community relation plan (CPR) to map out community
    involvement.
                          coeur d'alene: idaho's role
        Question. I understood that EPA is committed to work cooperatively
    with the state of Idaho and the local community in resolving the issues
    associated with the Basin. If that is still true, will EPA allow the
    state of Idaho to take a lead role in assessing the level of
    remediation that needs to be completed, creating a cleanup plan
    acceptable to the local community and facilitating a fair settlement
    with the potentially responsible parties? Can EPA act on contaminants
    that do not exceed drinking water standards?
        Answer. EPA is committed to working cooperatively with the State of
    Idaho and the local communities in resolving the issues concerning
    mining contamination in the Coeur d'Alene Basin. EPA is also committed
    to working cooperatively on these issues with the State of Washington,
    the Coeur d'Alene Tribe, the U.S. Department of the Interior, the U.S.
    Forest Service, mining companies, environmental groups, and other
    interested parties. Because of the number of parties and complexity of
    issues, impacting separate municipal, county, state, tribal, and
    Federal jurisdictions, EPA has assumed the lead for conducting the RI/
    FS.
        An early element of the RI/FS process is the development of a
    Community Relations Plan (CRP). See NCP Sec. 300.430(c). In accordance
    with the NCP, we are currently conducting community interviews and
    organizing public meetings in support of a Basin-wide CRP. The CRP will
    undergo public comment and will identify ways that the communities will
    be represented throughout this process.
        As to drinking water standards, EPA can act on contaminants that do
    not exceed drinking water standards. In developing the comprehensive
    cleanup plan for the Basin, EPA can and will consider a number of ways
    that people and other environmental receptors may be exposed to mining
    contamination. Ingestion through drinking water is one of these
    pathways. As such, drinking water standards represent just one set of
    potentially Applicable or Relevant and Appropriate Requirements that
    any final cleanup action must often meet, according to CERCLA. Human or
    other environmental receptors may also be exposed to contaminants
    through other pathways including inhalation (e.g. breathing in
    contaminated dust) and dermal exposure (e.g. playing on contaminated
    soils). In some cases where health standards are not already set, or
    are otherwise inappropriate, EPA may set standards based on the risk
    calculated for a particular area. This process is being followed to
    determine cleanup levels for lead in residential soils in the Basin.
                coeur d'alene: expansion of activities in region
        Question. Is EPA expanding its activities in the region because of
    a lawsuit?
        Answer. EPA is not undertaking its activities in the Coeur d'Alene
    Basin because of the Tribe's lawsuit. Under the lawsuit filed by the
    U.S. Department of Justice in 1996 concerning the Basin, which includes
    claims for EPA's past and future CERCLA response costs, EPA has an
    obligation to determine its potential future response costs in the
    Basin. EPA decided to satisfy this obligation through an RI/FS because
    the RI/FS process by law requires scientific and public involvement,
    and can help integrate other environmental programs including natural
    resource restoration and Total Maximum Daily Loads (TMDL)
    implementation under the Clean Water Act. Through the RI/FS process,
    EPA is now committed to developing a scientifically sound cleanup plan
    for the Basin in a reasonable timeframe with the participation of all
    interested parties. EPA believes that this cleanup plan may ultimately
    serve as the basis for a fair, comprehensive settlement with all
    parties involved.
                          coeur d'alene basin studies
        Question. Am I correct in stating that studies costing millions of
    dollars have been conducted in the Basin? If so, why can't EPA make a
    decision based on the information collected and analyzed to date? What
    is it that EPA is looking for? Is EPA simply searching for a problem in
    the Basin?
        Answer. You are correct that health and environmental studies
    costing millions of dollars have been conducted in the Basin. These
    studies have been conducted over the years by a range of private
    parties, including Gulf Resources, and government agencies, including
    EPA, the Idaho Department of Health and Welfare, and the Federal
    natural resource trustees. These studies collectively provide a wealth
    of data that EPA will use as it assesses the need for further cleanup
    actions in the Basin. However, as we indicated to you in our letter
    dated March 27, 1998, additional sampling has been and will be
    necessary to fully evaluate cleanup needs and alternatives. Beyond this
    additional sampling, as we previously indicated, substantial analytical
    work must be completed in order to identify the risks implied by these
    data and the cleanup actions necessary to address these risks.
        Through its RI/FS for the Coeur d'Alene Basin, EPA is looking to
    identify those areas of the Basin where mining contamination poses an
    unacceptable risk to human health or the environment. EPA's
    responsibilities are not limited to protecting human health. EPA also
    has an affirmative responsibility to protect the environment in the
    Basin, including the health of fish and wildlife. See 42 U.S.C. 9604(a)
    (The President, through EPA, authorized to take any response measure
    necessary to protect ``public health or welfare or the environment'').
    As just one example, the continuing injuries to waterfowl such as the
    tundra swans in wetlands of the lower Basin provide strong indication
    that there is an environmental problem demanding EPA's attention. In
    conjunction with identifying the extent of the problems in the Basin,
    EPA, with public involvement, will be looking for ways to fix these
    continuing problems.
                       coeur d'alene cooperative approach
        Question. Will EPA, as lead agency under the CERCLA, require a more
    cooperative approach on the part of the Coeur d'Alene Indian Tribe and
    the U.S. Department of Justice?
        Answer. As you know, the Department of Justice filed the pending
    suit under CERCLA, not only on behalf of EPA, but also on behalf of the
    Departments of Interior and Agriculture. By law, the conduct of
    litigation is generally reserved to the Department of Justice. 28
    U.S.C. Sec. 516. The Tribe has authority as a sovereign to assert
    claims for damages to natural resources under CERCLA, and the Tribe
    filed a separate lawsuit under this legal authority. Notwithstanding
    the independent authorities under which these entities function, EPA
    will work to foster cooperation among all interested parties, in order
    to produce a comprehensive cleanup plan for the Basin. In order to
    facilitate this cooperation, EPA has supported the hiring of a third-
    party neutral to assess the relevant issues and make recommendations on
    whether and how alternative dispute resolution may be productive.
               global climate change: co2 regulations
        Question. Has EPA in the past considered, or is it currently
    contemplating, regulations that would control emissions of carbon
    dioxide? Are you aware of any internal memoranda that discusses or
    addresses this issue? Are you aware of any policy or legal memoranda
    prepared by EPA, any Department or agency of the Executive Branch, or
    any other person or entity within the Administration that either
    discusses or addresses this issue?
        Answer. The EPA has no current or planned activities to use the
    Clean Air Act or any other existing law to propose or promulgate
    regulations that place limits on carbon dioxide emissions. The April
    10, 1998, EPA legal opinion submitted in response to Congressman
    DeLay's request addresses EPA's authority to regulate emissions of
    carbon dioxide from electric power generation sources under the Clean
    Air Act (see attachment). As the opinion states, the Administrator has
    made no determination to exercise that authority. The opinion also
    notes that the existing Clean Air Act authorities potentially
    applicable to carbon dioxide do not easily lend themselves to
    establishing market-based cap-and-trade programs, which the
    Administration favors for addressing this kind of pollution problem.
                        jurisdiction under clean air act
        Question. Please provide ALL legal memoranda prepared at any time
    by the EPA's Office of the General Counsel that discusses or addresses
    the issue whether EPA has jurisdiction under the Clean Air Act, or any
    other Federal law, to place limits on the emissions of carbon dioxide.
    Include any legal memoranda obtained from any Department or agency of
    the Executive Branch, or any other person or entity within the
    Administration that either discusses or addresses this issue.
        Answer. Attached is a legal opinion entitled ``EPA's Authority to
    Regulate Pollutants Emitted by Electric Power Generation Sources,''
    Memorandum from Jonathan Z. Cannon, General Counsel, to Carol M.
    Browner, Administrator, April 10, 1998. This is the only legal
    memorandum prepared by EPA on this subject.
                                   memorandum
    SUBJECT: EPA's Authority to Regulate Pollutants Emitted by Electric
    Power Generation Sources
    FROM: Jonathan Z. Cannon, General Counsel
    TO: Carol M. Browner Administrator
                         i. introduction and background
        This opinion was prepared in response to a request from Congressman
    DeLay to you on March 11, 1998, made in the course of a fiscal year
    1999 House Appropriations Committee Hearing. In the Hearing,
    Congressman DeLay referred to an EPA document entitled ``Electricity
    Restructuring and the Environment: What Authority Does EPA Have and
    What Does It Need.'' Congressman DeLay read several sentences-from the
    document stating that EPA currently has authority under the Clean Air
    Act (Act) to establish pollution control requirements for four
    pollutants of concern from electric power generation: nitrogen oxides
    (NOX), sulfur dioxide (SO2), carbon dioxide
    (CO2), and mercury. He also asked whether you agreed with
    the statement, and in particular, whether you thought that the Clean
    Air Act allows EPA to regulate emissions of carbon dioxide. You agreed
    with the statement that the Clean Air Act grants EPA broad authority to
    address certain pollutants, including those listed, and agreed to
    Congressman DeLay's request for a legal opinion on this point. This
    opinion discusses EPA's authority to address all four of the pollutants
    at issue in the colloquy, and in particular, CO2, which was
    the subject of Congressman DeLay's specific question.
        The question of EPA's legal authority arose initially in the
    context of potential legislation addressing the restructuring of the
    utility industry Electric power generation is a significant source of
    air pollution, including the four pollutants addressed here. On March
    25, 1998, the Administration announced a Comprehensive Electricity
    Competition Plan (Plan) to produce lower prices, a cleaner environment,
    increased innovation and government savings. This Plan includes a
    proposal to clarify EPA's authority regarding the establishment of a
    cost-effective interstate cap and trading system for NOX
    reductions addressing the regional transport contributions needed to
    attain and maintain the primary National Ambient Air Quality Standards
    (NAAQS) for ozone. The Plan does not ask Congress for authority to
    establish a cap and trading system for emissions of carbon dioxide from
    utilities as part of the Administration's electricity restructuring
    proposal. The President has called for cap-and-trade authority for
    greenhouse gases to be in place by 2008, and the Plan states that the
    Administration will consider in consultation with Congress the
    legislative vehicle most appropriate for that purpose.
        As this opinion discusses, the Clean Air Act provides EPA authority
    to address air pollution, and a number of specific provisions of the
    Act are potentially applicable to control these pollutants from
    electric power generation. However, as was made clear in the document
    from which Congressman DeLay quoted, these potentially applicable
    provisions do not easily lend themselves to establishing market-based
    national or regional cap-and-trade programs, which the Administration
    favors for addressing these kinds of pollution problems.
                          ii. clean air act authority
        The Clean Air Act provides that EPA may regulate a substance if it
    is (a) an ``air pollutant,'' and (b) the Administrator makes certain
    findings regarding such pollutant (usually related to danger to public
    health, welfare, or the environment) under one or more of the Act's
    regulatory provisions.
    A. Definition of Air Pollutant
        Each of the four substances of concern as emitted from electric
    power generating units falls within the definition of ``air pollutant''
    under section 302(g). Section 302(g) defines ``air pollutant'' as:

              any air pollution agent or combination of such agents,
            including any physical, chemical, biological, [or] radioactive
            * * * substance or matter which is emitted into or otherwise
            enters the ambient air. Such term includes any precursors to
            the formation of any air pollutant, to the extent that the
            Admmistrator has identified such precursor or precursors for
            the particular purpose for which the term ``air pollutant'' is
            used.

        This broad definition states that ``air pollutant'' includes any
    physical chemical, biological, or radioactive substance or matter that
    is emitted into or otherwise enters the ambient air. SO2,
    NOX, CO2 and mercury from electric power
    generation are each a ``physical [and] chemical * * * substance which
    is emitted into * * * the ambient air,'' and hence, each is an air
    pollutant within the meaning of the Clean Air Act.\1\
    ---------------------------------------------------------------------------
        \1\ See also section 103(g) of the Act (authorizes EPA to conduct a
    basic research and technology program to develop and demonstrate
    nonregulatory strategies and technologies for air pollution prevention,
    which shall include among the program elements ``[i]mprovements in
    nonregulatory strategies and technologies for preventing or reducing
    multiple air pollutants, including sulfur oxides, nitrogen oxides,
    heavy metals, PM-10 (particulate matter), carbon monoxide, and carbon
    dioxide, from stationary sources, including fossil fuel power
    plants.'').
    ---------------------------------------------------------------------------
        A substance can be an air pollutant even though it is naturally
    present in air in some quantities. Indeed, many of the pollutants that
    EPA currently regulates are naturally present in the air in some
    quantity and are emitted from natural as well as anthropogenic sources.
    For example, SO2 is emitted from geothermal sources;
    volatile organic compounds (precursors to ozone) are emitted by
    vegetation; and particulate matter and NOX are formed from
    natural sources through natural processes, such as naturally occurring
    forest fires. Some substances regulated under the Act as hazardous air
    pollutants are actually necessary in trace quantities for human life,
    but are toxic at higher levels or through other routes of exposure.
    Manganese and selenium are two examples of such pollutants. EPA
    regulates a number of naturally occurring substances as air pollutants,
    however, because human activities have increased the quantities present
    in the air to levels that are harmful to public health, welfare, or the
    environment.
    B. EPA Authority to Regulate Air Pollutants
        EPA's regulatory authority extends to air pollutants, which, as
    discussed above, are defined broadly under the Act and include
    SO2, NOX, CO2, and mercury emitted
    into the ambient air. Such a general statement of authority is distinct
    from an EPA determination that a particular air pollutant meets the
    specific criteria for EPA action under a particular provision of the
    Act. A number of specific provisions of the Act are potentially
    applicable to these pollutants emitted from electric power
    generation.\2\ Many of these specific provisions for EPA action share a
    common feature in that the exercise of EPA's authority to regulate air
    pollutants is linked to a determination by the Administrator regarding
    the air pollutants' actual or potential harmful effects on public
    health, welfare or the environment. See, e.g., sections 108, 109,
    111(b), 112, and 115. See also sections 202(a), 211(c), 231, 612, and
    615. The legislative history of the 1977 Clean Air Act Amendments
    provides extensive discussion of Congress' purposes in adopting the
    language used throughout the Act referencing a reasonable anticipation
    that a substance endangers public health or welfare. One of these
    purposes was ``[t]o emphasize the preventative or precautionary nature
    of the act, i.e. to assure that regulatory action can effectively
    prevent harm before it occurs; to emphasize the predominant value of
    protection of public health.'' H.R. Rep. No. 95-294, 95th Cong., 1st
    Sess, at 49 (Report of the Committee on Interstate and Foreign
    Commerce). Another purpose was ``[t]o assure that the health of
    susceptible individuals, as well as healthy adults, will be encompassed
    in the term `public health,' * * * '' Id. at 50. ``Welfare'' is defined
    in section 302(h) of the Act, which states:
    ---------------------------------------------------------------------------
        \2\ See e.g., section 108 (directs Administrator to list and issue
    air quality criteria for each air pollutant that causes or contributes
    to air pollution that may reasonably be anticipated to endanger public
    health or welfare and that is present in the ambient air due to
    emissions from numerous or diverse mobile or stationary sources);
    section 109 (directs Administrator to promulgate national primary and
    secondary ambient air quality standards for each air pollutant for
    which there are air quality criteria, to be set at levels requisite to
    protect the public health with an adequate margin of safety (primary
    standards) and to protect welfare (secondary standards)); section 110
    (requires states to submit state implementation plans (SIP's) to meet
    standards); section 111(b) (requires Administrator to list, and set
    Federal performance standards for new sources in, categories of
    stationary sources that cause or contribute significantly to air
    pollution that may reasonably be anticipated to endanger public health
    or welfare); section 111(d) (states must establish performance
    standards for existing sources for any air pollutant (except criteria
    pollutants or hazardous air pollutants) that would be subject to a
    performance standard if the source were a new source); section 112(b)
    (lists 188 hazardous air pollutants and authorizes Administrator to add
    pollutants to the list that may present a threat of adverse human
    health effects or adverse environmental effects); section 112(d)
    (requires Administrator to set emissions standards for each category or
    subcategory of major and area sources that the Administrator has listed
    pursuant to section 112(c)); section 112(n)(l)(A) (requires
    Administrator to study and report to Congress on the public health
    hazards reasonably anticipated from emissions of listed hazardous air
    pollutants from electric utility steam generating units, and requires
    regulation if appropriate and necessary); section 115 (Administrator
    may require state action to control certain air pollution if, on the
    basis of certain reports, she has reason to believe that any air
    pollutant emitted in the United States causes or contributes to air
    pollution that may be reasonably anticipated to endanger public health
    or welfare in a foreign country that has given the United States
    reciprocal rights regarding air pollution control); Title IV
    (establishes cap-and-trade system for control of SO2 from
    electric power generation facilities and provides for certain controls
    on NOX).
    ---------------------------------------------------------------------------
              [a]ll language referring to effects on welfare includes, but
            is not limited to, effects on soils, water, crops, vegetation,
            man-made materials, animals, wildlife, weather, visibility, and
            climate, damage to and deterioration of property, and hazards
            to transportation, as well as effects on economic values and on
            personal comfort and well-being, whether caused by
            transformation, conversion, or combination with other air
            pollutants.\3\
    ---------------------------------------------------------------------------
        \3\ The language in section 302(h) listing specific potential
    effects on welfare, including the references to weather and climate,
    dates back to the 1970 version of the Clean Air Act.
    ---------------------------------------------------------------------------
        EPA has already regulated SO2, NOX and
    mercury based on determinations by EPA or Congress that these
    substances have negative effects on public health, welfare, or the
    environment. While CO2, as an air pollutant, is within EPA's
    scope of authority to regulate, the Administrator has not yet
    determined that CO2 meets the criteria for regulation under
    one or more provisions of the Act. Specific regulatory criteria under
    various provisions of the Act could be met if the Administrator
    determined under one or more of those provisions that CO2
    emissions are reasonably anticipated to cause or contribute to adverse
    effects on public health, welfare, or the environment.
    C. EPA Authority to Implement an Emissions Cap-and-Trade Approach
        The specific provisions of the Clean Air Act that are potentially
    applicable to control emissions of the pollutants discussed here can
    largely be categorized as provisions relating to either state programs
    for pollution control under Title I (e.g., sections 107, 108, 109, 110,
    115, 126, and Part D of Title I), or national regulation of stationary
    sources through technology-based standards (e.g., sections 111 and
    112). None of these provisions easily lends itself to establishing
    market-based national or regional emissions cap-and-trade programs.\4\
    ---------------------------------------------------------------------------
        \4\ Title IV of the Act provides explicit authority for a cap and
    trade program for SO2 emissions from electric power
    generating sources.
    ---------------------------------------------------------------------------
        The Clean Air Act provisions relating to state programs do not
    authorize EPA to require states to control air pollution through
    economically efficient cap-and-trade programs and do not provide full
    authority for EPA itself to impose such programs. Under certain
    provisions in Title I, such as section 110, EPA may facilitate regional
    approaches to pollution control and encourage states to cooperate in a
    regional, cost-effective emissions cap-and-trade approach (see Notice
    of Proposed Rulemaking: Finding of Significant Contribution and
    Rulemaking for Certain States in the Ozone Transport Assessment Group
    Region for Purposes of Reducing Regional Transport of Ozone, 62 F.R.
    60318 (Nov. 7, 1997)). EPA does not have authority under Title I to
    require states to use such measures, however, because the courts have
    held that EPA cannot mandate specific emission control measures for
    states to use in meeting the general provisions for attaining ambient
    air quality standards. See Commonwealth of Virginia v. EPA, 108 F.3d
    1397 (D.C. Cir. 1997). Under certain limited circumstances where states
    fail to carry out their responsibilities under Title I of the Clean Air
    Act, EPA has authority to take certain actions, which might include
    establishing a cap-and-trade program.\5\ Yet EPA's ability to invoke
    these provisions for Federal action depends on the actions or inactions
    of the states.
    ---------------------------------------------------------------------------
        \5\ For example, section 110(c) requires EPA to promulgate a
    Federal implementation plan where EPA finds that a state has failed to
    make a required submission of a SIP or that the SIP or SIP revision
    does not satisfy certain minimum criteria, or EPA disapproves the SIP
    submission in whole or in part. In addition, section 126 provides that
    a State or political subdivision may petition the Administrator for
    certain findings regarding emissions from certain stationary sources in
    another state. If the Administrator grants the petition, she may
    establish control requirements applicable to sources that were the
    subject of the petition.
    ---------------------------------------------------------------------------
        Technology-based standards under the Act directed to stationary
    sources have been interpreted by EPA not to allow compliance through
    intersource cap-and-trade approaches. The Clean Air Act provisions for
    national technology-based standards under sections 111 and 112 require
    EPA to promulgate regulations to control emissions of air pollutants
    from stationary sources. To maximize the opportunity for trading of
    emissions within a source, EPA has defined the term ``stationary
    source'' expansively, such that a large facility can be considered a
    ``source.'' Yet EPA has never gone so far as to define as a source a
    group of facilities that are not geographically connected, and EPA has
    long held the view that trading across plant boundaries is
    impermissible under sections 111 and 112. See, e.g., National Emission
    Standards for Hazardous Air Pollutants for Source Categories; Organic
    Hazardous Air Pollutants from the Synthetic Organic Chemical
    Manufacturing Industry, 59 Fed. Reg. 19402 at 19425-26 (April 22, 1994)
                                iii. conclusion
        EPA's regulatory authority under the Clean Air Act extends to air
    pollutants, which, as discussed above, are defined broadly under the
    Act and include SO2, NOX, CO2, and
    mercury emitted into the ambient air. EPA has in fact already regulated
    each of these substances under the Act, with the exception of
    CO2. While CO2 emissions are within the scope of
    EPA's authority to regulate, the Administrator has made no
    determination to date to exercise that authority under the specific
    criteria provided under any provision of the Act.
        With the exception of the SO2 provisions focused on acid
    rain, the authorities potentially available for controlling these
    pollutants from electric power generating sources do not easily lend
    themselves to establishing market-based national or regional cap-and-
    trade programs, which the Administration favors for addressing these
    kinds of pollution problems. Under certain limited circumstances, where
    states fail to carry out their responsibilities under Title I of the
    Act, EPA has authority to take certain actions, which might include
    establishing a cap-and-trade program. However, such authority depends
    on the actions or inactions of the states
                   authority to cap co2 emissions
        Question. Will you pledge to the Committee that EPA will not seek
    any Administration approval to use any existing authority it thinks it
    might have to cap carbon dioxide emissions? If not, please explain, in
    full and complete technical and legal detail, why you cannot make this
    pledge.
        Answer. The EPA has no plans to regulate emissions of carbon
    dioxide under existing legal authority. EPA's General Counsel noted in
    an April 10, 1998, legal opinion that the agency's current legal
    authority does not easily lend itself to establishing a broad cap-and-
    trade program of this kind.
                   co2 emissions state regulations
        Question. Are you aware of any EPA efforts to discuss with state
    governments or urge state governments to regulate, or in some way
    control, CO2 emissions? If so, what is being discussed, or
    proposed, and what kind of responses are you getting from the states?
    What line item in Congressional appropriations to EPA is enabling EPA
    to fund this activity?
        Answer. EPA does not have any efforts to urge state governments to
    regulate CO2 emissions. EPA does, however, have several
    ongoing activities with state governments to assist them in voluntarily
    reducing greenhouse gas emissions consistent with the 1992 Framework
    Convention on Climate Change. Historically, funds have been
    appropriated to EPA for Climate Change Action Plan activities through
    the Abatement, Control and Compliance and the Environmental Programs
    and Management Appropriations.
      --EPA has supported voluntary development of climate change action
            plans for states through the State and Local Outreach Program,
            one of the President's Climate Change Action Plan voluntary
            initiatives since 1993. EPA supports these efforts as a means
            to increase awareness of climate change and build capacity at
            the state level. To date, nine states, out of twenty-four
            participating, have completed climate change action plans.
            These efforts are consistent with our general international
            obligations under the United Nations Framework Convention on
            Climate Change (FCCC), which the Senate ratified, to work
            toward reducing greenhouse gas emissions.
      --In July 1997, the U.S. EPA began an effort that may provide states
            with increased flexibility for meeting the National Ambient Air
            Quality Standards at reduced compliance costs, while reducing
            emissions of greenhouse gases. EPA has organized a workgroup to
            identify and evaluate ways in which accelerated adoption of
            energy efficiency and renewable energy in the residential,
            commercial and industrial sectors can reduce emissions of
            criteria pollutants such as NOX and particulates
            while reducing the amount of carbon dioxide released due to
            production and use of energy. The workgroup comprises air and
            energy program representatives from each of six states
            (California, Indiana, Massachusetts, Montana, New York and
            Wisconsin) as well as the National Association of State Energy
            Officials (NASEO) and the State and Territorial Air Pollution
            Program Administrators (STAPPA).
      --Many of the climate partnership programs, even those that don't
            focus on states, work with state governments to help them
            voluntarily control their own energy usage and greenhouse gas
            emissions through specific projects. These programs work with
            the states to achieve the same objectives as with other
            partners--profitable investments in technologies that also
            reduce emissions. The states' responses to these programs have
            been positive. For example, the Energy Star Buildings and Green
            Lights program has partnerships with more than 20 states. These
            states have already saved over $50 million on their energy
            bills while eliminating more than 800 tons of nitrogen oxides
            and more than 250,000 tons of carbon dioxide.
                                 kyoto protocol
        Question. Are you aware of any EPA sponsored or co-sponsored public
    events, conferences, seminars, workshops, or town hall type meetings
    that include agendas or agenda items that encourage discussion of
    global climate change issues? If so, under what legal authority are
    these events being held, and what line item in the Congressional
    appropriations to EPA is enabling EPA to participate in, or conduct
    this activity? Please submit a list of all of these types of public
    events, and include copies of the agendas, the type of notice used to
    inform the public or portions of the public, and any list of speakers
    with their titles and credentials. Also include in that response an
    explanation of efforts made to make those events open and the speaker
    list balanced in point of view?
        Answer. EPA is conducting climate change outreach activities in
    fulfillment of its commitment under the 1992 Framework Convention on
    Climate Change (Rio Treaty), as well as our broader obligation to
    educate the public about the environment. These activities are
    authorized under section 103 (a), (b) and (g) of the Clean Air Act,
    section 102(2)(F) of the National Environmental Policy Act, and section
    1103 of the Global Climate Protection Act of 1987. These efforts are
    designed to educate the American public about the science, economics,
    diplomacy, and technology regarding global warming. These efforts have
    been under way since fiscal year 1996 and are consistent with U.S.
    obligations under the 1992 Framework Convention on Climate Change, as
    ratified by the Senate.
        Article 6 of the Convention specifically states the following:
        In carrying out their commitments under Article 4, paragraph 1(i),
    the Parties shall:
        (a) Promote and facilitate at the national and, as appropriate,
    subregional and regional levels, and in accordance with national laws
    and regulations, and within their respective capacities:
      --(i) the development and implementation of educational and public
            awareness programs on climate change and its effects;
      --(ii) public access to information on climate change and its
            effects;
      --(iii) public participation in addressing climate change and its
            effects and developing adequate responses.
        These activities are focused on providing information on the
    science of global climate change and engaging in a public dialogue on
    climate change issues. The specific objectives of our conferences are:
    (1) to inform the public and policy makers on the science of global
    warming and policy issues affecting global climate change; (2) to
    provide an opportunity for stakeholders, including state and local
    governments, business, industry, public health agencies, community
    organizations, academic and scientific institutions, and other
    concerned constituents to learn about the state of global climate
    change science; (3) to provide a balanced perspective on the potential
    risks of climate change--both economic and environmental; (4) to
    identify strategies to reduce the risks associated with climate change;
    and (5) to identify innovative opportunities for reducing greenhouse
    gas emissions.
        EPA regional conferences are open to the public (see attached
    announcements) and our speakers represent both sides of the climate
    change debate. Attached, for your review, are the conference agendas
    which include a list of speakers and their credentials.
                     kyoto protocol: john heinz foundation
        Question. Are you aware of any efforts on the part of the John
    Heinz Foundation (or Center) to design one or more legislative or
    regulatory programs that would enable or assist the United States to
    achieve compliance with the Kyoto Protocol? Is EPA involved in any way
    with this project--either by detailing staff to assist the Foundation
    (or Center) with this task, or by providing funds either directly or
    indirectly through grants or other methods of financial support, or by
    providing guidance through technical or legal advice?
        Answer: The Heinz Center for Science, Economics and the Environment
    is conducting an effort to examine the design issues associated with
    alternative emission trading programs. The President has proposed a
    domestic emissions trading system to begin by 2068, after a decade of
    experience in reducing emissions. Efforts such as the Heinz Center's
    contribute to an informed public debate. The project is receiving
    funding from EPA, the Andrew W. Mellon Foundation, and the Vira I.
    Heinz Endowment. The EPA funding is in the form of a cooperative
    agreement. No EPA staff have been detailed to the Heinz Center to
    support this effort. However, two EPA staff serve on a 15 member panel
    that meets periodically to provide technical input on the Heinz Center
    Effort. Other panel members are from academic institutions, private
    industry, environmental groups, and the Department of Energy. No legal
    advice is provided by EPA.
                    kyoto protocol: proposal for legislation
        Question. Has EPA been asked by any Department, agency of the
    Executive Branch, interagency body, or any other person or entity
    within the Administration to develop potential proposals for
    legislation or regulations that would be intended to facilitate
    compliance by the United States with the Kyoto Protocol if the Protocol
    ever were to become binding on this nation? If so, please tell me which
    of the entities mentioned above made such a request and when the
    request was made.
        Answer. No, EPA has not been asked to develop any such proposals.
                  regional haze: visibility monitoring network
        Question. How adequate is the existing monitoring network for
    measuring visibility in all class I areas?
        Answer. There are currently 58 class I areas that have monitoring
    to measure PM-2.5 concentrations for visual air quality and other
    related data. Of the 156 class I areas, 98 do not currently have any
    monitoring. When the planned expansion is complete, EPA expects
    coverage to be generally representative of all mandatory class I
    Federal areas. It is expected that in several locations, one monitoring
    site can represent regional conditions in more than one class I area
    due to the close proximity of some of the class I areas. EPA is working
    with the States and Federal land managers to better define these
    ``representative site'' relationships.
        Question. How much is EPA requesting for visibility monitoring in
    fiscal year 1999?
        Answer. EPA has identified the need for $3.14 million as part of
    section 103 State grant dollars. This is in addition to $1.25 million
    from section 105 State grants. The total is $4.39 million.
        Question. How much total Federal funding will be required to ensure
    that the States are not left to pick up the tab for visibility
    monitoring?
        Answer. Seventy-eight new visibility sites in or near Federal class
    I areas are planned for deployment in 1998 and 1999. The estimated
    costs are $2.47 million for 1998 ($1.22 million to be funded with State
    section 103 dollars), and $4.39 million for 1999 (103 and 105 dollars).
        Starting in the year 2000, approximately $3.6 million per year will
    be needed for the expanded network of 108 visibility sites. The States
    would not be expected to provide any funding for visibility monitoring
    in fiscal year 1999.
        Question. Isn't there some way that EPA can coordinate these
    regulations and their time lines so as to integrate the monitoring
    programs?
        Answer. Section 169B of the Clean Air Act calls for State to submit
    an Implementation Plan (SIP) on year from the promulgation of the
    regional haze regulation. Recent legislation has changed that one-year
    SIP submittal requirement to a varying schedule which is tied to
    designations of areas as attainment or unclassifiable for PM-2.5 or to
    plan revisions needed to address nonattainment areas. In the proposal
    EPA had established a schedule of commitments under the one-year SIP
    requirement which envisioned States developing control strategies in
    coordination with plan requirements for PM-2.5. The recent legislation
    is intended to authorize EPA to directly coordinate these SIP
    requirements. As with the original proposal, EPA's intent continues to
    be one of coordinating regional haze rule SIP control strategies dates
    with those for PM-2.5 implementation.
                       regional haze: visibility research
        Question. In 1990, Congress required EPA to undertake research
    before it conducted a rulemaking to impose regional haze requirements
    on the country. Congress authorized $40 million for EPA's visibility
    research, but EPA's budget for visibility research was negligible. The
    Clean Air Act required the Administrator to report on its research
    findings and assessment results. After a court ordered EPA to produce
    its report, didn't EPA prepare a paper on visibility research?
        Answer. Yes, the Environmental Protection Agency issued the
    ``Interim Findings on the Status of Visibility Research'' report (EPA/
    600/R-95/021) in February 1995.
        Question. How much money has EPA spent on visibility research since
    1990, and what has EPA learned from that research?
        Answer. The Environmental Protection Agency (EPA) has spent
    approximately $18.5 million on collection of visibility data, analysis
    of that data, and other related visibility research. This amount does
    not include the significant resources spent development new regional
    modeling platforms capability of integrating ozone, fine particulate
    matter and visibility strategy assessment. The major of the
    approximately $18.5 million directly spent on visibility has been for
    monitoring in mandatory Class I Federal areas, and in some eastern
    areas to provide a network of visibility data. Other monies were
    expended to assist the Grand Canyon Visibility Transport Commission
    directly analyze visibility protection strategies. In addition, the EPA
    has spent approximately $6.1 million on development of regional
    particulate models.
        The basic results of what EPA has learned is presented in the table
    below:
    [GRAPHIC] [TIFF OMITTED] TVA.020

                   regional haze: visibility monitoring tools
        Question. Has EPA published the visibility monitoring, modeling,
    and assessment tools as required by section 169A(a)(3) for the regional
    haze rule?
        Answer. Section 169A(3) called for the Environmental Protection
    Agency (EPA) to complete within 18 months of enactment of section 169A
    a study and report to Congress describing available methods for
    visibility monitoring, modeling, and assessment of strategies to make
    progress toward the national goal of remedying existing and preventing
    future visibility impairment. Section 169A was enacted as part of the
    1977 Amendments. This report was issued by EPA in October 1979 and is
    entitled ``Protecting Visibility: An EPA Report to Congress'' (EPA-450/
    5-79-008).
        The availability of technical methods for visibility monitoring,
    modeling, and strategy assessment is also discussed in the National
    Academy of Sciences 1993 report entitled ``Protecting Visibility in
    National Parks and Wilderness Areas.'' One of the important findings in
    this report is that: ``Current scientific knowledge is adequate and
    control technologies are available for taking regulatory action to
    improve and protect visibility.'' Another important conclusion is the
    following:

              Visibility impairment can be attributed to emission sources
            on a regional scale through the use of several kinds of models.
            In general, the best approach for evaluating emission sources
            is a nested progression from simpler and more direct models to
            more complex and detailed methods. The simpler models are
            available today and could be used as the basis for designing
            regional visibility programs; the more complex models could be
            used to refine those programs over time.
                    visibility rule: technology requirements
        Question. The proposed visibility rule contains ``presumptive''
    targets and technology requirements that the States have the burden of
    overcoming. Doesn't this rule Federalize a program that Congress asked
    the States to implement?
        Answer. The proposed rule would not dictate to States either a
    Federal standard or a set of control requirements for any particular
    set of sources. Rather, it proposed a presumptive target which States
    were called on to evaluate in light of their particular visibility
    circumstances, to establish alternative targets if appropriate, and to
    decide on the appropriate mix of measures which would be needed to meet
    those targets. As such, the program sought to preserve State autonomy
    while addressing the specific mandates established by sections 169A and
    169B. The Environmental Protection Agency received comments during the
    public comment period concerning the appropriate degree of flexibility
    that should be accorded under the rule and is currently considering and
    preparing its responses to those comments.
                   regional haze: unfunded mandate on states
        Question. Now that EPA has asked the States to rebut the Federal
    presumptions, without providing the tools to generate the data needed
    to rebut those presumptions, States will have to incur a significant
    expense if they want to adopt alternative approaches that better suit
    their needs. Don't the presumptions in the regional haze rule amount to
    a new and unnecessary unfunded mandate on States?
        Answer. The Environmental Protection Agency (EPA) does not believe
    the presumptions in the proposed rule amount to an unfunded mandate for
    a number of reasons. First, EPA will continue to provide Federal funds
    to States under authority of the Clean Air Act to be used for
    implementation of air quality programs, including the regional haze
    program. In addition, EPA expects that funding for the PM and regional
    haze programs can be efficiently used since certain planning activities
    for implementation of the PM-2.5 and regional haze programs can be
    integrated, as recommended by the Clean Air Act Advisory Committee and
    its Subcommittee on Ozone, PM, and Regional Haze. Second, EPA is
    funding the development of important technical information, tools, and
    guidance, such as monitoring network expansions and the ability to
    model particulate matter and regional haze, needed by States to analyze
    alternate targets. Third, the proposed rule would provide flexibility
    to the States in adopting presumptive versus alternate targets, and it
    allows the states to take into account several criteria, including
    costs, in setting any alternate target. EPA intends to provide further
    guidance to the States in conducting such analyses.
                    visibility: revision of 1993 assessment
        Question. In 1992 the EPA was supposed to project the visibility
    improvements in Class I areas that would result from the implementation
    of the 1990 amendments. Every five years thereafter, the Act required
    EPA to assess the actual progress made on the visual air quality of the
    Class I areas. Has EPA revised its 1993 assessment of visibility
    improvement resulting from other sections of the Clean Air Act?
        Answer. The Environmental Protection Agency fulfilled its initial
    obligations under section 169B(b) in October 1993 by publishing a
    report entitled ``Effects of the 1990 Clean Air Act Amendments on
    Visibility in class I Areas: An EPA Report to Congress.'' The
    subsequent reports required by section 169B do not call for a revision
    to this broader assessment, but rather a review of actual progress and
    improvements in visibility.
        Question. Did EPA's 1993 assessment take the recent NAAQS revisions
    into account?
        Answer. No; at the time the 1993 report was prepared, the
    Environmental Protection Agency did not have information about the
    recent revisions to the NAAQS. However, the effects of implementing the
    standards were taken into account in the draft regulatory impact
    analysis prepared for the proposed regional haze rule.
        Question. Shouldn't we have the latest data on the progress being
    made by the rest of the Act before we create a new visibility
    regulatory program?
        Answer. The Environmental Protection Agency (EPA) believes that
    there is ample scientific evidence at this time to justify fulfilling
    its commitment made in 1980 to develop a regional haze program. The EPA
    will be encouraging the development of regional planning organizations
    that will take an integrated approach to ozone, PM-fine, and regional
    haze planning. Accordingly, no regional haze planning effort should
    take place that does not fully consider the impacts of all other Clean
    Air Act programs before making a ``reasonable progress'' decision for
    regional haze.
        Question. How long would it take and how much would it cost to
    update this research?
        Answer. The Environmental Protection Agency has not prepared an
    estimate of the cost or time required to prepare such an update.
    However, because States would be permitted and encouraged under the
    proposed rule to coordinate their planning and control strategies with
    the requirements of other programs, such as the PM2.5 standards and
    acid rain control programs, EPA does not believe that such an update
    would serve any useful purpose.
                      regional haze: transport commission
        Question. Should EPA establish Transport Commissions in other
    regions of the country before those regions have to implement any
    regional haze rules?
        Answer. No. As set forth in section 169B(d) of the CAA, the duties
    of a visibility transport commission are to assess available
    information regarding visibility and to issue a report to EPA
    containing recommendations addressing: (1) the establishment of clean
    air corridors, (2) the imposition of New Source Review requirements for
    new and modified major sources in such corridors, and (3) the
    promulgation of regulations to address long-term strategies for
    addressing regional haze. If a Commission is established, there is no
    requirement that the result be a long-term regional haze strategy for
    the region. The EPA believes that integrated efforts by regional
    planning bodies are needed to develop the long-range strategies.
    However, because there is a critical need for States to coordinate
    efforts to address long-range transport of PM 2.5 and ozone precursors,
    as well as visibility impairment, EPA does not believe that visibility
    transport commissions are the best approach to achieving this regional
    coordination.
        Question. Otherwise, aren't we putting the cart before the horse?
        Answer. No; as explained above, the required statutory duties of a
    visibility transport commission under section 169B(d) are limited and
    do not include a requirement to develop a long-term strategy to address
    regional haze. EPA does not believe regional transport commissions are
    either a necessary or appropriate means to address the need for
    integrated regional planning to meet visibility, PM 2.5 and ozone
    planning and implementation goals. Nonetheless, EPA continues to
    encourage and support the concept of multi-state planning organizations
    to carry out needed strategy planning and assessments.
                        regional haze: inadequate record
        Question. Without the statutorily mandated research, models, and
    studies, and without the reports from other visibility transport
    commissions, doesn't EPA have an inadequate record on which to build
    its proposed regional haze rules? If you disagree with that assessment,
    please provide a detailed explanation.
        Answer. The Environmental Protection Agency (EPA) believes it has
    an adequate record on which to base the proposed regional haze rule.
    The EPA has issued the reports required in section 169B on interim
    research findings and the estimated effects of the 1990 Amendments on
    Class I areas. The EPA also established the Grand Canyon Visibility
    Transport Commission and considered their recommendations in the
    development of the proposed rule. The EPA has worked cooperatively with
    the States and Federal land managers since 1988 to conduct monitoring
    in class I areas to characterize current visibility conditions, trends,
    and the principal PM-2.5 components leading to haze formation in all
    regions of the country. Scientific studies and modeling have shown that
    fine particulate matter, the principal cause of visibility impairment,
    can be transported for several days over hundreds of kilometers. In
    addition, the National Academy of Sciences 1993 report entitled
    ``Protecting Visibility in National Parks and Wilderness Areas''
    concluded that ``Current scientific knowledge is adequate and control
    technologies are available for taking regulatory action to improve and
    protect visibility.'' Thus, EPA believes there is sufficient evidence
    supporting the Agency's decision to move forward with the regional haze
    program at this time.
                        bart: unfunded mandate on states
        Question. If States have to undertake their own research in order
    to apply for alternative targets or alternatives to BART (Best
    Available Retrofit Technology) controls, doesn't this rule and the lack
    of available data impose a huge unfunded mandate on States? If you
    disagree, please provide a detailed explanation.
        Answer. The Environmental Protection Agency (EPA) does not believe
    the proposed rule imposes an unfunded mandate for a number of reasons.
    First, EPA will continue to provide Federal funds to States under
    authority of the Clean Air Act to be used for implementation of air
    quality programs, including the regional haze program. In addition, EPA
    expects that funding for the PM and regional haze programs can be
    efficiently used since certain planning activities for implementation
    of the PM-2.5 and regional haze programs can be integrated, as
    recommended by the FACA Subcommittee on Ozone, PM, and Regional Haze.
    Second, EPA is funding the development of important technical
    information, tools, and guidance, such as monitoring network expansions
    and the ability to model particulate matter and regional haze, needed
    by States to analyze alternate targets. Third, the proposed rule
    provides flexibility to the States in adopting presumptive versus
    alternate targets, and it allows the states to take into account
    several criteria, including costs, in setting any alternate target or
    alternate levels of BART controls. The EPA intends to provide guidance
    to the States in conducting such analyses.
                     alternative targets: costs for states
        Question. How much money will states need to complete an adequate
    record to establish alternative targets or controls?
        Answer. The cost of analyses to establish reasonable progress goals
    will depend on a number of factors, including the outcome of the final
    rulemaking for regional haze, the degree of impairment of visibility in
    each area, and the extent to which other programs are expected to
    provide significant visibility benefits. Thus it is not possible to
    provide an estimate of such costs at this time.
                regional haze: emissions from federal facilities
        Question. Under the proposed Regional Haze rule, would emissions
    from Federal facilities--such as a utility power plant or a boiler at a
    military base--be subject to State regulation to the same extent as
    emissions from private sector facilities?
        Answer. As required by section 118 of the Act, if a State air
    quality regulation affects a given type of source within its
    jurisdiction, Federal facilities having that type of source must comply
    with the State regulations to the same extent as any nongovernmental
    entity. Emissions from Federal facilities such as utility power plants
    fall within the scope of this requirement.
        Question. If not, please provide a detailed explanation why not. If
    so, does the same hold true for Federal land managers?
        Answer. The Environmental Protection Agency believes that Federal
    Land Managers having emission sources of the type that are covered by
    State air quality regulations must comply to the same extent as private
    sector entities.
             regional haze: regulators for park and forest services
        Question. Will the Park Service and the Forest Service be subject
    to regulation to the same extent as States and the private sector for
    activities like road construction and proscribed burning?
        Answer. If the State develops regulations that impose requirements
    for road construction and prescribed burning that all sources in a
    given area of the State must comply with, the Environmental Protection
    Agency believes that the Park Service and the Forest Service would be
    required by section 118 to comply with those regulations to the same
    extent as nongovernmental entities.
                    visibility: natural vs man-made sources
        Question. How does EPA propose to distinguish ``natural'' sources
    of visibility impairment from ``man-made'' sources?
        Answer. Some effort has already distinguished between natural and
    man-made sources, e.g., the modeling inventories created for the Ozone
    Transport Assessment Group considered biogenic emissions of ozone
    precursors. Since the Clean Air Act does not require that the
    Environmental Protection Agency (EPA) regulations be designed to
    eliminate all visibility impairment, but only that which is ``man-
    made,'' the impacts of such emissions on visibility will be used to
    adjust the extent of improvement in visibility that would be needed to
    meet reasonable progress goals and, ultimately, to meet the CAA goal of
    no man-made impairment. The EPA recognizes that there are technical
    issues concerning some types of sources, e.g., naturally-occurring
    wildfires and prescribed fires to reduce their frequency and severity,
    which will require further efforts. The EPA is working with other
    Federal agencies to develop methods and policies for distinguishing
    between these types of sources in the calculation of the needed degree
    of improvement.
                    visibility: regulation of private sector
        Question. In late April 1998, Boise, Idaho was blanketed by smoke
    from a Forest Service prescribed burn. The proposed rule suggests that
    EPA will assess the average visibility of the 20 percent most impaired
    days, regardless of the source of the impairment. How does the proposed
    rule ensure that States will not have to over-regulate private sector
    sources to make up for an unusually bad fire season?
        Answer. It is important to note that the Environmental Protection
    Agency's (EPA's) proposed rule calls for the establishment of
    reasonable progress targets which call for improvement over a period of
    10-15 years. Thus, while air quality impacts during one or more years
    during that period may impact the calculations of progress, the
    determination is to be based on what is achieved over the long-term
    period, not annually. The EPA believes that this significantly reduces
    the likelihood that a bad fire season could result in failure to
    achieve reasonable progress goals. Additionally, the proposed rule
    calls for States to evaluate the nature of visibility impairment and to
    develop reasonable progress targets and control strategies which are
    responsive to the nature and extent of the problem. These targets and
    strategies must address the natural role of fire for the region. Thus
    private sector stationary sources will not be asked to compensate for
    fire emissions from a bad fire season. If impairment is principally
    caused by a particular type of source or sources, it is reasonable to
    expect States to focus their attention on actions to reduce the impacts
    of those sources.
                          regional haze: moa for idaho
        Question. If Idaho had a memorandum of agreement with the Federal
    land managers, what recourse would Idaho have against the Federal
    Government for fires that impair visibility?
        Answer. First, Federal Land Managers have entered into memoranda of
    understanding with a number of State air quality planning agencies to
    demonstrate and carry out their commitment to working with States to
    improve air quality. These agreements are intended to minimize the
    instances in which States would need to seek such recourse. Whether or
    not the State of Idaho had a memorandum of agreement with Federal land
    managers, however, section 118(a) of the Clean Air Act (Act) generally
    requires Federal agencies to comply with Idaho air quality control laws
    in the same manner as those laws apply to nongovernmental entities.
    Moreover, sections 118(a) and 304 of the Act permit suit against a
    Federal Agency for injunctive relief to remedy violations of air
    quality control laws.
        Question. Can the Federal Government waive any immunity (if any
    exists) from state enforcement measures on visibility impairment in a
    memorandum of agreement with the states?
        Answer. The Supreme Court has held that any waiver of sovereign
    immunity by the Federal Government must be unequivocally expressed in
    statutory text. Therefore, a Federal Land Manager cannot waive any
    sovereign immunity defenses that are not expressly waived by statute.
                       regional haze: state road projects
        Question. If the regional haze rule becomes final, will States have
    to submit their road projects to an additional level of bureaucratic
    review by the Park Service or Forest Service to assess regional haze
    impacts, and could the Park Service or Forest Service stop highway
    construction?
        Answer. The proposed rule does not impose control requirements for
    any particular set of emission sources, including highways, but leaves
    decisions concerning the appropriate degree of control for each
    category to the States to address in their implementation planning
    processes. Moreover, while the rule requires coordination and
    consultation with the appropriate Federal land managers, it does not
    establish a new concurrence function by which Federal Land Managers
    would review and approve or disapprove State highway projects. Rather,
    States are called on by the rule to evaluate all sources whose
    emissions could reasonably be anticipated to cause or contribute to
    visibility impairment in the mandatory Federal Class I areas, including
    projections of emissions growth, and select an appropriate mix of
    measures to provide for reasonable progress in improving visibility.
    Thus, while they will need to consider the impact of mobile source
    emissions on visual air quality, the proposed rule does not impose any
    specific requirements for mobile source or transportation emissions
    control, nor does it provide new provisions for Federal Land Manager
    review of transportation projects.
        Question. Will road building projects by the Park Service and
    Forest Service be subject to similar review by the States?
        Answer. In compiling inventories of current and projected
    emissions, States will need to consult with Federal land managers to
    ensure that emissions from activities on Federal lands, including new
    roads, are accounted for. The consultation called for under the
    proposed rule is expected to include consideration of the need for
    actions on Federal lands to contribute to visibility improvement.
                      visibility transport: proposed rule
        Question. Doesn't the proposed rule look a lot more like the
    Federalized program that Congress rejected than the State-lead program
    that Congress adopted?
        Answer. The proposed rule does not dictate to States either a
    Federal standard or a set of control requirements for any particular
    set of sources. Rather, it proposed a presumptive target which States
    were called on to evaluate in light of their particular visibility
    circumstances, to establish alternative targets if appropriate, and to
    decide on the appropriate mix of measures which would be needed to meet
    those targets. As such, the program sought to preserve State autonomy
    while addressing the specific mandates established by sections 169A and
    169B. The Environmental Protection Agency received comments during the
    public comment period concerning the appropriate degree of flexibility
    that should be accorded under the rule and is currently considering and
    preparing its responses to those comments.
                         bart: provide tools for states
        Question. Isn't it true that in order for States to use alternative
    approaches to the presumptive visibility target and BART (Best
    Available Retrofit Technology) they bear the burden of proof, yet EPA
    has not fulfilled its statutory job to provide the analytical tools
    necessary for States to do so? A clarifying example is that EPA failed
    to produce the 5 year update to the study on the visibility
    improvements from other CAA provisions as required by section
    169(B)(b). Please provide a detailed explanation if you disagree with
    my assessment.
        Answer. In establishing their reasonable progress targets and any
    specific controls for sources affected by the Clean Air Act (CAA)
    requirements for BART, States will need to provide justifications for
    their decisions which address the analytical factors set out in CAA
    sections 169A(g) (1) and (2). The availability of technical methods for
    visibility monitoring, modeling, and strategy assessment is discussed
    in the National Academy of Sciences 1993 report entitled ``Protecting
    Visibility in National Parks and Wilderness Areas.'' One of the
    important findings in this report is that: ``Current scientific
    knowledge is adequate and control technologies are available for taking
    regulatory action to improve and protect visibility.'' Another
    important conclusion is the following:

              Visibility impairment can be attributed to emission sources
            on a regional scale through the use of several kinds of models.
            In general, the best approach for evaluating emission sources
            is a nested progression from simpler and more direct models to
            more complex and detailed methods. The simpler models are
            available today and could be used as the basis for designing
            regional visibility programs; the more complex models could be
            used to refine those programs over time.

        The EPA intends to provide the necessary additional technical tools
    and further guidance to assist States in fulfilling their obligations
    under the rule. As proposed, the rule would not require States to
    establish reasonable progress targets or specific BART requirements in
    the plans which the CAA requires to be submitted 12 months after the
    rule is promulgated. Rather, those elements would be due to EPA in
    future SIP revisions. The EPA intends to work directly with the States
    as it develops needed additional guidance. As EPA has noted previously,
    section 169B(b) requires EPA to assess and report on actual progress
    and improvement in visibility, and does not require EPA to conduct
    further studies of visibility improvements from other Clean Air Act
    provisions.
                       waste isolation pilot plant (wipp)
        Question. I have had the opportunity to speak before with EPA about
    the importance of opening the Waste Isolation Pilot Plant (WIPP) in New
    Mexico, for the disposal of this nation's transuranic waste. I was
    pleased when the EPA released its proposed certification for WIPP last
    October--a determination that WIPP will meet environmental standards
    and that WIPP will operate safely as a disposal site.
        I am concerned, however, that in its rulemaking, EPA proposed a new
    role for itself--requiring that EPA perform individual certifications
    of each waste generator site, such as the Idaho National Engineering
    and Environmental Laboratory. You also propose to have a public comment
    period on each site certification, which will last at least 30 days.
        I, along with Senator Dirk Kempthorne and Congressman Mike Crapo,
    have corresponded with you on this issue, but I would like to hear from
    the Administrator now, on why EPA believes an additional hurdle is
    appropriate and what statute grants EPA the authority to regulate DOE
    waste site in this manner.
        Please provide a complete and detailed explanation that supports
    EPA's position on this matter.
        Answer. The WIPP Land Withdrawal Act (LWA) requires EPA to, inter
    alia, develop, through informal rulemaking pursuant to Section 4 of the
    Administrative Procedures Act (APA), criteria by which to certify
    whether the WIPP will comply with EPA's radioactive waste disposal
    regulations at 40 CFR Part 191 [Section 8(c)], and utilize such
    criteria to certify, through APA Section 4 informal rulemaking, whether
    the WIPP will comply with such regulations. [Section 8(d)(2)]. Thus,
    EPA has a legal obligation to utilize the compliance criteria in its
    determination of whether the WIPP will comply with the 40 CFR Part 191
    disposal regulations. The quality assurance (QA) and waste
    characterization conditions imposed upon EPA's certification that the
    WIPP will comply with the Part 191 regulations reflect the fact that
    DOE did not fully demonstrate compliance with Sections 194.22(a)(2)(I),
    194.24(c)(3), 194.24(c)(4), and 194.24(c)(5) of the compliance
    criteria.
        EPA is legally required to determine whether DOE has met the
    requirements of the compliance criteria. Under 40 CFR 194.22(a)(2)(I),
    DOE is required to demonstrate that a quality assurance program in
    accordance with Nuclear Quality Assurance (NQA) standards, has been
    ``established and executed'' for waste characterization activities and
    assumptions. Also, under Section 194.24(c)(3-5), DOE is required to
    provide information that demonstrate the following: (1) that use of
    process knowledge to quantify waste components meets the requirements
    of Section 194.22(a)(2)(I); (2) that a system of controls has been and
    will continue to be implemented to confirm that the total amounts of
    waste components to be emplaced at WIPP will not exceed the established
    limits under Section 194.24(c); and (3) that such system of controls
    meets the quality assurance requirements of Section 194.22(a)(2)(I). As
    set forth in the certification, EPA has determined that the only site
    at which DOE has met these specific quality assurance and waste
    characterization requirements is for the process used to characterize
    legacy debris waste at Los Alamos National Laboratory.
        Thus, EPA finds that it is both necessary and within the Agency's
    authority to evaluate and approve site-specific QA and waste
    characterization programs. The compliance criteria expressly provide
    that any certification of compliance ``may include such conditions as
    [EPA] finds necessary to support such certification.'' [Section
    194.4(a)]. Before waste is shipped for disposal at the WIPP, EPA must
    be confident that the waste will conform to the waste limits and other
    waste-related assumptions incorporated in the performance assessment--
    that is, that the information and assumptions on which a certification
    of compliance is based will be adhered to in practice. Such confidence
    can be assured only by confirmation that the required QA and waste
    characterization programs are in place (i.e., established and
    implemented/executed) at waste generator sites. EPA believes that an
    approval process separate from DOE's internal procedures is critical
    because DOE's process is not geared solely at confirming that programs
    adhere to EPA's compliance criteria, and because DOE's process does not
    provide for public participation.
        EPA believes that its site approval process is not redundant and
    has different regulatory objectives from DOE's certification process.
    EPA's main objective is to assess compliance with the applicable
    certification criteria. Waste generator sites produce relevant
    information on waste components that is critical to the performance of
    the WIPP disposal facility. The predictions made by the performance
    assessments, which are the basis for compliance with the radioactive
    disposal standards, set up limits on waste components that are fixed
    throughout the duration of this certification. Waste characterization
    activities will generate critical information on the amount of waste
    components comprising the various waste streams to be emplaced at WIPP.
    Evaluation of waste characterization and quality assurance activities,
    waste analysis procedures, waste characterization instrumentation and
    techniques, etc., are of paramount importance in determining whether
    DOE has the ability to adhere to the identified waste component limits.
    Consequently, prior to approving shipment of transuranic wastes from a
    waste generator site for emplacement at WIPP, EPA will assess whether
    DOE has demonstrated compliance with the requirements of Sections
    194.22(a)(2)(I) and 194.24(c) (3)-(5). DOE's certification process, on
    the other hand, is part of DOE's internal activities, offers no access
    to the public in regard to information gathered during such activities,
    and includes a number of evaluations which are not relevant to EPA
    regulatory objectives (e.g., transportation requirements, etc). The
    focus of DOE's certification process do not meet EPA's regulatory
    objectives, nor do they provide the external oversight of DOE that is
    the purpose of the LWA.
        EPA believes that it has developed a process for approving QA and
    waste characterization processes at waste generator sites which will
    fulfill the Agency's requirement to determine DOE's compliance with
    Section 194.22(a)(2)(I) and 194(c) (3)-(5) while providing the public
    an opportunity to comment on these activities. For most generator
    sites, this process involves a thirty day public comment period and an
    inspection of a DOE audit. EPA is committed to completing these
    activities in an expeditious manner.
                         fqpa: guarantee sound science
        Question. In your April 10th memorandum to the Vice President, you
    pledge to apply sound science to all FQPA related decisions. What steps
    have you taken, or plan to take, to guarantee this to be the case?
        Answer. EPA is confident that its policies and procedures since the
    Food Quality Protection Act (FQPA), have been based in sound science.
    To ensure that these policies and procedures are independently
    reviewed, the Agency has called on the expertise of the Federal
    Insecticide, Fungicide, and Rodenticide Act Scientific Advisory Panel
    (SAP), the International Life Sciences Institute (ILSI), the Endocrine
    Disruptors Screening and Testing Advisory Committee, the Food Safety
    Advisory Committee, and the recently formed Tolerance Reassessment
    Advisory Committee. Since FQPA was signed into law, EPA has made FQPA-
    related presentations at six SAP meetings, on topics such as the FQPA
    safety factor, common mechanism of toxicity and cumulative effects, and
    drinking water exposure methods. ILSI has also assisted the Agency on
    common mechanism and drinking water exposure. EPA's Administrator also
    formed an internal review group to look at the scientific soundness of
    some aspects of FQPA implementation. Attached is a chart outlining some
    of our activities in this area.
    [GRAPHIC] [TIFF OMITTED] TVA.021

    [GRAPHIC] [TIFF OMITTED] TVA.022

        Question. What type of scientific review will be performed to judge
    the ``soundness'' of EPA's science?
        Answer. Many of EPA's science decisions go through the SAP and
    specific policies are often shared with independent groups such as the
    International Life Sciences Institute. In the specific case of
    designing screening and testing procedures for endocrine disruptors,
    the Agency has used the Endocrine Disruptors Screening and Testing
    Advisory Committee (formed of independent scientists from various
    disciplines) and has also consulted both the SAP and the
    Administrator's Science Advisory Board and will publicly propose the
    final procedures.
                         fqpa: advisory groups criteria
        Question. I am interested in EPA's plan to establish an advisory
    group on FQPA issues and was pleased to learn that a number of
    commodity organizations will be represented on it. However, EPA plans
    call for the group to number somewhere between 45 and 50 people. When
    will you be prepared to announce the members of the advisory group, and
    what criteria are you using to determine membership?
        Answer. Attached is a list of the membership of the newly formed
    Tolerance Reassessment Advisory Committee. Members were selected under
    requirements of the Federal Advisory Committee Act and approved by Fred
    Hansen, Deputy Administrator of EPA and Richard Rominger, Deputy
    Secretary of USDA. Members were chosen based on their relevant
    experience and diversity of perspectives. Membership was balanced
    between: environmental and public interest groups; pesticide industry
    and trade associations; user, grower and commodity organizations;
    pediatric and public health organizations; Federal agencies, tribal,
    state, and local governments; academia; and consumer groups.
        Question. How will such a large group ever come to any concrete
    conclusion?
        Answer. The Advisory Committee provides a forum for discussing many
    of the issues involved in FQPA implementation. Given the variety of
    viewpoints represented, it may not be possible to reach consensus on
    all of the issues. The discussion itself, however, will assist the
    Agency in its deliberations and will allow for greater consultation
    with the regulated community and interested parties.
        Question. How will issues be decided if not everyone agrees with a
    decision?
        Answer. The Advisory Committee process is an important part of
    EPA's effort to consult stakeholders. The results of the meetings will
    be considered in connection with the other information available to the
    Agency when developing policies and procedures. EPA is the final
    arbiter of what policies it adopts.
        Question. What stock will be given to the advisory group's
    recommendations by EPA, and how will EPA be accountable to follow them?
        Answer. Again, recommendations will be considered in connection
    with other information available to the Agency. Any recommendations the
    committee may have will be seriously considered and will play an
    important role in shaping EPA's approach to reassessing tolerances.
        Question. Will the advisory group's recommendations be published,
    will there be a final report?
        Answer. There will be a final report following the last Advisory
    Committee meeting. In addition, after each Committee meeting, a summary
    of the discussion will be prepared. The report and summary documents
    will be posted on EPA's Web Page and placed in a publicly available
    pesticide docket. Broader distribution will be considered and may be
    discussed by the Committee.
        Question. What issues do you expect the advisory group to take up,
    what of the issues not addressed during the groups 4 meetings?
        Answer. The Advisory Committee will focus on the pending tolerance
    reassessment of organophosphates but its input will be used to shape
    the broader tolerance reassessment process. Some of the specific issues
    that will be addressed by the Committee include: advice on developing
    an appropriate process for making tolerance reassessment decisions
    under FQPA; recommending the proper policy framework for deciding when
    there is adequate scientific information, when new information is
    needed, and when it is scientifically appropriate to use estimates in
    the absence of actual measurements; recommend ways to increase the pace
    of decision-making to make available to growers newer and safer
    pesticides and new uses of registered pesticides that meet the FQPA
    standard; developing strategies for reducing risk to acceptable levels
    while retaining those pesticides of the highest public value, and
    identifying opportunities for reasonable transition mechanisms;
    assuring that appropriate priority is given to assessing pesticides
    that are most likely to lead to exposure in children's foods; fostering
    improved communication and understanding among stakeholders; and
    assuring appropriate public participation in Agency decision making.
        This group will largely be providing advice on broad policy issues;
    it is not a technical, scientific advisory group. As a result, we do
    not anticipate that it will consider, or make recommendations on,
    scientific and technical issues. EPA will continue to use independent
    scientific panels such as the Scientific Advisory Panel (SAP)/
    Scientific Advisory Board (SAB) to solicit this type of detailed
    technical review.
                                     ______

         Consultation Opportunities Attachment to ``At a Glance'' Table

              federal insecticide, fungicide, and rodenticide act
                     scientific advisory panel (fifra sap)
                      background documents concerning fqpa
    October 29-30, 1996 FIFRA SAP meeting
        Metabolism Guidelines
        Requirements of the Food Quality Protection Act: Additional
        Uncertainty Factor for Developmental/Reproductive Endpoints
        Developmental and Reproductive Guidelines
        In Utero Exposure for Carcinogenicity Studies
    March 19-20, 1997 FIFRA SAP meeting
        Aggregate Exposure Methodology Issues
        Common Mechanism of Action
        Visual System Toxicity Testing of Organophosphates
    June 3-4, 1997 FIFRA SAP meeting
        Anticipated Residues Methodology
        Import Tolerance Guidelines
        Antimicrobial Issues
        Cholinesterase Policy Issues
    September 9-10, 1997 FIFRA SAP meeting
        Criteria for Requiring In-Utero Cancer Studies
        Efficacy Testing Issues Concerning Public Health Antimicrobial
    Pesticides
        The Office of Pesticide Programs' Update on the FQPA Activities to
    Date
    December 10-11, 1997 FIFRA SAP meeting
        Estimating Drinking Water Exposure As A Component of the Dietary
    Risk Assessment
    March 24-25, 1998 FIFRA SAP meeting
        Common Mechanism of Action of Organophosphates
        Policy for Review of Monte Carlo Analyses for Dietary and
    Residential Exposure Scenarios
        Suggested Probabilistic Risk Assessment Methodology for Evaluating
    Pesticides That Exhibit a Common Mechanism of Action
        Use of 10x Safety Factor to Address Special Sensitivity of Infants
    and Children to Pesticides
        Post Application Exposure Guidelines
                     international life sciences institute
                 background documents concerning drinking water
                       risk assessment methods under fqpa
    October 1, 1997 ILSI Workshop
        The Screening Concentration in Ground Water (SCI-GROW)
        Surface-Water-Source Drinking Water Exposure Assessment in the
    Office of Pesticide Programs: Current Modeling Methods and Needs SCI-
    GROW: A Proposed Method to Determine Screening Concentration Estimates
    for Drinking Water Derived from Ground Water Sources Development of
    GENEEC for Screening Level Estimation of Pesticide Exposure in the
    Aquatic Environment
                  pesticide program dialogue committee (ppdc)
                      background documents concerning fqpa
    November 12-13, 1996 PPDC meeting
        The Food Quality Protection Act of 1996 Fact Sheet
        Major Issues in the Food Quality Protection Act of 1996 Fact Sheet
    March 18-19, 1997 PPDC meeting
        1996 Food Quality Protection Act Implementation Plan
        FQPA Fact Sheet on Implementation Activities
        Process for Developing FQPA Consumer Right-to-Know Brochure
    Briefing Paper
    June 24-25, 1997 PPDC meeting
        FQPA New Health Standards Draft Issue Paper
        Summary of Activities Related to Aggregate/Cumulative Exposure
    Assessment in the Office of Pesticide Programs
        Proposed Reduced-Risk Initiative Guidelines
        Draft Guidelines for Expedited Review of Conventional Pesticides
    under the Reduced-Risk Initiative and for Biological Pesticides
        EPA's Minor Use Program Issue Paper
        Tolerance Reassessment under the Food Quality Protection Act
    October 22-23, 1997 PPDC meeting
        The Food Quality Protection Act of 1996--Status of Implementation
    at the end of Fiscal Year 1997 (10/1/97)
        Consumer Right-to-Know Efforts under FQPA White Paper
        Standard Operating Procedures (SOP's) for Residential Exposure
    Assessments
    April 16-17, 1998 PPDC meeting
        Registration Activities in the Office of Pesticide Programs
        Implementation of Registration Review
        Memorandum to Secretary Glickman and Administrator Browner from
    Vice President Gore (4/8/98)
        Memorandum to Vice President Gore from Secretary Glickman and
    Administrator Browner (4/10/98)
                                     ______

        Letter From the Department of Agriculture and the Environmental
                               Protection Agency

                                        Washington, DC, April 30, 1998.
    Mr. John Adams,
    Executive Director, Natural Resources Defense Council,
    New York, NY.
        Dear Mr. Adams: It is our pleasure to invite you to serve as a
    member of the EPA-USDA Tolerance Reassessment Advisory Committee (TRAC)
    for a term beginning immediately and ending September 1998. Vice
    President Gore recently requested the Administrator of EPA and the
    Secretary of Agriculture to work together to ensure smooth
    implementation of the Food Quality Protection Act (FQPA). Passed in
    1996, this new law strengthens the nation's system for regulating
    pesticides on food. The EPA and the USDA are very committed to both the
    public health requirements of FQPA and to preserving the strength of
    our Nation's agriculture and its farm communities.
        We value your knowledge and perspective on FQPA implementation
    issues, as a member of this new Committee, you will make it possible
    for us to take advantage of your experience and expertise to help
    establish overall priorities and a strategic direction for making
    tolerance decisions. We will be asking the Committee to provide policy
    guidance on sound science; ways to increase transparency in our
    decision making; strategies for a reasonable transition for
    agriculture, and ways to enhance consultations with our stakeholders,
    as we reassess pesticide tolerances including those for
    organophosphates. We will Co-Chair this Committee and plan to hold four
    public meetings over the next three months.
        The TRAC is being established as a subcommittee under the auspices
    of the FQPA National Advisory Council for Environmental Policy and
    Technology (NACEPT). Enclosed is a copy of the NACEPT Charter and the
    Federal Advisory Committee Act, which regulates and governs the
    operation of advisory committees, including public participation and
    access to committee documents. Since Committee members are invited to
    serve as representatives of non-Federal interests (i.e., are not
    appointed as special Government employees and do not receive a stipend
    for their participation), you are not subject to the conflict of
    interest restrictions. However, you should take note of the enclosed
    memorandum of March 24, 1998, entitled ``Legal Requirements for
    Representative Members of EPA Advisory Committees.'' As a
    representative of TRAC, you are entitled to receive travel and per diem
    allowances, if needed.
        We hope that you will find it possible to accept this invitation
    and give EPA and USDA the benefit of your expertise. If so, please sign
    the enclosed invitation response form to indicate your decision and
    either fax or use the pre-addressed envelope to send your response to
    Margie Fehrenbach, Designated Federal Officer for TRAC. If you have
    general questions about the meeting or concerns about possible
    conflicts of interest, she can be reached by phone at (703) 309-4775 or
    305-7090; by fax at (703) 308-4776, or by Internet at the following
    address: Ferhrenbach.margie@epamail.epa.gov
        Our first public meeting is scheduled for May 29-29, 1998, at the
    Washington National Airport Hilton located in Crystal City at 2399
    Jefferson Davis Highway, Arlington, Virginia. We will also meet on June
    22-23, July 13-14, and July 27-28, 1998.
        We have enclosed a copy of our Mission Statement, a list of the
    invited Committee members, and some additional background materials. If
    you accept, we will be calling you soon to discuss the scope and
    objectives of the Committee. If you have questions in the interim,
    please contact Stephen Johnson, Deputy Director, Office of Pesticide
    Programs, EPA, at (703) 305-7090 or Keith Pitts, special assistant to
    the Deputy Secretary, USDA, at (202) 690-2525.
        Upon learning of your acceptance we will provide you with more
    information relating to Committee activities.
                Sincerely,
                                       Richard E. Rominger,
                           Deputy Secretary, Department of Agriculture.
                                       Fred Hansen,
                 Deputy Administrator, Environmental Protection Agency.
                                     ______

                           EPA Note to Correspondents

                     for release: thursday, april 30, 1998
      epa broadens public involvement in implementation of food, quality
                                 protection act
        The U.S. Environmental Protection Agency in conjunction with the
    U.S. Department of Agriculture is establishing a new advisory group to
    ensure the broadest possible public involvement as it moves forward to
    implement the Food Quality Protection Act. This new committee responds
    to Vice President Gore's request that implementation of the new law is
    informed by appropriate input from affected members of the public.
        EPA Administrator Carol M. Browner said,

              The new committee to advise EPA on pesticide-safety issues is
            part of the Clinton Administration's common-sense approach to
            protect public health while ensuring the abundance of America's
            food supply. One of the most important parts of that approach
            is consulting openly and often with a broad variety of groups
            representing the views of the American public. We look forward
            to hearing from this committee on issues ranging from
            protecting children's health to using the best scientific data
            in our decision making,

        USDA Deputy Secretary Richard Rominger said,

              USDA looks forward to working closely with EPA and this
            advisory group to develop a scientifically sound and balanced
            implementation strategy for FQPA. Using this process to craft
            an effective transition strategy for at-risk commodities is
            critically important to USDA and American Agriculture,

        The new committee will be co-chaired by EPA Deputy Administrator
    Fred Hansen and USDA's Richard Rominger. Its members will be made up of
    experts that include farmers, environmentalists, public health
    officials, pediatric experts, Pesticide companies, food processors and
    distributors, public interest groups, academicians, and state, local
    and tribal governments.
        The new committee will advise EPA and USDA on a host of issues
    pertaining to the implementation of the Food Quality Protection Act.
    Examples of those issues include helping EPA use the best science in
    making decisions about pesticide safety; helping EPA set priorities in
    considering broad categories of pesticides, such as organophosphates;
    helping EPA speed the pace of decisions on pesticide safety to make
    sure that farmers can have products they need in a timely way, advising
    USDA on prioritizing research programs to address FQPA-driven needs,
    and making sure Pesticide safety rule are protective of children. A
    list of nominees is attached.

                                                   John Kasper,
                                     Director, Press Services Division.

                                 [May 13, 1998]

           epa-usda tolerance reassessment advisory committee (trac)
     subcommittee to national advisory council for environmental policy &
                                   technology
        Fred Hansen, Deputy Administrator, EPA, Co-Chair
        Richard Rominger, Deputy Secretary, USDA,Co-Chair
    Designated Federal Officer
        Margie Fehrenbach, Office of Pesticide Programs, EPA
    Environmental/consumer Organizations/Farmworker Representatives
        Carolyn Brickey, National Campaign for Pesticide Policy Reform
        Nelson Carrasquillo, Executive Director, C.A.T.A. (Farmworker
    Support Committee)
        Ken Cook, Environmental Working Group
        Shelley Davis, Farmworker Justice Fund
        Jeannine Kenney, Consumers Union
        Sarah Lynch, World Wildlife Fund
        Maion Moses, Pesticide Education Center
        Erik Olson/David Wallinga, Natural Resources Defense Council
    Agriculture/Farmer Representatives
        Dan Botts, Florida Fruit and Vegetable Association
        Jim Czub, National Corn Growers Association
        Larry Elworth, Program for Strategic Pest Management
        Hugh Ewart, Northwest Horticultural Council
        William T. Lovetady, Chairman, National Cotton Council
        Brad Luckey, Luckey Farms, Imperial County, California
        Charles Mellinger, National Association of Independent Crop
    Consultants
        Steven Pavich, Organic Grape Producer, Terra Bella, CA
        Bill Spencer, Farmer, American Farm Bureau Federation
        Robin Spitko, Plant Pathologist, Massachusetts
    Pesticide Companies
        Emilio Bontempo, Novartis
        Linda Fisher, Monsanto
        Jon Jessen, Gowan
        Elin Miller, DowElanco
        Nancy Rachman, American Cyanamid
        Jay Vroom, American Crop Protection Association
    Other Federal Agencies
        Dick Jackson, Centers for Disease Control and Prevention
        Robert Lake, Food and Drug Administration
    NACEPT/SAP Representatives
        Mark Greenwood, Ropes & Gray
        Ernest McConnell, Chair, FIFRA Scientific Advisory Panel (SAP)
    Academia
        Dr. Jose Arnador, Director, Agriculture Research & Extension
    Center, Texas A&M
        Dr. Mike Linker, North Carolina State University (State Extension
    Service)
        Dr. J. Routt Reigart, Pediatrician, Medical University of South
    Carolina
        Dr. Michael Shannon, Pediatrician, Children's Hospital/Harvard
    Medical School
        Michael Taylor, Visiting Scholar, Resources for the Future
        Dr. John Wargo, Yale University
        Mark Whalon, Michigan State University
    Tribal, State, & Local Representatives
        Henry (Andy) Anderson, Association of State & Territorial Health
    Officials, Wisconsin
        Bill Cottkamp, Supervisor of Vector Control, St. Louis County Dept
    of Health, MO
        Alice Devine, Commissioner, Kansas Department of Agriculture
        Jean-Mari Peltier, California Department of Pesticide Regulation
        Greg Phillips, Omaha Tribal Council
        Lora Lee Schroeder, Chair, AAPCO FQPA Minor Use Committee, GA Dept.
    of Agriculture
    Food Processors/Distributors
        John Cady, National Food Processors Association
        Kay Holcombe, Policy Directions, Inc.
        Alfred Pieroallini, Gerber Products Company
        William Spain, Del Monte Foods
        Margaret Wittenberg, Whole Foods Market, Inc.
    Structural Pest Control User
        Robert Rosenberg, National Pest Control Association
    Observers
    EPA Regional Office
    EPA Office of Children's Health Protection
        Ramona Trovato
    USDA
        Allen Jennings, Office of Pest Management
    Congressional Participants
        Howard Cohen, House Commerce Committee
        John Ford, House Commerce Committee
        Eric Burger, House Commerce Committee
        Greg Dotson, Congressman Waxman's Office
        Bill O'Connor, House Agriculture Committee
        Dannell Farmer, House Agriculture Committee
        Terri Nintemann, Senate Agriculture Committee
        Phil Schwab, Senate Agriculture Committee
        Jean Fruci, House Committee on Science
        Paul Charton, Office of Congressman Berry Jay Hawkins, Senate
    Committee on Labor and Human Resources
                   fqpa: ten fold safety presumption progress
        Question. Your April 10th memorandum to the Vice President also
    mentioned EPA's plan to review the application, and the possible
    elimination, of the ten-fold safety presumption. What progress, if any,
    has been made on the review?
        Answer: In February 1998, EPA Administrator Browner asked
    representatives of the Office of Prevention, Pesticides, and Toxic
    Substances, the Office of Research and Development, and the Office of
    Children's Health Protection to determine what data is appropriate to
    rebut the presumption that the ten-fold factor should be retained and
    to discuss whether the factor was being appropriately applied and
    adequately communicated to the regulated community. This group's final
    report should be available soon. In addition, at the request of the
    Federal Insecticide, Fungicide, and Rodenticide Act Scientific Advisory
    Panel (SAP), EPA has revised its guidance document on the ten-fold
    factor. A new version was presented to the SAP in March and we are
    currently reviewing the SAP's comments on that revised draft.
        Question. When do you expect the review to be completed, how will
    the results be published?
        Answer: Once the intra-agency workgroup has reported, and the SAP's
    comments have been reviewed, the Agency will revise its paper
    accordingly. When a final version of the paper has been prepared, EPA
    will investigate appropriate methods of distribution, including
    publication in the Federal Register or distribution as a Pesticide
    Registration Notice.
                          fqpa: minor crop protection
        Question. As you know, my state is dependent on the production of
    ``minor crops.'' Officials from both EPA and USDA have stated their
    support for continued emphasis on minor crop pesticide registrations.
    What specific efforts has EPA taken to assure the protection of minor
    crop registration?
        Answer: EPA's pesticide registration program establishes priorities
    for applications based upon certain environmental and societal goals.
    Under this system, registrations for minor use pesticides receive
    expedited review. In addition, EPA has created a minor use team with an
    ombudsman within the pesticide program and has broadened communication
    efforts with growers and trade associations concerned about minor use
    issues. The Agency also published guidance on the minor use
    prioritization criteria and held a workshop on minor use registration.
        In addition, EPA works with the U.S. Department of Agriculture
    (USDA) on a regular basis to ensure that the impact of its regulations
    and decisions on farmers is considered. USDA has committed to enhance
    research and development of alternative pest control methods and EPA
    has committed to expediting review of any products that result from
    this research and development. EPA and USDA also have a Memorandum of
    Understanding to foster cooperative efforts to provide replacements for
    pesticides that are likely to be subject to cancellation or suspension
    by EPA, or are subject to voluntary cancellation based on risk or
    economic concerns. This program is particularly important for minor use
    crops which may face a lack of safe and effective pest management
    alternatives. We have also added staff in each division to specifically
    facilitate registration of minor crop products.
        Question. Does EPA give higher priority to minor crop registrations
    and will this practice continue?
        Answer: Minor use applications, including all petitions from the
    U.S.D.A. Inter-Regional Research Project # 4 (which supports
    registration applications for minor uses) receive priority review. EPA
    recognizes the unique situation these uses face and will continue this
    practice.
                   dr. goldman participation in idaho meeting
        Question. I have invited Dr. Goldman and other EPA officials to
    participate in a public meeting in Idaho to address FQPA implementation
    and its impact on our state. Is Dr. Goldman prepared to accept this
    invitation?
        Answer: EPA would welcome the opportunity to attend a public
    meeting on the Food Quality Protection Act (FQPA) implementation and
    its impacts on Idaho. We will continue to work with your staff to
    determine the appropriate EPA participants.
                     clean water act: state primacy keepers
        Question. Isn't it true that pursuant to the Clean Water Act,
    Congress delegated to the States exclusive authority to protect the
    quality of water within the boundaries of each State, and therefore,
    the States are the ``primary keepers'' of clean water in the United
    States?
        Answer: The Clean Water Act assigned specific roles and
    responsibilities to the Administrator of the Environmental Protection
    Agency and to State governments. In some cases, EPA is directed to
    stand ready to act to implement clean water programs where a State is
    not able to do so. Over the past 25 years, States and EPA have worked
    cooperatively to carry out clean water programs and other related
    activities. Many other levels of government and the private sector have
    contributed to this effort. As a result of this work, the quality of
    the nation's waters has improved dramatically. EPA and the States need
    to continue to maintain their close partnership in order to continue
    good progress in pollution reduction in the years to come.
                         clean water act: federal role
        Question. Does EPA believe that the States have not adequately
    protected the quality of water in the United States and that EPA, or
    another Federal agency should have authority to ensure that water
    quality meet a higher Federal standard?
        Answer: EPA recognizes that water quality has improved dramatically
    in the past several decades. This dramatic improvement is the result of
    hard work by States, Federal agencies, and local governments to
    cooperatively implement programs authorized under the Clean Water Act.
    Many States and local laws, as well as other Federal laws, have also
    contributed to this important progress. States establish water quality
    standards and monitor the condition of waters. In recent reports,
    States have indicated that between 30-40 percent of assessed waters do
    not meet clean water goals. EPA will continue to work with States and
    others to continue progress toward clean water.
              clean water act: federal standard for water quality
        Question. Is EPA contemplating the promulgation of any rule that
    would establish a Federal standard for water quality in the United
    States?
        Answer: The Clean Water Act provides that States establish water
    quality standards for waters, and that EPA review and approve these
    standards. EPA and States have a good partnership for the development
    of standards and EPA acts to promulgate a change to a State standard
    only in very rare cases. EPA is presently in various stages of
    promulgating some aspect of a water quality standard in the States of
    California, Alabama, Kansas, and Kentucky.
                 clean water act: expanded federal jurisdiction
        Question. Is EPA contemplating amending any existing rules that
    would expand EPA's jurisdiction over water quality that currently is
    monitored by the State?
        Answer: Section 305(b) of the Clean Water Act provides that States
    have the lead in designing and implementing programs for monitoring of
    water quality. EPA believes that States do a good job of monitoring
    water quality and does not see a need to change this arrangement.
                                     ______

                    Questions Submitted by Senator Mikulski

                  napa: implementation of napa recommendations
        Question. How does your fiscal year 1999 request address the
    implementation of NAPA's recent report regarding the earlier 1995
    report? Who at EPA is responsible for implementing the NAPA
    recommendations? What steps will you take next?
        Answer. The National Academy of Public Administration conducted an
    extensive study of the Environmental Protection Agency, including its
    legislative history, organization, management processes and current
    operating environment. In its 1995 report, NAPA recommended:
      --Giving EPA a statutory mission with a clearer sense of direction
            than can now be inferred from the agency's fragmented statutes;
      --Designing national environmental programs to encourage states,
            cities, and firms to find innovative and locally appropriate
            ways to meet national standards;
      --Managing EPA to focus on environmental results, rather than on
            bureaucratic processes and building the environmental database
            to do so;
      --Strengthening EPA's management systems and the agency's ability to
            integrate its management approaches across environmental media
            and statutes; and
      --Working with Congress to set strategic priorities for environmental
            risk reduction.
        EPA actively responded to these recommendations from the outset. A
    task force comprised of senior managers conducted a comprehensive
    review of Agency operations to ascertain the best strategy for
    achieving what was envisioned by the recommendations. In March 1996,
    the Administrator announced an ambitious plan to reorganize the Agency
    in order to strengthen key management functions and provide greater
    opportunities for scientific information to impact decision making.
    These new directions were also consistent with the Agency's approach to
    implementing management reform legislation such as the Government
    Performance and Results Act.
        The Office of the Chief Financial Officer was established to
    consolidate planning, budgeting, financial management, analysis and
    accountability under one program official. By integrating these
    functions, the Agency is positioning itself to manage for results. It
    will impact how EPA sets priorities, directs funding and ensures
    results from our investments.
        Significant progress already has been made. In September of last
    year, we delivered to Congress our Strategic Plan, based upon an
    intensive evaluation, aided by the views of its partners and
    stakeholders, of what we would like our work to have achieved five
    years from now. We have also made significant strides in the process of
    aligning our budget structure with the Strategic Plan elements, thus
    establishing clear linkages between environmental results and budget
    decisions. With the assistance of State and Tribal representatives, we
    have begun to address the internal challenge of developing an
    accountability process that moves us away from counting ``program
    outputs'' and toward the measurement of environmental outcomes.
    Finally, an Agency-wide evaluation of the availability and quality of
    data needed to measure progress toward achieving the commitments in the
    Strategic Plan is underway. This evaluation will help inform the
    Agency's multi-year planning process, identify opportunities for
    strategic investment in better data and methods, and provide useful
    information for improving the Agency's accountability system.
        Through coordinated planning and the use of targeted staff offices
    under the Administrator, such as the Office of Children's Health
    Protection and the Office of Reinvention, EPA has also made significant
    headway in supporting cross-media approaches and promoting innovative
    solutions to environmental protection. This work is still in its
    initial stages and will require continued support from top management
    and Congress.
            superfund/brownfields: coordination with other agencies
        Question. What coordination efforts are underway with other
    agencies to ensure the Brownfields initiative is a success?
        Answer: The Brownfields Initiative is about partnerships--with
    other Federal, State, and local agencies, and diverse stakeholders. In
    response to community requests for better governmental coordination,
    EPA established an Interagency Working Group which included more than
    20 Federal departments and agencies. This Working Group led to the
    establishment of the ``Brownfields National Partnership Agenda.'' The
    National Partnership was announced in 1997 and was established as a
    forum for Federal agencies to exchange information on brownfields-
    related activities and to develop a coordinated national agenda for
    addressing Brownfields. The National Partnership Agenda included
    Federal commitments of $300 million intended to leverage billions in
    private investment. Collectively, 25 public and private entities
    contribute The National Partnership. The centerpiece of the Partnership
    is the Brownfields Showcase Communities Project. Announced by Vice
    President Gore in March 1998, the Showcase Communities Project brings
    together the technical, financial and staff resources of EPA and its
    Federal partners in support of 16 communities chosen from among more
    than 200 applicants. The goal of the Brownfields Showcase Communities
    Project includes promoting environmental protection and restoration,
    economic redevelopment, job creation, community revitalization, and
    public health protection through the assessment, cleanup, and
    sustainable reuse of brownfields. The project will also demonstrate the
    benefits of public and private collaboration in dealing with
    brownfields challenges.
        Federal support and coordination have also been demonstrated
    through the establishment of Memoranda of Understanding. The
    Environmental Protection Agency (EPA) currently has Memoranda of
    Understanding (MOU's) with: the Department of Interior's Rivers,
    Trails, and Conservation Assistance Program (RTCA); the Department of
    Housing and Urban Development (HUD); the Department of Labor's
    Employment Training Administration (ETA); the Department of Commerce's
    Economic Development Administration (EDA); the National Oceanic and
    Atmospheric Administration (NOAA); the Department of Agriculture; and
    the General Services Administration. These agencies and EPA have
    collaboratively established policies and procedures to support the
    Brownfields Initiative.
                  sf: action plans for end of fiscal year 2001
        Question. What action plans do you have in place to reach your
    proposed goal of cleaning up 900 sites by end of 2001?
        Answer. The goal of cleaning up 900 sites by end of 2001 is based
    on site management plans which are in place and provided by the
    regional site managers in CERCLIS. The site plans outline activity
    starts, completions, and resource needs.
                    superfund/brownfields: empowerment zones
        Question. How will the Brownfields initiative help empowerment
    zones like the one in Baltimore create jobs in our inner cities?
        Answer: EPA believes that workforce development and job training
    are essential to the economic and environmental redevelopment of inner
    city communities, like the Empowerment Zone in Baltimore. Indeed, many
    of EPA's Brownfield assessment pilots are located in Federal Enterprise
    Communities/Federal Empowerment Zones communities (EC/EZ). Of EPA's 157
    Brownfields Assessment Demonstration Pilots, over 40 percent are
    located in EC/EZ's. A range of tools to maximize investment and job
    creation are available within EC/EZ's. In addition, EPA and HUD are
    working together to understand the factors that impact urban investment
    and redevelopment decisions, and to collaborate in cities designated as
    EC/EZ's, where appropriate.
        Under the Brownfields Initiative, EPA, in partnership with local
    job training organizations and community colleges, continues to develop
    long-term plans for fostering workforce development. The focus is on
    the creation of jobs related to cleanup and redevelopment for residents
    within affected communities. As a whole, these efforts are designed to
    guarantee that brownfields cleanup and redevelopment have the trained
    workforce needed to revitalize contaminated properties, and that local
    residents have an opportunity to compete in the economic mainstream.
        The EPA, in partnership with local job training organizations and
    community colleges, continues to develop long-term plans for fostering
    workforce development in brownfields communities. Recently, the Agency
    accepted applications for Brownfields Job Training and Development
    Demonstration Pilots. The application period ended May 29, 1998 and the
    Agency intends to competitively select ten Pilots by July 8, 1998. The
    Brownfields Job Training and Development Demonstration Pilots will each
    be funded up to $200,000 over two-years. These funds are to be used to
    bring together community groups, job training organizations, employers,
    investors, lenders, developers, and other affected parties to address
    the issue of providing training for residents in communities impacted
    by brownfields. Pilot applicants must be located within or near one of
    the 121 pre-1998 brownfields assessment pilot communities. Colleges,
    universities, non-profit training centers, community-based job training
    organizations, states, cities, towns, counties, U.S. Territories, and
    Federally recognized Indian Tribes are eligible to apply for funds.
        To date, 1,854 redevelopment jobs and 337 cleanup jobs have been
    created through Brownfields Assessment Pilots.
                 environmental technology verification success
        Question. Why hasn't the Environmental Technology Verification
    program been as successful as we had expected?
        Answer. The U.S. Environmental Protection Agency's (EPA)
    Environmental Technology Verification Program (ETV) began in 1996 in
    response to the President's Environmental Technology Strategy, Bridge
    to a Sustainable Future. The President's Strategy called for the Agency
    to create a market based verification program covering all technology
    categories within three years. EPA met this goal in July 1998. After
    two and a half years of operation, the program has established twelve
    pilot programs to verify the environmental performance characteristics
    of technologies in all environmental media (e.g., industrial pollution
    prevention, recycling and waste treatment, advanced and field
    monitoring technologies, air pollution control technologies, drinking
    and waste water systems), with four programs brought on line each year
    since the program began in 1996. Verification partners include two
    Department of Energy National Laboratories, a state government program
    (California), an industry association (the Civil Engineering Research
    Foundation), and five nationally known testing and standards
    development organizations (Research Triangle Institute, Battelle, NSF
    International, Concurrent Technologies Corporation, and Southern
    Research Institute).
        EPA sent an ETV Strategy to Congress in early 1997 for implementing
    the program within the required time period. The ETV Strategy lays out
    operating principals (e.g., use of public/private partnerships; active
    participation of stakeholders; voluntary participation of technology
    vendors; quality assured test protocols, test plans, data acquisition,
    and reports), budget projections, and verification goals. One of the
    program's major goals is to verify 300 technologies by 2005.
        To date, eleven monitoring devices and one low NOX fuel
    have completed testing, reporting and peer review, and have been issued
    verification statements. Fifty-four additional and quite varied
    technologies have been accepted into the program and are currently
    under evaluation (twenty-eight monitoring, eleven water, eight
    pollution prevention, and seven air technologies). Two pilots which
    began operation in October 1997 (air pollution and advanced monitoring)
    have received over seventy-five applications in the last two months. If
    this rate of technology participation continues, ETV will easily
    achieve the 300 verification target.
        ETV recently published a program-wide Quality Management Plan,
    written under the ANSI E4 Environmental Technology Testing Standard.
    This document lays out the quality management criteria for and
    responsibilities of all of the governmental and private sector
    participants in the ETV program. It also stipulates procedures, format,
    data collection quality and output standards for the five year pilot
    period. All ten of the ETV partner organizations are required to
    produce Quality Management Plans consistent with this Plan within six
    months of being selected as partners to assure comparable quality
    across the program.
        Moreover, an ETV Website has been in place since January 1997. It
    receives over seven thousand hits per month, with approximately 20
    percent of the hits from foreign countries. Information ranging from
    meeting announcements to full scale testing protocols for all twelve
    pilots are on the single Website.
        In April 1998, the program received Vice President Al Gore's
    National Performance Review Hammer Award.
        We believe this young program has made significant progress toward
    meeting its goals. ETV is making a difference in the environmental
    technology marketplace and has the enthusiastic backing of numerous
    state regulatory organizations, industry associations, and private
    companies. Over the next two years, we expect to see an acceleration in
    the output of all of the ETV pilots now that the basic infrastructure
    of the program is fully in place. As the program continues, it will
    become largely self sufficient by 2005, with the Federal Government
    providing 10 percent to 20 percent of the peak annual EPA investment.
             environmental technology--working with other agencies
        Question. How is EPA working with other agencies to develop
    environmental technology?
        Answer. The U.S. Environmental Protection Agency (EPA) works with
    other Federal agencies in environmental technology development across
    EPA in numerous program offices as well as the Office of Research and
    Development.
        For instance, EPA has worked with DOE in a number of areas to
    improve the use of today's energy-efficient technologies, which
    simultaneously prevent pollution and lower energy bills. For example,
    EPA and DOE are working together, and in partnership with
    manufacturers, to identify energy efficient products through EPA and
    DOE's ENERGY STAR label. Together, EPA and DOE have formed partnerships
    that make hundreds of ENERGY STAR products, covering a large share of
    household energy consumption, and have a Memorandum of Understanding
    that outlines the responsibilities of each agency for the ENERGY STAR
    programs.
        Another example of EPA's collaborations with other agencies occurs
    under the Science to Achieve Results (STAR) program. Under STAR, EPA
    has engaged in partnerships with other agencies to issue solicitations
    and jointly award research grants in two areas related to environmental
    technology. EPA and NSF have issued a joint solicitation for the past
    four years under the title ``Technology for a Sustainable
    Environment'', that focuses on cutting edge research in green chemistry
    and engineering. In the first three years, EPA and NSF together funded
    62 projects totaling approximately $18 million. Similarly, EPA has
    joined with NSF, DOE, and the Office of Naval Research to issue a joint
    solicitation titled ``Bioremediation'', that addresses furthering the
    fundamental understanding of the chemical, physical, and biological
    processes influencing the bioavailability and release of chemicals in
    soil, sediments, and groundwater. In fiscal year 1996 and fiscal year
    1997 the agencies awarded jointly 22 research projects totaling
    approximately $10 million.
        Under EPA's Environmental Technology Verification Program (ETV),
    the Agency works with other agencies through a variety of mechanisms.
    As one of the charter members of the White House supported
    Environmental Technology Working Group, the ETV coordinator meets twice
    a month with twelve other agencies to review program progress and get
    input. The Department of Energy supports the two ETV partner
    organizations that are national laboratories, Sandia and Oak Ridge
    National Laboratories. Recently, the Department of Defense (DOD) and
    EPA have begun evaluating the possibility of reciprocal verification
    activities for technologies verified under the DOD Environmental
    Security Technology Certification Program.
        Internationally, the Agency is supporting a number of cross-cutting
    initiatives on pollution prevention that directly or indirectly support
    the development, evaluation, and international dissemination of cleaner
    production practices and technologies applied in the United States.
                  environmental technology--``one stop shop''
        Question. With the verification program, will EPA become the ``one
    stop shop'' for environmental technology?
        Answer. The Environmental Technology Verification (ETV) program
    verifies the performance characteristics of commercial ready
    environmental technologies using objective and quality assured data.
    The program, which began in 1995, is designed to expedite the
    deployment of improved environmental protection technologies in the
    United States and abroad, with the intent of acting as a catalyst for
    commercial acceptance into the marketplace. The program is limited
    solely to technology performance verification. As stated in the ETV
    Verification Strategy sent to Congress in February 1997, EPA intends to
    sponsor the evaluation of environmental technologies through adequate
    testing and verify \1\ that they perform at the levels reported. EPA
    does not intend to certify \2\ that a technology will always, or under
    circumstances other than those used in testing, operate at the levels
    verified.
    ---------------------------------------------------------------------------
        \1\ Verify/Verification in this context means to establish or prove
    the truth of the performance of a technology under specific,
    predetermined criteria or protocols and adequate data quality assurance
    procedures.
        \2\ Certify/Certification in this context is to guarantee a
    technology as meeting a standard or performance criteria into the
    future.
    ---------------------------------------------------------------------------
        The ETV program does not cover all aspects of innovative technology
    commercialization. In particular, the program does not assist
    technology vendors with activities associated with the ``one stop
    shop'' concept, such as financing, business planning, export
    assistance, and marketing.
        As discussed on pages 15-16 of the ETV Verification Strategy, the
    program begins a planned gradual decline of Federal funding in fiscal
    year 1999 with no plans to address all aspects of innovative technology
    commercialization.
                 international cooperation environmental status
        Question. What is the status of your efforts to expand
    international cooperative efforts concerning the environment?
        Answer. International cooperation will be critical to the
    achievement of EPA's strategic objectives. The Agency's international
    programs help reduce environmental threats along our borders; lower
    global and regional environmental risk; and elevate the quality and
    reduce the cost of environmental protection in the United States. They
    also serve broader U.S. economic, political, humanitarian and national
    security interests.
        We are focusing our efforts on Agency goals related to protection
    of North American ecosystems, climate change, stratospheric ozone
    depletion, persistent toxic pollutants, and achievement of cleaner and
    more cost-effective practices.
        Question. What is the level of cooperation with agencies in other
    countries concerning this new effort?
        Answer. Working closely with the State Department, EPA has strong
    bilateral and multilateral ties with key environmental counterparts in
    Asia, Latin America, Europe and elsewhere around the world. In the past
    two years, for example, the Agency has strengthened cooperation with
    other G-8 countries on children's health protection, climate change,
    environmental crime and environmental foresight. We have also worked
    with the Governments of Mexico and Canada and with many other countries
    in reducing transboundary and global environmental risks.
        In addition to joint pollution abatement efforts, scientific,
    technical and policy exchanges enable us to share the results of over
    30 years of experience in the United States and to benefit from
    scientific, technological and other breakthroughs achieved in other
    countries, thereby lowering the cost of environmental protection in the
    United States.
        interagency coordination of health and environmental activities
        Question. Given the large number of other Federal agencies with
    responsibilities that crosscut EPA's, how can we and the taxpayer be
    assured that EPA is not requesting funds for activities that duplicate
    those of other agencies or that could best be undertaken by those
    agencies?
        Answer. EPA is currently involved in a number of programs that
    cross-cut agencies. To avoid duplication of effort, EPA works through a
    number of processes and approaches such as Memorandum of Understandings
    (MOU's), workgroups, clearance of position papers and extensive
    interactive communications with these other agencies. We are constantly
    involved with other Federal agencies as we develop our budget request
    for these cross-cutting programs. This approach ensures that
    responsibilities are assigned to the correct agency and that funding
    requests to Congress are not duplicated. This, in turn, ensures savings
    to the taxpayers.
        There are numerous examples of this cooperation between the EPA and
    other Federal agencies. For instance, EPA's Brownfield Initiative has
    MOU's with the Departments of Housing and Urban Development, Labor,
    Interior, Commerce and the General Services Administration. In
    addition, the Vice President's Clean Water Action Plan documents the
    roles and responsibilities of each participating agency's efforts
    towards ensuring clean water. The report contains ``key actions'' which
    clearly outline Federal commitments performed by these agencies, such
    as EPA, USDA, DOI, and the Army Corps of Engineers. The Brownfield
    Initiative and the Action Plan are prime examples of interagency
    coordination without duplication of effort.
        EPA's Climate Change Technology Initiative (CCTI) partners with
    many different agencies to prevent duplicating work. A great example of
    this is the Partnership for a New Generation of Vehicles (PNGV)
    program. PNGV draws on the resources of seven Federal agencies which
    are actively contributing to the development of new technologies. For
    instance, EPA's National Vehicle and Fuel Emissions Laboratory is
    specifically equipped to focus on high-payoff, high-risk automotive
    technologies to reduce pollutants, especially carbon dioxide emissions,
    therefore, its focus will be to determine whether specific designs that
    could achieve the PNGV target fuel efficiency could also provide a
    commensurate reduction in greenhouse gases and criteria pollutant
    emissions. The Department of Commerce has several major programs
    specifically designed to spur industrial innovation, accelerate the use
    of new technologies, and encourage industry to improve quality. The
    Department of Defense is engaged in the development of military
    vehicles with major improvements in performance and efficiency.
        EPA routinely collaborates with a number of other Agencies in order
    to effectively implement the Pesticides and the Toxics programs.
    Regular and ad hoc meetings and information-sharing occur at every
    level of the organization to ensure careful planning and avoid
    duplication of effort. USDA in particular is a key component of the
    Federal strategy to ensure safe use of pesticides and food safety for
    the public. The Toxics program works closely with HUD and OSHA to
    implement the Lead abatement, asbestos protection, and other programs
    designed to protect human health and the environment. Joint planning
    and collaboration include Memoranda of Agreement and Inter-Agency
    Grants as well as participation in longer-term, comprehensive planning
    discussions across multiple agencies.
        Furthermore, the Office of General Counsel has relationships with
    agencies to avoid duplicating cross-cutting functions and costs. The
    LEXIS computer system is accessed through an inter-agency agreement
    with the Library of Congress. Contract appeals are handled through an
    interagency agreement with the Department of Labor, and general legal
    coordination is provided through the Department of Justice.
            health and environmental activities:interagency process
        Question. Your strategic plan indicates that you have already
    initiated a process with other agencies to review crosscutting areas.
    Could you explain that process and when will we see the results? Have
    you been getting good cooperation from other agencies?
        Answer. EPA has been engaged in a number of activities to ensure
    that our activities, as outlined in the Agency's Strategic Plan and
    Annual Performance Plan, are well coordinated with other Federal
    agencies. Last summer, the Agency reviewed the draft or final strategic
    plans of 28 agencies or major bureaus. These reviews underscored that
    much work needs to be done to better coordinate programs across
    government.
        EPA has a history of working cooperatively with other agencies. We
    have always acknowledged the need to engage these agencies on specific
    cross-cutting issues. For example, the issue of wetlands has brought
    many agencies together to focus on the best ways that we can leverage
    Federal activities.
        EPA has taken a number of steps in the last year to lay the
    groundwork for improving our communication with those agencies with
    whom we share cross-cutting issues. First, EPA supports the National
    Academy of Public Administration's Consortium on Improving Government
    Performance. One of the issues being addressed by the consortium is how
    to effectively conduct crosscutting coordination.
        Second, the Agency is working with a number of interagency groups
    to increase efforts to reconcile planned activities and develop
    consistent performance measures. One of these groups is the Natural
    Resources Performance Measures Forum. The Forum consists of Federal
    agencies and their bureaus with a focus on natural resources. The Forum
    includes EPA, the Department of Interior, Department of Agriculture,
    Department of Energy, National Oceanic and Atmospheric Administration,
    and the Army Corps of Engineers. The Forum is currently working with
    the Interagency Clean Water Action Plan Steering Committee to pilot an
    approach on interagency coordination using water programs as the focus.
        The Agency recognizes that effective coordination among Federal
    agencies is an incremental process and will require a concerted effort
    by program offices throughout government.
              environmental data: comprehensive and reliable data
        Question. Comprehensive and reliable data on the environment has
    been a long-term need. Where do we actually stand and what are you
    doing to fill the gaps that NAPA and GAO have pointed out in the EPA's
    environmental data systems?
        Answer. EPA is undertaking a number of activities to improve the
    quality and reliability of its data systems, considering input from
    NAPA, GAO, and statutory laws. The Center for Environmental Information
    and Statistics and the Office of Information Resource Management are
    currently accessing data to gaps and identifying the priority data
    needed to implement the Government Performance and Results Act (GPRA).
    In addition, the Reinventing Environmental Information (REI) program
    provides a framework for many of these efforts. Under REI, EPA is
    developing both data standards and electronic reporting standards. Over
    the next five years, all of the Agency's major systems will be revised
    to incorporate these data and electronic reporting standards. The data
    standards will allow cross-media integration of data and improve
    reliability of the data by eliminating errors associated with
    transferring information from paper to electronic form, and will reduce
    duplication of data collected. In implementing standards and electronic
    reporting, many of the Agency systems will be re-engineered using
    state-of-the art technology that will also improve reliability.
        Through the Environmental Council of the States, EPA is working
    closely with the states on REI and other data quality issues. The One-
    Stop program provides a framework for EPA and states to coordinate
    their information needs and system development activities to reduce
    duplication and increase reliability.
                      environmental data: data priorities
        Question. Could you briefly describe your data priorities, how
    these were arrived at, and how they are reflected in the performance
    plan and budget?
        Answer. The Agency's Reinventing Environmental Information
    initiative has a plan for improving the standards for EPA's data so
    that the data can provide decision makers with necessary information on
    how to protect human health and the environment. Additionally, the
    Agency's data priorities are determined by the individual data
    requirements of each program office. A high priority is the expansion
    of our efforts for Americans' right-to-know about their environment
    that cross programs. We are providing spatial data as well as other
    data in an effort to support performance outcome measurement and
    community-based environmental protection. We continue to seek
    stakeholder input to help us set our data priorities in a manner
    informed by their needs. We have found that our flexibility to obtain
    new data is limited by the requirements to meet statutory mandates
    within budget constraints.
                    peer review: status to address concerns
        Question. Could you please inform this subcommittee about the
    current status of actions to address concerns that EPA's peer review
    policy is being implemented unevenly across the agency?
        Answer. The Agency has taken a number of steps to ensure that the
    Peer Review Policy is being implemented consistently across the Agency.
    In January 1998, a report on the 1997 evaluation of peer review
    implementation across the agency was submitted to the Deputy
    Administrator by the Office of Research and Development. This report
    contained a number of suggestions for improving the clarity and
    documentation of peer review policies and procedures across the Agency.
    On February 25, 1998, the Administrator and Deputy Administrator
    cosigned a memorandum that released the Peer Review Handbook for use
    across the Agency. The Handbook was prepared in response to the
    findings of the 1997 evaluation and provides a common base of
    information for use by Agency staff in identifying products for peer
    review and planning, conducting, and documenting peer reviews of
    scientific and technical products used in Agency decision making. The
    Peer Review Handbook was developed by the Peer Review Advisory Group of
    the Science Policy Council; this Group represents both Headquarters and
    Regional organizations and has extensive experience in both conducting
    and overseeing peer review. The Handbook was reviewed by the Science
    Policy Council, its Steering Committee, and the Peer Review
    Coordinators from each major Agency organization before it was approved
    for use. Since the issuance of the Handbook, training material has been
    developed and presented to the Peer Review Coordinators from each
    Assistant Administrator and Regional Administrator's office. The
    material for use in training managers and peer review leaders is being
    revised based on feedback from its initial presentation and will be
    made available across the Agency by mid July.
          peer review: establishment of specific criteria by congress
        Question. Given GAO's March 1997 testimony and your acknowledgment
    at the same hearing of inconsistent peer review implementation, would
    it be helpful now for the Congress to establish some specific criteria
    for peer review of the scientific and technical work products that
    underlie EPA's major actions?
        Answer. At this time, we feel that the Agency's criteria for
    selecting products for peer review are sufficiently detailed to ensure
    their consistent application. EPA is committed to using the best
    possible science and peer review for rule making. Therefore, we feel
    that it is not necessary for Congress to establish peer review criteria
    for our scientific and technical work products.
        The recently issued Peer Review Handbook provides expanded guidance
    on the selection of products for peer review and requires increased
    management involvement in the development of lists of products for peer
    review and in the decision to review specific products from the lists.
    The Handbook is located at http://www.epa.gov/ORD/spc/sopmenu.htm on
    the Internet.
               peer review: clean air science advisory committee
        Question. Isn't it true that one of the major successes that EPA
    now points to is the Congress' establishment of the Clean Air Science
    Advisory Committee, or CASAC, review process?
        Answer. It is true that the CASAC mechanism for peer reviewing
    science that underlies Agency decisions on air pollution standards is
    an effective mechanism for ensuring quality of the science. In fact the
    CASAC is only one of a many peer reviews that are managed by the
    Agency's Science Advisory Board (SAB). The same standards for selection
    of experts, appropriate balance and independence that guide the CASAC
    process also guide the operation of the other review panels convened by
    the SAB. The Agency's recently released Peer Review Handbook outlines
    the same objectives and similar procedures for all peer review panels
    utilized by the Agency to peer review major scientific and technical
    documents.
                      peer review: number of staff trained
        Question. In 1996, the GAO recommended that the EPA educate staff
    and managers on the need for and benefits of peer reviews. How many
    staff have been trained in the proper techniques for carrying out peer
    review activities?
        Answer. As the Peer Review Handbook was being developed, the Office
    of Research and Development (ORD) developed a strategy for distributing
    the information in the Handbook across the Agency. The strategy called
    for development of training materials to be used by organizations' Peer
    Review Coordinators in training managers and peer review leaders about
    their responsibilities in the peer review process. The Peer Review
    Coordinators received the training in May 1998. The training materials
    used in May have been revised based on comments received after the
    session. The Peer Review Coordinators are responsible for providing
    training to managers and others within their organizations. We expect
    to complete training of Decision Makers, line managers, and Peer Review
    Leaders during fiscal year 1998.
                 peer review: peer review and peer involvement
        Question. GAO also found a few years ago that some EPA offices
    routinely used employees from the same office to comment on their own
    work products and called this peer review. EPA's own Science Advisor at
    the time said that this was peer involvement--a valuable tool--but that
    it fails to the independency requirement for peer review. Has the
    difference between peer review and peer involvement been clarified for
    EPA staff?
        Answer. The Peer Review Handbook clearly defines peer review and
    peer involvement as separate, and distinctly different forms of review.
    Sections 1.2.2, 1.2.3, 1.2.4, and 1.2.5 of the Handbook discuss the
    definitions of and differences between these terms, including the term
    peer input. In general, peer involvement involves the active outreach
    to and participation by the broad scientific, engineering, and
    economics communities. Peer involvement can take the form of peer
    review or peer input. Peer Review is a documented critical review of a
    specific Agency work product. The peer review is conducted by qualified
    individuals who are independent of the work to be reviewed and are
    collectively equivalent in technical expertise to those who performed
    the original work. The peer review is conducted to ensure that
    activities are technically adequate, competently performed, properly
    documented, and satisfy established quality requirements. Peer input
    generally involves an interaction during the development of an evolving
    product, providing an open exchange of data, insights, and ideas.
    Whereas peer review tends to be a one-time interaction or a limited
    number of interactions by independent peer reviewers, typically upon
    culmination of the work product, peer input tends to be continuing and
    iterative as a product is being developed, such as that provided by a
    workgroup with continuous involvement in the development of a product.
        Peer input can play an important role during the development of
    most products, as it provides additional information and points of view
    to the process. However, it does not substitute for peer review, which
    is the review of a product by independent reviewers who have not had
    prior involvement with the product. Even though a product has
    benefitted from substantial peer input, peer review would still be
    necessary if the product was being used to support an Agency decision.
             peer review: expansion of current list recommendation
        Question. GAO was also concerned that various scientific and
    technical work products could fall through the cracks without EPA
    senior managers' awareness and approval that such products not be peer
    reviewed. GAO recommended that you expand the current list of products
    nominated for peer review to include all major products, along with
    explanations of why individual products are not nominated for peer
    review. Has this GAO recommendation been implemented? If not, why not?
    Also, do you intend to have the MOBILE5a and other key models peer
    reviewed?
        Answer. Yes, the GAO recommendation regarding expansion of the
    listing process to include all scientific and technical work products
    was included in the 1997 reporting on peer review implementation and
    has been included in the Peer Review Handbook.
        The Peer Review Handbook clearly includes models within the
    definition of scientific and technical work products. If the model is
    new or has major impact across a large area or to a large segment of
    the regulated community, then the model is a candidate for peer review.
    Also, if a previously peer reviewed model is being used in a
    circumstance that was not covered by the earlier review or has been
    substantially modified, then it would be a candidate for additional
    review. The MOBILE5a model will be peer reviewed. In fact, we intend to
    have all newly developed models undergo peer review.
                        reinvention: gao recommendation
        Question. GAO's July 1997 report on EPA's Reinvention program cited
    widespread concerns over the large number of complex and demanding
    initiatives now being undertaken, as well as confusion over the
    underlying purpose of some of the agency's many reinvention
    initiatives. The GAO also made several recommendations to correct this
    problem. Has EPA done anything in response to these concerns and the
    GAO recommendations?
        Answer. EPA has taken a number of steps to address GAO's concerns
    and is continuing to make progress on all four of GAO's
    recommendations.
        EPA recently issued a short document, ``Reinventing Environmental
    Protection--EPA's Approach,'' (attached) that explains the need for
    reinvention, the agency's objectives for reinvention, and a framework
    that illustrates how EPA's reinvention activities fit together into a
    cohesive approach for improving environmental protection. Additionally,
    the Office of Reinvention developed an initial inventory of reinvention
    initiatives and programs last fall, and this inventory was used to
    identify key cross-cutting areas where greater focus and coordination
    is needed, for example:
        Permitting.--Drawing on the many recommendations and experiments to
    reinvent permitting, the Agency has developed and is now implementing a
    ``Permit Action Plan'' that identifies a key set of activities,
    responsible offices, and time frames, for permit reform at EPA.
        Sector-based approaches.--In February, the Administrator and Deputy
    Administrator directed that the Agency's senior management work with
    the Common Sense Initiative (CSI) Council to develop an action plan
    that will integrate sector-based approaches into the fabric of Agency
    programs. The action plan, to be completed this fall, will define
    actions based on CSI ``lessons learned'' and will address issues such
    as stakeholder involvement in sector-based approaches.
        Environmental Management Systems (EMS's).--The Deputy Administrator
    directed the Office of Reinvention to bring together the various
    efforts relating to EMS's and ensure that EPA speaks with a consistent
    voice in this area. As part of that effort, EPA published a position
    statement in the Federal Register in March, publicly expressing support
    for the use of EMS's in the regulated community, and also announcing an
    effort to evaluate the effects of EMS's on environmental performance,
    compliance, cost, and other important dimensions.
        The second GAO recommendation suggested that EPA needed to clarify
    the circumstances under which unanimous agreement in a stakeholder
    process is required. This recommendation was primarily intended for
    CSI--where some have felt that progress has been hindered by the
    difficulty in reaching full consensus. Last November, the CSI Council
    approved a guidance document on the principles and applications of
    consensus, and this document is proving to be a useful tool for the
    Council and sector subcommittees.
        The third GAO recommendation emphasized the need for improved
    internal management processes for problem-solving and decision-making.
    In 1997, the Office of Reinvention was created to improve management
    and coordination of reinvention activities across the Agency.
    Additionally, the senior career managers in the Agency (i.e., the
    Deputy Assistant Administrators and Deputy Regional Administrators)
    have been designated by the Deputy Administrator to facilitate quick
    resolution of issues arising in the implementation of reinvention
    projects within their offices. And, the Office of Reinvention convenes
    meetings of these senior managers quarterly, to provide guidance and
    make decisions on the Agency's reinvention activities. As EPA embarks
    on new reinvention efforts, the Agency is defining explicitly the
    management authority and accountability structures that foster timely
    and efficient decision-making. For example, under the new agreement
    with the states on innovation, the Regional Administrators are
    identified as the responsible decision-makers on state proposals for
    innovation, and we have defined appropriate time frames for decision-
    making.
        Finally, the fourth GAO recommendation stated that each of the
    agency's reinvention initiatives should include an evaluation
    component. EPA has contracted with the National Academy of Public
    Administration (NAPA), as directed by the Appropriations Committee, to
    conduct external evaluations of key reinvention activities. An
    important part of NAPA's work will include helping to build evaluation
    capacity within EPA, such as providing training and guidance materials.
    The Office of Reinvention has established a senior evaluation position
    to work with EPA reinvention project leaders on evaluation. Evaluation
    components are underway or are being developed for key reinvention
    initiatives such as Project XL, the Common Sense Initiative,
    Brownfields, the compliance assistance centers, and the National
    Environmental Partnership Program with the states. Finally, EPA is
    increasing its use of customer satisfaction surveys in many areas, to
    ensure that our activities are responsive to customer needs.
                  reinvention: statutory change not warranted
        Question. EPA's past position has been that statutory change is not
    warranted to facilitate reinvention of environmental regulation. Has
    that position changed in recent months?
        Answer. In general, EPA does not think that new legislation is
    necessary to carry out the work of reinvention. Indeed, we are making
    significant progress in finding cleaner, cheaper, and smarter
    environmental solutions under the existing legal structure. We do think
    that in some discrete areas legislation could be helpful, as long as it
    has a broad base of support. For example, we are supporting the
    ``Innovative Environmental Strategies'' bill introduced by Sen.
    Lieberman because creating a clear legal framework for experimentation
    may encourage more companies to participate in reinvention programs and
    give stakeholders more confidence in those programs. However, we do not
    believe such legislation is needed in order to proceed with Project XL,
    CSI and similar efforts.
                      right-to-know: plan to access impact
        Question. In the spirit of the Government Performance and Results
    Act, how do you plan to assess the impact of the Right to Know or
    public outreach efforts in achieving the agency's goals for a clean
    environment?
        Answer. The success of the Agency's Right-to-Know or public
    outreach efforts is ultimately determined by increased understanding
    and actions by the public about their environment. We believe that with
    increased knowledge, the public will be able to make decisions to help
    solve the nation's environmental problems, particularly at the
    community level. EPA is helping the public develop these capabilities
    by providing the information, data, tools, and skills to take effective
    action. Measures to assess our progress will focus in three areas--
    information access, stakeholder awareness, and improved environmental
    conditions in targeted areas.
        Various means will be employed to assess the impact of these
    efforts. One way will be by assessing the number of people who access
    our information. Technological advances in disseminating information,
    such as through the Internet, will help us assess this impact easily.
    With regard to providing information to low-income and rural
    communities that lack access to computers, and the Internet, EPA has
    made efforts to determine the best way to provide these communities
    with right-to-know and assess the impact of these efforts. Over the
    past year, in more than 30 meetings that we have convened with
    environmental information user groups (including representatives of
    low-income, low environmental literacy and rural groups) our
    ``environmental information'' customers have indicated that they often
    depend on intermediary organizations who have more immediate contact
    with them, a track record of communicating technical and scientific
    information in layperson's terms, and who are often focused on
    addressing a particular health or environmental issue. Rural
    information users for example, said that they depend on accessing EPA
    data and information from local USDA extension agents and NIOSH staff
    who are involved in worker safety issues, most frequently via
    newsletters and workshops (during non-growing seasons).
        In a meeting with the Afro-American community in Philadelphia,
    Pennsylvania, our customers said that they depend on community
    newspapers and telephone services to access EPA information. To be
    successful, EPA will need to establish partnerships with these
    intermediary organizations and develop the means to provide access that
    are preferred by the end users. For example, EPA's new Center for
    Environmental Information and Statistics, last week, launched a new web
    site in partnership with the Federal depository library system and the
    American Library Association, in order to provide more than 170-million
    Americans in urban and rural areas, access to the Internet and EPA
    information resources via 16,000 public branch libraries nationwide. In
    the Brooklyn neighborhood of Baltimore, Maryland, EPA and several other
    community-based groups are cooperatively monitoring, analyzing and
    reporting air emissions and water pollution levels in a partnership
    that provides all community residents access to environmental data and
    information.
        We will also determine whether the public find the information they
    receive useful. A classic example of this involves our Toxic Release
    Inventory data which is collected and provided to the public to inform
    and assist them in protecting their families and their communities. EPA
    conducts periodic focus groups and feedback sessions to ascertain how
    well the public understands and uses these TRI data. The TRI program is
    proposing to conduct follow-up monitoring in areas of the country where
    there have been reports of high volumes of toxic releases, to ascertain
    whether or not the provision of TRI data and information has led to
    actual decreases in emissions.
                     right-to-know: accuracy of information
        Question. In the push to carry out Right-to-Know activities at the
    program level, what controls do you have in place to ensure that the
    information provided the public is accurate, complete, and put in the
    proper context to avoid raising undue concern or inappropriate use of
    the data?
        Answer. EPA is committed to improving the accuracy and completeness
    of the information it provides to the public. At the same time, the
    Agency also is committed to making its information publicly available
    unless there is a specific statutory basis for withholding the
    information. Our focus has been on making data more readily available,
    without interpreting the data for the public. To put information into
    proper context and to enhance understanding, EPA is expanding access to
    and availability of metadata on Agency information, that is descriptive
    information such as definitions, origin, source, and any data
    describing how, why, or when the data was collected including
    indications on the accuracy of the data or its precision. Metadata
    provides a high-level of information about the characteristics of the
    data contained in the database. It answers the important questions
    which inquire into the background and history of the data set. EPA's
    new CEIS website will include very thorough discussions of the
    strengths, weaknesses and appropriate uses for EPA environmental data
    available on the website. We seek to help people understand the data
    they are reading, as well as its potential uses and limitations, by
    providing metadata along with the actual data. The Agency is also
    striving for continuous improvement in quality of information,
    recognizing that no set of information will be completely free of
    errors and inadequacies. Feedback from the public and from regulated
    entities is an important part of the information quality improvement
    process, as stakeholders often are best able to recognize and comment
    on errors. When information is not publicly available, EPA loses the
    benefits of such feedback.
        As part of our commitment to the public Right-to-Know initiative,
    the Agency is developing a Data Quality Strategic Action Plan, due for
    completion by September 30, 1998. The plan will address issues and
    concerns related to data quality, accuracy, completeness, and
    reliability, and will define a process for addressing these problems.
        The Agency's Reinventing Environmental Information (REI) initiative
    was established in an effort to improve our ability to collect and
    report accurate data to the public, with less burden to industry. Under
    REI, EPA is developing data and electronic reporting standards. Among
    other things, these standards will improve the quality and reliability
    of our data by allowing cross-media integration of data, and
    eliminating errors associated with transferring information from paper
    to electronic form.
               right-to-know: establishing standards of accuracy
        Question. Have you established any standards as to the accuracy,
    completeness, reliability, or proper context that data must meet before
    it is made available to the public?
        Answer. EPA is committed to accurate, complete, and reliable data
    collection and provision, consistent with our statutory mandates,
    mission, available resources, and burden reduction goals. Similarly, we
    seek to provide good metadata to help furnish a context for
    interpretation of our data. Metadata provides a high-level of
    information about the characteristics of the data contained in the
    database. It answers the important questions which inquire into the
    background and history of the data set.
        The EPA is undertaking a number of activities to improve the
    accuracy and reliability of its data. In response to Congressional and
    public interest in EPA's data, and awareness about data errors in EPA's
    national systems, the Administrator has tasked the Chief Information
    Officer with developing a Data Quality Strategic Action Plan. This plan
    is due for completion by September 30, 1998. It will define the
    problems, present strategies and costs for addressing them, and lay out
    a process, responsibilities, time-lines, and costs. The plan is a
    management approach to changing behaviors and processes both internally
    and externally that will allow the Agency's program and Regional
    managers to correct data quality problems now, and avoid them in the
    future.
        In an effort to improve our ability to collect and report accurate
    data to the public, we have launched the Reinventing Environmental
    Information (REI) initiative. Under REI, EPA is developing data
    standards and electronic reporting standards. Over the next five years,
    all of the Agency's major systems will be revised to incorporate these
    data and electronic standards. The data standards will allow cross-
    media integration of data and improve reliability of the data.
    Electronic reporting will improve the quality and reliability of the
    data by eliminating errors associated with transferring information
    from paper to electronic form and will reduce duplication of data
    collected. In implementing standards and electronic reporting, many of
    the Agency systems will be re-engineered using state-of-the-art
    technology that will also improve reliability.
                        right-to-know: security of data
        Question. Considering your efforts to make more data available to
    the public on the Internet, what controls do you have to protect the
    security of the data from intruders or hackers? (In September 1997, the
    EPA Inspector General reported that it had found several cases of
    hacker intrusion.)
        Answer. EPA employs multiple security mechanisms to protect data
    from intruders or hackers.
        For the Network.--Physical access to EPA's internal network is
    controlled by requiring that data reside in EPA (leased or owned)
    facilities and we allow only one connection between the Agency's
    internal network and the Internet, and protect this connection with a
    ``firewall''.
        Access to privileged commands on the network infrastructure is
    restricted to a small number of key individuals. EPA's network router
    audits trails daily for activities that could indicate the presence of
    an intruder or a hacker on the Agency network. Suspected problems are
    quickly followed up with the appropriate internal and external security
    groups, the Inspector General, and law enforcement groups, if
    necessary. EPA monitors and implements the appropriate security alerts
    and controls recommended by government and industry security groups. As
    such, EPA has installed direct controls on the Agency firewall router
    which is the single point of connection between EPA and the Internet.
    These targeted controls ward against anti-spoofing, discovery of the
    topology and structure of our network, blocking NetBt and SNMP, and
    other items recommended by national security organizations.
        Finally, the EPA contractor and Federal Network Information
    Technology staff maintain a constant state of training and alert status
    relative to the technical aspects of state-of-the-art networking,
    network security, and damage/waste prevention.
        For the Public Access Server.--EPA controls physical access to the
    computer systems on which the public access data resides. For purposes
    of data update, the Agency also limits network access to the system to
    registered users, coming from registered Internet addresses.
        Access to privileged commands is restricted to system
    administrators on a need-to-use basis. EPA employs Class C2 security on
    all our central systems, in accordance with the Department of Defense
    Trusted Computer System Evaluation Criteria, DOD 5200.28-STD (commonly
    called ``The Orange Book''). All central systems separate user data
    areas from those of the operating system, and maintain separate access
    controls for each user's data. The data for each user and project is
    only modifiable by users and groups authorized by the user owning the
    data.
        The Agency maintains audit trails of significant system events (log
    in successes and failures, failed access attempts against system level
    files, and privileged command use), and reviews system audit trails
    routinely to detect potential threats to system, application, or data
    integrity. Further, the Agency records checksums on important system
    files and use automated monitoring for any change to alert us to
    possible tampering.
        Operations staff monitor the public access systems twenty-four
    hours a day, seven days a week, to assure their availability and
    integrity. Security alerts are monitored from government and industry
    security groups. As a result, EPA regularly installs software patches
    and initiate procedures necessary for system and data security.
        Persistent intrusion attempts are detected occasionally, as we did
    in both the incidents reported by the Inspector General and in other
    situations where no actual intrusion occurred. If any intrusion does
    occur as a result of previously unidentified security vulnerabilities
    (e.g., in system software), situation-specific steps are taken to
    contain and then eliminate the intrusion. Its impact is then assessed
    and its effects reversed, restoring data and service as expeditiously
    as due diligence allows. The Agency also maintains backup copies of all
    data, including off-site copies, to prevent data loss for any reason.
                right-to-know: sector facility indexing project
        Question. A serious concern recently reported in the trade press is
    the issue of data reliability as it involves EPA's Sector Facility
    Indexing Project (SFIP), initially scheduled for January 1998
    implementation. What is EPA doing to resolve these concerns--especially
    as they relate to the SFIP's use of chemical release toxicity weights?
        Answer. EPA worked for three years to identify the facilities to be
    included in the SFIP, and to collect and verify the data. Each facility
    received a copy of its compliance and enforcement data for review, to
    identify any problems before the information was distributed through
    the SFIP.
        Prior to the industry data review, EPA specifically asked the
    states to review the data and make changes, as appropriate. Based upon
    these data reviews, EPA believes that the information in the underlying
    databases is generally of high quality. EPA will continue to work with
    stakeholders to ensure the greatest possible quality of data in the
    SFIP.
        In total, facilities commented on 4 percent of the 38,000 major
    data elements they received for review. About half (53 percent) of
    their comments were accepted. The remaining 47 percent were either
    inaccurate (the review determined that the data was correct and no
    change was necessary) or the facility comment was not accompanied by
    the necessary documentation to explain the facility's position in order
    for a determination on the accuracy of the comment to be made.
        The accuracy of the data depends upon reliable reporting by states,
    local agencies, and industry. Accuracy also depends upon correct
    recording of information by regulatory agencies at local, state, and
    Federal levels. EPA, in conjunction with the affected stakeholders,
    will continue to work on improving the quality and consistency of the
    underlying data. EPA has set up an SFIP Hotline (617-520-3015) for
    users to ask questions about the data and has also established a
    ``comment page'' on the SFIP website for users to submit their comments
    instantly.
    Toxicity Weights
        Based upon stakeholder comments that known chemical toxicity data
    should be used to distinguish chemicals of high hazard from chemicals
    of lower hazard, a toxicity-weighting system for facility-specific TRI
    data was developed for the SFIP. This system was considered to be an
    interim step towards incorporating relative risk-based information,
    which is a long-term goal of the SFIP. The EPA Science Advisory Board
    (SAB), which reviewed EPA's toxicity weighting methodology, confirmed
    that a toxicity-weighted approach is ``a step in the right direction''
    and that the scientific underpinnings of the toxicity weightings are
    sound. However, EPA also received comments from many stakeholders that
    toxicity data do not go far enough in examining potential risks and
    that risk components should be factored into the SFIP along with
    toxicity weights. Toxicity weighting allows users to examine where
    potential hazards may be without respect to whether population may be
    affected, whereas relative risk-based analysis examines potential
    interactions between chemical releases, toxicity, weather patterns,
    chemical dispersion properties, and surrounding populations.
        Although EPA concurs with the SAB that toxicity weighting is a step
    in the right direction and is useful on its own, the Agency also agrees
    with stakeholder comments that relative risk-based analysis is of
    equal, if not greater, importance. Therefore, facility-specific,
    toxicity-weighted TRI data have not been included in the initial
    release of the SFIP. EPA plans to incorporate both toxicity weights and
    risk-based analysis into future SFIP iterations.
                  right-to-know: sfip's implementation status
        Question. What is the SFIP's implementation status?
        Answer. The SFIP became available on the Internet for use by the
    general public on May 1, 1998. The SFIP Internet address is as follows:
    http://www.epa.gov/oeca/sfi.
        A system has been established for making changes to the SFIP data.
    To report a possible inaccuracy, users can call the SFIP Hotline at
    617-520-3015 and explain their concern. They will then be directed to
    the proper individual within EPA. In addition, a ``comment page'' is
    located on the SFIP website for users to instantly submit comments on
    any aspect of the project, including concerns with regard to the data.
        EPA also plans to release summary SFIP information in a hard copy
    format in the near future.
      right-to-know: adequacy of data disseminated through ``envirofacts''
        Question. Another area of concern is the adequacy of environmental
    data from seven EPA program systems that are integrated and
    disseminated through the EPA's ``Envirofacts'' database on the
    Internet. Critics, including a former EPA official, say that
    Envirofacts does not provide enough context for the public and other
    users of the database and that this could lead to misuse. What, if
    anything, is EPA doing to address these concerns and to help
    Envirofacts users understand the data?
        Answer. Envirofacts provides public access to a wide range of non-
    sensitive EPA information, such as environmental, facility, and spatial
    data, to Federal agencies, states, environmental interest groups, the
    regulated community, and the general public. It eliminates the need to
    obtain information from multiple systems individually. The purpose is
    to provide reader access to the public data and, therefore, EPA makes
    no value judgments. EPA seeks to support sound science and the public's
    right-to-know initiative by presenting factual data through
    Envirofacts. Other interested parties are then allowed to interpret the
    data as they see fit. Several tools are readily available within
    envirofacts to assist the interpreter in understanding the data.
        More specifically, such tools include an ability to overview the
    information, the metadata warehouse, and a data dictionary. Envirofacts
    provides an overview to introduce the user to the information. Metadata
    provides a high-level of information about the characteristics of the
    data contained in the database. It answers the important questions
    which inquire into the background and history of the data set. Users
    are encouraged to consult the metadata to understand and make better
    use of the Envirofacts database. Finally, a complete data dictionary is
    available to assist users with the technical and scientific jargon.
    There are no explicit constraints on the use of the data because of its
    public nature.
        EPA has supplied these tools to aid in the understanding of the raw
    facts. It is up to the viewer to interpret the data as they see fit
    and, as a result, the interpretation depends on the viewpoint and the
    motives of the interested party. We are exploring through our Center
    for Environmental Information and Statistics (CEIS) ways to support the
    interpretation of our data and expect to make progress in this area as
    CEIS becomes fully operational.
            right-to-know: legal authority to gather tri information
        Question. Does EPA have sufficient legal authority to gather and
    disseminate the TRI information it needs to meet its right-to-know
    responsibilities under the Emergency Planning and Community Right-to-
    Know Act and the Pollution Prevention Act? If not, what changes are
    needed?
        Answer. Since the Emergency Planning and Community Right-to-Know
    Act (EPCRA) was enacted in 1986, EPA has successfully exercised its
    authority to gather and disseminate chemical release information on
    over 600 chemicals from 27 industries. The Agency has exercised
    authority under EPCRA to add and delete chemicals, add new industry
    sectors, modify reporting thresholds, and modify the reporting form. In
    addition, EPA has exercised its authority under the Pollution
    Prevention Act to collect and disseminate expanded TRI information
    related to managing waste and source reduction. The Agency is reviewing
    all relevant statutes and is considering a variety of strategies that
    could be used, individually or in combination, to expand the reporting
    and public availability of information.
                  performance partnership: process vs results
        Question. Initial feedback from states suggests that they like the
    focus of the NEPPS system on results, and that they believe the system
    has potential for providing them with greater flexibility. However,
    some have indicated that certain EPA Headquarters offices resist
    providing the added flexibility. EPA's Office of Enforcement and
    Compliance Assurance is often mentioned by state officials, who say
    that office is too focused on ``process'' rather than ``results''. EPA
    has expressed a desire to become more outcome-oriented and the states
    have encouraged the agency to move in that direction as well. However,
    the performance plan, in areas such as enforcement, establishes
    predominantly output performance goals and measures. Why do we have
    this disconnect between EPA's rhetoric and its 1999 performance plan
    and what is EPA doing to address this discrepancy?
        Answer. Fiscal year 1999 is the first year for implementing GPRA
    and transitioning to a new budget and planning framework. EPA is
    committed to implementing an outcome-oriented management approach, and
    has worked actively with states over the past several years to develop
    outcome measures that clearly link activities to the achievement of
    environmental goals and objectives.
        These new measures will allow flexibility while complementing
    existing output measures, such as the number of inspections or
    enforcement cases. As EPA and state leaders agreed when they signed the
    original agreement launching the National Environmental Performance
    Partnership System (NEPPS) in 1995, a mix of both output measures and
    environmental indicators will always be needed for program management
    purposes.
        The Office of Enforcement and Compliance Assurance (OECA) is
    gradually combining outcome measures with output measures to provide a
    more complete assessment of performance. OECA has made progress in
    moving beyond tracking solely outputs and anticipates additional
    improvements in measures in future years. OECA currently collects
    outcome data, such as environmental results from enforcement actions,
    and reports this data in the annual Enforcement Accomplishment report.
        In January 1997, OECA initiated the National Performance Measures
    Strategy ``to develop and implement an enhanced set of performance
    measures for EPA's enforcement and compliance assurance program.'' We
    have spent over a year working with states, the regulated community and
    public interest groups to develop a workable set of measures.
    Developing this strategy clearly pointed out the difficulty in
    developing new outcome-oriented measures that fairly and adequately
    portray results. Despite these difficulties, the final report, issued
    in January 1998, describes the enhanced set of measures and a plan to
    implement these measures is underway.
           performance partnership: criticism on process vs. results
        Question. How do you respond to the criticism that some of EPA's
    offices, such as the Office of Enforcement and Compliance Assurance,
    resist providing states with the flexibility to focus their
    environmental programs on results, and instead compel them to focus on
    process-oriented activities?
        Answer. All of the EPA National Program Managers (NPM), including
    the Office of Enforcement and Compliance Assurance (OECA), work closely
    with the states through the Environmental Council of the States (ECOS),
    to develop core performance measures (CPM) to measure state
    environmental performance. Core performance measures for the
    enforcement and compliance assurance program are referred to as
    ``accountability measures.'' The accountability measures are in sync
    with OECA program measures, which relate directly to the Agency's goals
    and assist OECA in meeting its obligations under GPRA.
        Core performance measures (including accountability measures) were
    issued under the ``Joint Statement on Measuring Progress Under the
    National Environmental Performance Partnership System'' signed by EPA
    and State officials in August 1997, which reaffirms our joint
    commitment to use core performance measures as tools to track progress
    in achieving results.
        Current accountability measures are a mixture of outcome and output
    measures. Traditionally, EPA relied on output measures, such as the
    number of enforcement actions taken and inspections conducted. These
    will remain important measures of program performance and
    accountability for both EPA and the states because they assure the
    public of the government's presence, they provide accountability for
    Federal and state actions, and they give EPA and the states important
    information about how our strategies are working.
        However, the core performance measures for states also reflect the
    progress EPA has made in developing outcome measures. Outcome measures
    included in the core performance measures are:
      --rates of significant non-compliance by industry sector and by
            media;
      --percent of significant violators in each media that have new or
            recurrent significant violations within two years of receiving
            a formal enforcement action;
      --environmental and/or public health benefits achieved through
            inspection and enforcement activities (e.g., case settlements,
            compliance agreements, injunctive relief, Supplemental
            Environmental Projects); and,
      --results or impact of using: state audit privilege or immunity law;
            state audit policies; state small business compliance
            assistance policies; and compliance assistance initiatives
            developed for specific industry sectors.
                 performance partnership agreements and grants
        Question. Will Performance Partnership Grants allow states to focus
    on the highest environmental priorities and effect real changes in the
    services delivered by states?
        Answer. Under Performance Partnership Grants (PPG's), states can
    negotiate work plans with the U.S. Environmental Protection Agency
    (EPA) that direct Federal funds where the state needs them most to
    address environmental and public health problems. States can choose to
    combine funds from up to 16 different EPA grant programs into a PPG.
    EPA's goal in the PPG program is to provide as much flexibility to
    states as possible while assuring fiscal accountability and
    implementation of core environmental programs.
        In the National Environmental Performance Partnership System
    (NEPPS), states and EPA jointly develop priorities and strategies based
    on an assessment of environmental conditions and program needs in the
    state. The Performance Partnership Agreements (PPA's) that result from
    these negotiations typically set out jointly developed goals,
    objectives, and priorities; the strategies to be used in meeting them;
    the roles and responsibilities of the state and EPA; and the measures
    to be used in assessing progress. A PPA is generally based on
    information about the environmental and program conditions of the
    state, as well as national and Regional priorities and concerns. A
    state may apply for and receive any grant, as well as a PPG, without
    negotiating a PPA. However, a PPA can provide the strategic
    underpinning for the work a state plans to carry out with EPA financial
    assistance, and in some cases, the PPA actually serves as the grant
    work plan.
        In proposing to direct resources in a PPG away from lower priority
    areas to areas of greater need, states need only assure that base
    environmental programs will be carried out and explain why the proposed
    use of resources would be beneficial. Some states are using PPG's to
    try new approaches, such as multi-media inspections, compliance
    assistance programs, and ecosystem management, that were difficult to
    fund under traditional categorical grant programs. By allowing states
    to combine two or more categorical grants, PPG's offer states an
    opportunity for administrative cost savings by not having to negotiate
    and track separate grants. Although states choosing to receive their
    Federal funds in PPG's may be realizing cost savings through the
    streamlined administrative requirements, any actual savings achieved by
    the states have not yet been quantified. A recent Management Assistance
    Review (12/97) by the EPA Inspector General of the PPA and PPG in Texas
    indicates that the state is seeing some administrative savings, but has
    not yet quantified them. Savings that are realized by the states will
    free up resources to do more environmental protection generally--
    providing benefits in all PPG states, including those not shifting
    resources among programs or to multi-media approaches.
        Question. What changes are needed in EPA's oversight of the states
    in light of the state/Federal partnership implied by these grants?
        Answer. Under NEPPS and PPG's, EPA still has responsibility and
    authority to conduct oversight of state programs under the various
    Federal environmental statutes. As one of its fundamental goals, NEPPS
    seeks to achieve more efficient and judicious use of this authority.
    The NEPPS process provides an opportunity for EPA and the state to
    discuss strengths and weaknesses in a state's environmental programs,
    and to design solutions to problems or rewards for good performance to
    suit the specific situation. Agreements reached about oversight are
    often articulated in the PPA itself.
        Under NEPPS, EPA and individual states have negotiated such changes
    in oversight as reductions in the frequency of reports and on-site
    reviews, elimination of unnecessary reports, and direct information-
    sharing. In some states, EPA and the state are jointly carrying out
    tasks ``side by side;'' this approach allows EPA to oversee a state
    process while assisting the state in getting real work accomplished. In
    another example of how EPA is providing technical assistance, EPA staff
    were assigned to work part time in a state to help the state clear its
    significant permit backlog.
        All Federal grants, including PPG's, are subject to government-wide
    performance and fiscal accountability requirements. EPA is responsible
    for ensuring that the state carries out the work the state agreed to
    perform and has properly used Federal funds. To build partnership into
    the grant process to the extent possible, EPA is working with the
    states to draft a revised rule governing EPA grants to states, which
    significantly streamlines administrative requirements. The new rule, as
    currently drafted, emphasizes joint planning and priority setting,
    promotes the use of a results- oriented management framework, and
    requires joint development and implementation of grant evaluation
    plans. EPA expects to propose this rule in fiscal year 1999.
        Question. What progress have EPA and the states made in developing
    alternative measures of state performance?
        Answer. EPA and the states have been working jointly in several
    different groups over the last few years to develop better performance
    measures. The principal focus of these groups has been to develop more
    results-oriented (outcome) measures which can be used in combination
    with the more traditional activity (or output) measures. In August of
    1997, EPA and the Environmental Council of the States (ECOS), an
    organization comprised of senior state environmental officials, agreed
    to a set of fiscal year 1998 Core Performance Measures, as well as to
    the overall architecture, terms, and definitions for those measures.
    While many of the measures in that set are still considered ``works in
    progress,'' this agreement was a major milestone in developing better
    measures of state and EPA environmental performance. These measures are
    being tested and refined by joint EPA/state workgroups. These groups
    plan to recommend refinements to the measures in time for use in fiscal
    year 2000.
        In addition to the work of these joint groups, notable examples of
    progress in developing new measures can be found in New Jersey's
    emphasis on new environmental measures; Florida's efforts to measure
    environmental compliance as contained in the ``Secretary's Quarterly
    Performance Report'' from the Department of Environmental Protection;
    and the EPA Office of Enforcement and Compliance Assurance's (OECA)
    ``Final Report of the National Performance Measures Strategy,'' issued
    in January 1998. OECA received extensive involvement and input from
    stakeholder groups representing a wide range of interests in developing
    the report. These different projects are producing alternative measures
    and approaches which are being piloted in several places across the
    nation for possible future use on a national level.
                           drinking water regulations
        Question. How does EPA respond to concerns expressed by the water
    industry that (1) epidemiological studies and other scientific research
    will not be completed in time to base potentially expensive standards
    on good science and (2) the agency will proceed to issue the
    regulations and meet the statutory deadlines despite the lack of
    sufficient data?
        Answer: The Agency is aware and has discussed with its stakeholders
    that as provisions with longer-term deadlines in the 1996 amendments to
    the Safe Drinking Water Act get underway, there may be a strain on the
    research and risk analysis capacities to address the science and data
    needed for the potential regulation of newly identified drinking water
    contaminants. The EPA research, risk and regulatory communities and
    their principal stakeholders are in agreement that current level of
    effort is satisfactory to meet the SDWA requirements for the
    contaminants identified in the 1996 amendments, e.g., microbial/
    disinfection byproducts rule cluster, arsenic, radon, radonnuclides.
    After conducting a strategic program assessment on long-term drinking
    water activities and needs, however, work on any of the contaminants
    listed on the Contaminant Candidate List (CCL), issued as mandated on
    February 6, 1998; activities to revisit and revise all existing
    National Primary Drinking Water Regulations by 2002; and, new rule
    implementation present a challenge.
        In addition to identifying the next round of contaminants for
    potential regulation, the CCL also identified priorities for research
    and occurrence data collection. This screening process allows EPA and
    stakeholder to focus research activities on a manageable group of
    priority contaminants for which there is currently inadequate
    information upon which to base sound risk management decisions.
    Research on these contaminants will allow them to be the principal
    focus of the ``regulation determination'' portion of the next CCL
    required by 2003. The research needed includes health effects (i.e.,
    sensitive population considerations), exposure, analytical methods and
    treatment.
        EPA is examining a variety of options to ensure that drinking water
    regulations will continue to be developed upon a base of good science
    and data. Internal discussions between the Office of Water and the
    Office of Research and Development are held regularly to develop a
    research plan that maximizes Agency resources (staff and dollars) on
    drinking water issues. Moreover, the National Drinking Water Advisory
    Council has been briefed on this concern and will provide advice to the
    Agency on the most effective way to address this problem.
                           cwap: reliability of data
        Question. EPA's Clean Water Action Plan proposes additional
    spending in fiscal year 1999 of $568 million, Federal Government-wide,
    to augment water quality programs. About $145 million of that amount
    would be targeted for EPA programs.
        In justifying the additional expenditure, EPA officials often cite
    its data showing that almost 40 percent of our nation's waters are
    still impaired. Yet many have criticized the reliability of these data.
    Do you feel they adequately characterize the problem and therefore help
    to justify the additional expenditure?
        Answer: To draw conclusions about the Nation's water quality, EPA
    uses ``The National Water Quality Inventory: 1996 Report to Congress''
    (Report) required under section 305(b) of the Clean Water Act. This
    Report is based on data collected and evaluated by states, tribes, and
    other jurisdictions during 1994 and 1995, then submitted to EPA.
        Uncertainties in the data arise primarily because jurisdictions use
    different water quality criteria and survey methods to rate their water
    quality. The jurisdictions also take different approaches to
    designating how their waterbodies are most appropriately to be used--
    such as for swimming, drinking, or fishing. Finally, the reporting
    jurisdictions have not evaluated all of their waterbodies, but only a
    sampling of their rivers, lakes, and estuaries.
        Based on the data in the Report, EPA has made its best judgment
    that about 40 percent of the surveyed rivers, lakes and estuaries are
    too polluted for basic uses such as swimming, drinking, or fishing.
        EPA believes that the data does adequately characterize the
    Nation's water quality, but also that additional and more consistent
    information is needed. This type of information and evaluation would be
    made possible under the Clean Water Action Plan (CWAP) and is highly
    justified given the broad scope of the effort and the number of
    jurisdictions involved. Under CWAP, EPA, USDA, USGS, NOAA, and other
    partner agencies will collaborate with states, tribes, and local
    governments to more uniformly assess water quality and other natural
    resource goals, develop watershed restoration action strategies,
    prevent watershed pollution, and provide grants to local organizations
    to promote leadership in restoring and protecting watersheds.
        A key component of the CWAP is to ensure that Federal monitoring
    resources are used to support areas of greatest concern, including
    watershed characterization. The Plan calls for Federal agencies, led by
    USGS, to work with states and tribes to improve monitoring and
    assessment of water quality, focusing on nutrients and related
    pollutants.
        The additional funding provided under CWAP will significantly
    improve our assessment of the Nation's water quality, and will
    facilitate a combined Federal, state, and local effort to improve water
    quality and our watersheds on a national level.
                     cwap: major programs already in place
        Question. Before deciding on such a substantial increase in our
    commitment to dealing with the problem, doesn't it make sense to take
    stock of major programs already in place, such as USDA's Conservation
    Reserve Program, to address water quality programs?
        Answer. It makes very good sense to take stock of programs already
    in place, along with the extent and severity of remaining water quality
    problems, in identifying the level of Federal funding needed. This was
    an important part of the process that led to the Clean Water Action
    Plan (CWAP). In recognition of the significant contribution that farm
    programs such as the Conservation Reserve Program make to water
    quality, USDA Secretary Glickman co-led the effort to develop the Plan
    with EPA Administrator Browner. In addition, eight other agencies with
    programs that affect water quality participated in developing the Plan,
    ensuring that the full extent of existing water quality efforts were
    considered.
        Despite the significant contributions to water quality that Federal
    programs and others have made, the waters in many communities in the
    U.S. do not meet clean water or other natural resource goals. Unless
    additional efforts are made, including additional funding, many of
    these waters will continue to be impaired for the foreseeable future.
    There are two challenges before us, and each requires a significant
    investment of resources. The first is addressing the continuing effects
    of past practices. Excessive sedimentation has resulted from
    inappropriate land management. Over half of the wetlands originally
    found in the continental U.S. have been destroyed. Runoff from
    abandoned mines pollutes our waters. Our second challenge is to address
    emerging problems in our waters. Increasing development along our
    coasts is adding more stresses to our estuaries and the rivers that
    feed them. Changes in the nature of the livestock industry in recent
    decades require additional steps to manage wastes from animal feeding
    operations. Many kinds of hydrologic modifications are altering aquatic
    habitat. One consequence of the emerging stressors is increased risks
    from waterborne organisms such as cryptosporidium and pfiesteria. Other
    effects are algal blooms, fish kills, dead zones and a troubling number
    of freshwater fish species listed as threatened or endangered.
        The Conservation Reserve Program, like the Wetlands Reserve
    Program, has a maximum number of acres that can be enrolled. The
    President's budget request is designed to provide funds for those
    programs that are best suited to address the most significant problems
    in priority watersheds. By directing most funds to States, Tribes and
    landowners, changes that improve water quality and aquatic habitat will
    be accomplished on-the-ground in ways that are tailored to solve
    specific problems and achieve the most environmental benefits for the
    funds invested.
        Question. Do you have a handle on how much of a resource commitment
    the Federal Government is already making to address these issues?
        Answer: In the programs for which increases are requested, the base
    funding in fiscal year 1998 is $1.6 billion, and the request would
    raise that to $2.2 billion in fiscal year 1999 (includes discretionary
    and mandatory funds). While the total fiscal year 1998 investment to
    address these kinds of issues is unavailable, other significant
    programs include the Conservation Reserve Program, funded at $1.8
    billion, the Wetlands Reserve Program at $236 million, and the Land and
    Water Conservation Fund at $270 million in fiscal year 1998. In
    addition, some States are using some of the Clean Water State Revolving
    Fund, funded at a level of $1.35 billion in fiscal year 1998, to
    address polluted runoff and degraded aquatic habitat.
                        cwap: non-point source controls
        Question. We understand that water quality benefits from nonpoint
    source controls can take several years or more, and be difficult to
    definitively measure--a difficult situation in a world where most want
    to see immediate results for their invested dollar. How do you plan to
    measure the effectiveness of these activities so you can reassure the
    public that results will be achieved, even if not immediately?
        Answer: The environmental benefits from implementation of nonpoint
    source control measures and practices can be measured in many ways at
    different points in the pollutant delivery process, as well as at
    different geographic scales. EPA has taken several steps within this
    broad range of options to demonstrate that measurable water quality
    benefits will accrue from improved nonpoint source controls and other
    methods of water quality and watershed improvement.
        Under the Government Performance and Results Act (GPRA), EPA has
    set a national objective to reduce, by 2005, the pollutant discharges
    from key point sources and nonpoint source runoff by at least 20
    percent from 1992 levels. EPA is entering into an interagency agreement
    with the U.S. Geological Survey (USGS) to measure progress in achieving
    these objectives with stream data and a method that USGS has developed
    to relate measured loads of total phosphorus and total nitrogen in
    streams to point and nonpoint sources. In addition, EPA will use the
    U.S. Department of Agriculture's National Resources Inventory data to
    track progress in achieving the GPRA sub-objective of reducing erosion
    from cropland, used as an indicator of success in controlling sediment
    delivery to surface waters, by 20 percent from 1992 levels.
        At the State and watershed levels, all nonpoint source projects
    funded with Clean Water Act section 319 funds are required to include a
    monitoring plan that will demonstrate the effectiveness of the
    projects. These monitoring plans encompass a range of environmental
    indicators including water chemistry, fish, macroinvertebrates,
    physical conditions, and aquatic habitat. In addition, the twenty-two
    watershed projects that participate in EPA's section 319 National
    Monitoring Program will provide detailed information regarding the link
    between nonpoint source controls and water quality. A few of these
    projects are beginning to show measured water quality improvements.
    Source-based estimates of runoff reductions are also used by States and
    watershed managers to indicate pollutant load reductions.
        Other elements in EPA's strategy to achieve and document water
    quality improvement include completion of a modernized water quality
    data storage and retrieval system (STORET), revised regulations on the
    issuance of Total Maximum Daily Loads (TMDL's), receipt of revised
    lists of impaired waters from states, and improved and more consistent
    water quality monitoring and assessment across state, tribal, and local
    boundaries. The information we receive from this work should enable EPA
    to present an accurate picture of water quality and tie some of that
    improvement to reduced pollution form nonpoint sources.
                      cwap: role of epa and other agencies
        Question. Could you briefly describe the roles of EPA and other
    agencies in carrying out the Clean Water Action Plan and how these
    activities will be coordinated?
        Answer: On February 19, 1998, the President released the Clean
    Water Action Plan (CWAP) that had been developed by a group of ten
    Federal agencies at the direction of the Vice President. This group
    consisted of the Departments of Agriculture, Commerce, Defense,
    Interior, Energy, Justice, Transportation, the Tennessee Valley
    Authority, the Council on Environmental Quality and the Environmental
    Protection Agency. An Assistant Secretary/Administrator level group
    from these agencies continues to meet regularly to guide
    implementation, and members of that group have traveled to seven cities
    around the U.S. to discuss implementation with Federal, State, tribal
    and local officials, and with stakeholders. In addition, an interagency
    steering committee, consisting of representatives from USDA, DOI, DOC/
    NOAA, the Army, and EPA, has been established to coordinate the
    activities of the Federal agencies to carry-out the 111 key actions
    outlined in the Plan. Nine interagency action teams have been organized
    to assist the steering committee by tracking groups of key actions.
        Action teams are charged with developing more detailed
    implementation plans, milestones, and time frames and for coordinating
    with the agency personnel who will be engaged in completing the tasks.
    The plan outlines in detail which agencies are to participate in
    accomplishing specific key actions. The action teams, where necessary,
    will facilitate clarifying those roles and reporting on progress as key
    milestones are met. This structure is intended to facilitate
    coordination among the various Federal agencies and is not intended to
    replace or duplicate existing organizational structures or chains of
    command.
        At the regional level, Federal agencies are creating new
    interagency coordinating mechanisms, or adapting existing ones, to
    ensure that interagency cooperation occurs in the field as well as in
    Headquarters. Discussions are also underway with State, Tribal and
    local officials to determine how best to ensure that we work
    effectively across levels of government as well as across Federal
    agencies in putting the Clean Water Action Plan into effect.
        Successful implementation of the Plan will require the involvement
    of many people--and communication will be critical to ensure that we
    coordinate effectively. A multi-agency Federal communications plan has
    been drafted to ensure this occurs, using a variety of approaches
    including web sites, satellite video-conferencing, public events,
    written materials, and a speakers' bureau.
                        rcra: corrective action program
        Question. What is EPA's strategy for correcting this significant
    lack of progress in the RCRA Corrective Action program?
        Answer: EPA is implementing a number of ambitious activities aimed
    at reforming the RCRA Corrective Action Program. The Agency's
    objectives are to:
        1. Promote faster cleanups by focusing the program on environmental
    results, not process, with emphasis on prompt controls at high priority
    facilities;
        2. Enhance the role of state partners;
        3. Promote innovative yet practical approaches to improve the pace
    and efficiency of investigation and cleanup actions; and
        4. Enhance public involvement and boost community participation in
    the process.
        Some of the key activities underway to achieve these objectives
    are:
        1. The development of new national corrective action performance
    standards under the Subpart S initiative which emphasize results, not
    process;
        2. Finalization of the HWIR-Media rule, which creates a new type of
    permit that will be faster and easier to obtain than traditional RCRA
    permits, and will not require facility-wide corrective action, and also
    provides for a new kind of unit called a staging pile that allows more
    flexibility for the storage of remediation waste;
        3. Finalization of the post-closure rule, which provides for
    flexibility by removing the requirement to obtain a permit for the
    post-closure period, and allowing the use of other available
    authorities such as corrective action to address post-closure needs;
    and
        4. The development and delivery to the EPA regional offices and
    states of a major new corrective action training course, which focuses
    on key principles and approaches to cleanup that have accelerated
    schedules, improved efficiency and focused implementation more on
    achieving protective results rather than following a prescriptive
    process.
        5. Heightened emphasis through the Annual RCRA National Meeting and
    through frequent visits with the regional and state programs as
    vehicles for stressing the importance of using the flexibility in the
    corrective action program. Flexibility among implementation options was
    outlined in the May 1996 Advanced Notice of Proposed Rulemaking for
    Subpart S, and reinforced in a memorandum from Elliott Laws and Steven
    Herman to the regional offices in January 1997.
                   rcra: deferral of superfund sites to rcra
        Question. Given the lack of progress in the RCRA Corrective Action
    program, why has the agency taken the position to defer some Superfund
    sites to this program, especially given the larger amount of resources
    available to the Superfund program?
        Answer. The 1984 amendments to RCRA established corrective action
    requirements for treatment, storage, and disposal facilities (TSD's).
    Consequently, EPA has overlapping statutory authorities under RCRA and
    CERCLA for those facilities. EPA decided to use the regulatory program
    under RCRA as the program of first resort for that particular subset of
    the facilities regulated under RCRA. This reduces the duplication of
    resources that would inevitably occur if the Agency were to act
    concurrently under both RCRA and Superfund programs. The Agency does,
    however, reserve the authority to use CERCLA to address RCRA facilities
    where the owners/operators are unwilling to undertake corrective action
    or unable to pay for corrective action.
        RCRA is an ongoing regulatory program designed for facilities
    actively managing hazardous wastes, and the Agency concluded that this
    regulatory structure was more appropriate than Superfund for operating
    TSD's with cleanup obligations. RCRA provides administrative efficiency
    by allowing cleanup requirements to be merged into the facility's
    permit. By using RCRA first, EPA can leverage State resources in States
    that have authorized RCRA corrective action programs. Moreover, there
    is a backlog of Superfund sites awaiting funding for remedial actions,
    underscoring the need to look first to the RCRA program at sites where
    corrective action authorities are applicable.
        The two programs will continue to work together to ensure that all
    available resources are brought to bear in cleaning up sites. EPA is
    currently reviewing the sites deferred from Superfund to RCRA to ensure
    that the policy has been correctly applied and that high priority sites
    are being appropriately addressed under RCRA.
             rcra: status of efforts for a new subpart s regulation
        Question. What is the status of EPA's efforts to issue a new
    Subpart S regulation that provides for more flexible approaches to
    Corrective Action cleanups?
        If you are not moving forward with the regulation, how are you
    ensuring that individual cleanup managers in regions and authorized
    states (1) consistently understand any options they have to get
    cleanups done faster and cheaper and streamline the cumbersome and
    lengthy corrective Action process, and (2) are appropriately using
    these options so that industry does not experience regional differences
    in the extent and level of cleanups they have to achieve at their
    facilities?
        Answer. EPA is currently moving towards finalization of corrective
    action regulations and/or guidance that would form a performance-based
    framework for cleanups under RCRA corrective action. Performance
    standards would de-emphasize process and form a national framework for
    corrective action that would accommodate varied approaches towards
    attaining national goals. The standards would be useful when states use
    non-RCRA programs to implement corrective action. Performance-based
    regulations were widely supported by commentors on the 1996 Advance
    Notice of Proposed Rulemaking in which EPA sought comment on this
    approach.
        To issue regulations expeditiously, the performance standard
    framework would be finalized directly from the 1996 ANPR and the 1990
    Subpart S proposal, rather than going through reproposal. EPA is
    committed to active outreach in the development of final regulations,
    and is planning to issue a Notice of Data Availability (NODA) this fall
    which would include, in addition to data related to its economic
    analysis, EPA's view of what performance based regulations would
    entail. Prior to issuing this NODA, EPA is seeking additional input
    from state regulators.
                          rcra: allocation of resources
        Question. To what extent has EPA assessed how it has allocated
    resources across hazardous waste cleanup programs, especially among
    regions, and whether there is an opportunity to better reallocate the
    resources to achieve more progress in the Corrective Action program?
        Answer. The Agency recognizes the high level of risk reduction
    associated with the Corrective Action program and has responded by
    devoting nearly 41 percent of all regional FTE and 42 percent of all
    regional RCRA program dollars to the Corrective Action program. The
    Agency created a workload model to distribute Corrective Action
    resources among the regions based on the number of Corrective Action
    sites within each region. Corrective Action, for the purposes of the
    workload model, is defined as all activities associated with detecting
    and taking appropriate follow-up actions for hazardous waste releases
    from RCRA Facilities. Sixty percent of Corrective Action resources were
    allocated to ``pipeline'' activities that were defined as RCRA Facility
    Investigations that have been formally imposed. The balance of
    Corrective Action resources for ``new activities'' (40 percent) were
    distributed over Treatment Storage and Disposal Facilities that either
    had not had a RCRA Facility Assessment or had been assessed but were in
    need of a RCRA Facility Investigation. Treatment Storage and Disposal
    Facilities that had been assessed but were determined not to need an
    investigation were not counted in the workload model for funding
    distribution.
        The percentage distributions are as follows:
                                                                  Percentage
                                                                       Share
    Region 1..........................................................   6.4
    Region 2..........................................................    11
    Region 3..........................................................     9
    Region 4..........................................................  14.1
    Region 5..........................................................  17.7
    Region 6..........................................................  14.3
    Region 7..........................................................   7.2
    Region 8..........................................................   4.3
    Region 9..........................................................  10.9
    Region 10.........................................................   5.1

        Regions are currently assessing the above funding distribution to
    bring resources more closely in line with the recently established GPRA
    performance goals. This is to be done so as to facilitate achieving the
    goal that 95 percent of high priority RCRA facilities will have human
    exposure to toxins controlled and 70 percent of high priority RCRA
    facilities will have toxic releases to groundwater releases controlled
    by 2005. This goal focuses resources on the use of interim measures,
    rather than full clean-up, to accelerate progress in achieving risk
    reduction by protecting people and the environment from exposure to the
    dangerous contaminants at these sites.
                       rcra: increase enforcement actions
        Question. Given industry's reluctance to initiate cleanups, what
    plans does EPA have to increase enforcement actions at the high
    priority facilities to achieve more progress or to work through state
    voluntary cleanup programs to provide industry more incentives to
    initiate cleanups?
        Answer. EPA and the states are using a variety of approaches,
    including orders and permits, to ensure appropriate corrective action
    at RCRA facilities. Through GPRA, EPA has set two performance targets
    for high priority RCRA corrective action facilities by 2005. These two
    targets are to control human exposure at 95 percent of these facilities
    and to control releases of contaminated ground water at 70 percent. EPA
    promotes expedited cleanup that is consistent with the RCRA corrective
    action performance goals. Industry owner/operators may address cleanup
    independently or through voluntary cleanup programs ahead of schedule
    of permit or order requirements.
                         ccti: greenhouse gas releases
        Question. What analysis did the administration perform to determine
    that $6.3 billion is needed to implement climate change activities and
    how to allocate these funds to ensure that they are used most
    effectively to decrease greenhouse gas releases?
        Answer. There was a coordinated effort within the Administration
    among several agencies to determine the appropriate resources to invest
    in activities to stimulate the development and deployment of energy
    efficient and low carbon technologies. The starting point for these
    efforts was a review of the costs and benefits of existing programs
    which had been developed last year through an interagency effort
    chaired by the Council on Environmental Quality. The results of this
    analysis were published in the ``U.S. Climate Action Report--1997.''
    This was followed with a sector-by-sector review of additional
    opportunities for carbon reductions, selecting strategic opportunities
    that cost-effectively can advance the development and deployment of
    energy efficient and low-carbon technologies across the economy. A
    recent study, by five Department of Energy laboratories of energy
    technologies that reduce carbon emissions, supported the sector-by-
    sector review. The Administration also considered the extensive
    recommendations of the President's Committee of Advisors on Science and
    Technology (PCAST) for new investments in energy research and
    development. These recommendations are contained in the November 1997
    report ``Federal Energy Research and Development for the Challenges of
    the 21st Century.'' The Treasury Department and several other Federal
    agencies worked together to evaluate the costs and benefits of
    potential tax incentives.
                        ccti: effectiveness of programs
        Question. How is the administration planning to monitor the
    effectiveness of its programs to ensure they are functioning
    effectively?
        Answer. The Administration regularly evaluates the effectiveness of
    its climate programs through interagency evaluations. The first such
    interagency evaluation, chaired by the White House Council on
    Environmental Quality, examined the performance of programs included in
    the Climate Change Action Plan. The results were published in the
    ``U.S. Climate Action Report--1997'' as part of the United States
    Submission to the Framework Convention on Climate Change. There were
    several opportunities for public comment. The Administration will
    continue monitoring the effectiveness of its programs through the
    programs' performance measures established under the Government
    Performance and Results Act. Several performance measures for EPA's
    climate change programs were included in our 1999 Annual Plan provided
    to the committee.
      climate change: adjustments to programs for greenhouse gas emissions
        Question. What plans are there for making any necessary adjustments
    to the programs to ensure that U.S. greenhouse gas emissions decrease
    to the levels required by the Kyoto Protocol?
        Answer. The Agency will continue to adjust programs in order to
    maximize the benefits that the programs achieve. The Agency has made
    several adjustments to its climate partnerships since their inception
    in 1993 in order to maximize their effectiveness. In addition, the
    Administration conducts periodic interagency reviews of program
    accomplishments and potential, with the last being completed in 1997
    (see response to previous question). This process includes a review of
    the overall success of the programs and an evaluation of opportunities
    to achieve additional reductions as necessary.
        It must be noted that the partnership programs are not themselves
    designed to implement the Kyoto Protocol. EPA's objective is based on
    voluntary, profitable opportunities to reduce greenhouse gas emissions
    while strengthening the economy. This objective is consistent with
    general international obligations under the 1992 United Nations
    Framework Convention on Climate Change (FCCC), which the Senate
    ratified, to work toward reducing greenhouse gas emissions. Regardless
    of whether or not the Kyoto Protocol is ratified, these programs are a
    sensible, cost-effective step to begin to reduce greenhouse gas
    emissions, and are common-sense measures to improve energy efficiency
    in our homes, offices, and businesses.
              climate change: cost/benefits of voluntary programs
        Question. What are the estimated costs and benefits (emission
    reductions) of the voluntary programs for which EPA is seeking funding
    in fiscal year 1999? To what extent have the estimated emission
    reductions been adjusted to take into account factors other than EPA's
    programs that may have encouraged companies to reduce their emissions?
        Answer. The following table provides the fiscal year 1999 funding
    request for EPA's voluntary climate programs.

                  Fiscal Year 1999 President's Budget Request

    EPM.....................................................      $158,502.1
        Industry Initiatives................................        51,600.0
        Buildings...........................................        78,100.0
        Carbon Removal......................................         3,400.0
        Transportation......................................        12,002.1
        Engaging Developing Countries.......................         8,400.0
        State and Local Outreach............................         5,000.0
    S&T.....................................................        46,905.5
        Transportation......................................        46,905.5
                        --------------------------------------------------------
                        ____________________________________________________
          Total Voluntary Programs..........................       205,407.6

        With this funding, EPA estimates that the following benefits will
    accrue in 1999:
      --Greenhouse gas reductions of 40 million tons of carbon (mmtce)
      --90,000 tons of nitrogen oxide (NOX) reductions, along
            with reductions in other air pollutants (such as PM and
            mercury) and water pollution
      --Savings of over 45 billion kilowatt hours in U.S. energy
            consumption, providing $3 billion in energy bill savings to
            consumers and businesses;
        These benefits will expand greatly beyond 1999. The 1999 funding
    will be used to form new partnerships that will deliver increased
    benefits for years to come. Funding will also be used to develop a new
    generation of efficient cars and trucks that can make everyday
    transportation less costly and less polluting.
        EPA's benefits estimates are not overstated and are based on
    careful and thorough tracking of partner progress in existing
    activities and are generally conservative. A 1997 audit by EPA's Office
    of the Inspector General concluded that the climate programs that were
    examined ``used good management practices'' and ``effectively estimated
    the impact their activities had on reducing risks to health and the
    environment * * *.'' The report went on to explain the methodology of
    these programs as an example to the rest of the Agency, stating
    ``future voluntary programs could benefit from using similar
    measurement techniques.'' [``Risk Reduction Through Voluntary
    Programs,'' March 19, 1997].
       climate change: timetable to develop ``credits for early actions''
        Question. What is the timetable for developing a plan to provide
    ``credits for early actions''? What types of credits are being
    considered? How will ``early actions'' be defined?
        Answer. The Administration has not established a timetable for
    developing an early credit plan. The President's 3-stage plan,
    announced on October 22, 1997, includes giving appropriate credit for
    early action. A number of proposals are being circulated by industry
    groups and other organizations with suggestions of how to provide this
    credit. The Administration intends to review these and other proposals
    as it consults with industry over the coming months on ways to
    voluntarily reduce greenhouse gas emissions in the near term.
    climate change: stage one action steps, costs, benefits and impediments
        Question. Is EPA responsible for any of the Stage One action steps
    in addition to those listed above? If so, please specify the action
    steps, estimated costs and benefits, and impediments to implementation
    (such as the need for legislation).
        Answer. EPA's responsibilities under Stage One of the President's
    Three-Stage plan include continuing implementation of its voluntary
    programs, conducting research and development to support the
    Partnership for a New Generation of Vehicles, and participating in
    consultations and discussions with industry on issues such as the
    design of an early credit program. These are all addressed in the
    previous questions.
                   sf: site cleanup goal by fiscal year 2001
        Question. How can EPA be assured of meeting its 900 site cleanup
    goal by the end of 2001 when EPA must obtain PRP commitments for 70
    percent of the work to be performed?
        Answer. The Superfund program is committed to pursuing an
    Enforcement First strategy to ensure that parties responsible for
    contamination at Superfund sites conduct and pay for the cost of
    cleanup. The 70 percent PRP work figure is based on historical trends.
    With budget constraints and the project funding queue, this ratio may
    vary over the next few years. Aside from these constraints, recent
    trends indicate approximately 70 percent of new remedial work will
    continue to be initiated by PRP's.
    sf: site identification clean up during fiscal year 1999 and estimated
                                     costs
        Question. Has EPA specifically identified the sites that will be
    cleaned up during fiscal year 1999 and the estimated costs of cleaning
    up each site?
        Answer. The Agency has a candidate list of sites that will be
    cleaned up during fiscal year 1999 with cost estimate; however, site
    schedules and circumstances change making it difficult to identify a
    specific list of sites. Although, there are specific targets the Agency
    plans to meet. The President's fiscal year 1999 Budget Request states a
    target of 136 cleanups during that fiscal year. We will be tracking the
    candidate list throughout fiscal year 1999.
            mexico border: justifications for border water projects
        Question. Does EPA's Office of Wastewater or the EPA Inspector
    General plan to perform a comprehensive review of the project
    justifications for border water projects to ensure that the
    justifications are fully consistent with EPA Office of Water and Border
    Environment Cooperation Commission project criteria?
        Answer. There is a comprehensive review process in place. EPA
    currently receives from the Border Environment Cooperation Commission
    (BECC) a copy of each project application and a detailed discussion of
    whether and how it meets the BECC criteria. EPA also currently receives
    from the North American Development Bank a discussion of whether and
    how the project meets EPA funding criteria. Both are used by EPA to
    determine whether to approve the use of EPA funding.
            mexico border: integrated database for colonias program
        Question. Does EPA's Office of Water plan to develop and use for
    program evaluation purposes an integrated database for completed and
    ongoing Colonias Program border water infrastructure projects run under
    the Colonias and Border Facilities Construction Program?
        Answer. Databases for tracking colonia projects already exist. An
    extensive database has been established for projects funded under the
    colonia program in the state of Texas. The database is maintained by
    the Texas Water Development Board (TWDB) and is updated monthly. It
    includes a project-by-project summary of planning/construction status,
    population served, funding sources and commitment amounts, as well as
    other information. Regular meetings between EPA and the TWDB are held
    to review progress and discuss more detailed issues for individual
    projects. The New Mexico colonia program currently consists of only 13
    projects, for which a summary spreadsheet is maintained by the New
    Mexico Environment Department (NMED), and quarterly progress reports
    are prepared. EPA holds meetings with NMED and makes site visits to
    track progress of individual projects. Colonia projects certified and
    funded as part of the general border facilities construction program
    will be tracked under a database which is currently under development
    by the Border Environment Cooperation Commission, in cooperation with
    EPA.
         mexico border: installation and hook-up of drinking water and
                              wastewater services
        Question. There are a number of financial and regulatory problems
    which complicate the installation and successful hookup of drinking
    water and wastewater services to unserved households in the U.S.-Mexico
    border region, including (1) household capital costs of improvements,
    (2) jurisdiction conflicts between state and local governments and
    water supply corporations, (3) inconsistent national, state, and local
    building code requirements associated with home improvements required
    for participation in the water projects, and (4) the lack of
    coordination between EPA, HUD, and USDA water infrastructure projects.
    How significant are these problems? What remedies have you used or
    planned to use to address these problems?
        Answer. The problems identified above do not prevent the
    construction of the water and wastewater infrastructure in the
    colonias. These problems have been known for some time and positive
    efforts have been initiated and are being implemented to minimize their
    effects.
    1. Household Capital Costs
        The EPA colonia grants can be used to assist the completion of
    household connections. This type of assistance has been made a priority
    in colonia projects where the initial funding has successfully created
    the needed treatment and collection system. In addition, the Border
    Environment Infrastructure Fund (BEIF) can include household
    connections in the project financing structure. The BEIF is an EPA
    funded program administered by the North American Development Bank to
    assist in the design and construction of water and wastewater
    infrastructure in the U.S./Mexico border.
    2. Jurisdiction Conflicts
        State laws and requirements define the jurisdiction and authority
    for providing water and wastewater service to communities. In cases
    where there is overlap the state will mediate. While there have been
    some conflicts this is not a major issue. The state has provided a
    cooperative environment that has resulted in fair and equitable results
    to all parties without major delays to providing needed services to the
    colonias.
    3. Inconsistent Housing Code Requirements
        The requirement for a licensed plumber for indoor plumbing and
    household connections is the only code-related issue associated with
    EPA funds. This issue has been resolved on a case-by-case basis at the
    local level. Code requirements are specified at the state and local
    level, not by EPA.
    4. EPA, HUD, USDA Coordination
        It is recognized that there may have been issues regarding
    coordination among Federal agencies during the early stages of the
    colonias program. Over time, however, the involvement of several
    Federal agencies has been an asset, since an ongoing dialogue has
    resulted in a cooperative, shared approach to solving problems on a
    project-by-project basis. This has been established for several years
    through a Texas colonias group made up of Federal and state agencies
    involved with colonias water and wastewater infrastructure. This effort
    was initially begun by EPA, and has continued under the chairmanship of
    the Texas Water Development Board.
                food quality: revise draft food safety brochure
        Question. Does EPA plan to revise its current draft food safety
    brochure based on the extensive comments received? If yes, what
    revisions are planned? If no, why not?
        Answer. Yes. EPA is currently revising the March 1996 draft based
    on all the comments received from our stakeholders. EPA conducted focus
    groups to ensure the brochure will answer the questions consumers are
    most interested in. EPA will also be consulting with the Food and Drug
    Administration and the U.S. Department of Agriculture to ensure the
    brochure is consistent with the Administration's focus to strengthen
    food safety.
        The brochure will likely explain the importance of eating the
    recommended servings of fruits and vegetables, the possible risks from
    pesticides, and how consumers can obtain more information on pesticides
    and food safety. The brochure will be distributed to large retail
    grocery stores by August 1998 (the statutory deadline). EPA is also
    developing information consumers can access on the Agency's website
    (www.epa.gov).
        Question. Is the current budget adequate to revise, print and
    distribute the brochure?
        Answer. Yes.
          food quality: appropriate approach for revising food safety
        Question. Recognizing that EPA may not meet the August 1998
    requirement, is this still an appropriate approach?
        Answer. Yes, the Agency thinks the general framework is still
    appropriate. At the same time, we are using information from
    stakeholder meetings and comments received to see how to best finalize
    and distribute the brochure.
     annual performance plan: performance goals and measures in annual plan
        Question. How do the performance goals and measures in your annual
    performance plan reflect the need to ensure that we can assess EPA's
    performance on one level--that is, what improvements are directly
    attributable to EPA's actions--and, on another level, track the
    progress that the nation, as a whole, is making in protecting the
    environment?
        Answer. The Agency has tried to accommodate the competing interests
    of measuring Agency-specific and national environmental performance by
    blending a mix of both kinds of performance goals and measures into the
    fiscal year 1999 Plan. In general, EPA has tried to cast its longer-
    term performance goals as a set of objectives that reflect
    environmental outcomes in its Strategic Plan. In some cases this effort
    has been constrained by the Agency's present ability to measure these
    environmental parameters (and the ability to link the results of Agency
    activities to discrete improvements in environmental quality). Taking
    into account this constraint, the Agency's basic premise is to evaluate
    its own performance in terms of the relative improvements in the
    nation's environmental quality. So to the extent feasible, the Agency
    wants to represent its performance by national trends in environmental
    quality. However, such measures will never be able to represent the
    totality of the Agency's obligations and performance characteristics.
    For example, the Agency's activities serve other societal values such
    as fiscal responsibility and efficient utilization of public monies.
    For this reason, Agency-specific performance measures will presumably
    always be included in its Annual Plans.
       annual performance plan: activities and actions relevant to other
                                strategic goals
        Question. Under specific strategic goals covered in the performance
    plan, EPA lists as performance goals various activities and actions
    that appear to be relevant to other strategic goals. Is there an
    overlap that needs to be/has been recognized and, if so, how?
        Please be as specific as possible in your response and also address
    the budget implications, i.e., how any overlap has been addressed
    concerning the budget amounts requested for the specific program
    activities involved and the resources being applied to achieve the
    respective goals.
        Answer. Some degree of ``cross-cutting'' categorization is
    inevitable in trying to present an annual plan that simultaneously
    addresses the entirety of the Agency's activities and highlights the
    most significant achievements in a systematic manner. You will note
    that in Chapter 5 of the Strategic Plan (pp 80-88) the Agency
    highlighted six specific themes that cannot be adequately captured by
    the presented set of strategic goals and objectives. Likewise, as you
    note, activities among the 10 goals and 45 objectives sometimes
    overlap.
        We have carefully aligned the Agency's resources in a strictly
    ``linear'' fashion according to the array of goals and objectives
    presented; we have painstakingly avoided ``double counting.'' We do not
    believe any overlap in resource allocation exists.
        Since the array of goals and objectives are cross-cutting, programs
    have to make decisions about how best to represent their activities.
    For instance, water program activities that relate to improving the
    public's understanding of local surface-water conditions or specific
    public water supply conditions are accounted for under Goal 7, even
    though the bulk of water program activities appear under Goal 2.
     annual performance plan: epa partnerships with states, tribes, local
                      governments, and regulation parties
        Question. The September 1997 strategic plan identifies ``key
    external factors'' that influence EPA's ability to achieve its goals
    and objectives and over which the Agency notes that it has only partial
    control or little influence. Important among these are the partnerships
    EPA says it relies heavily on with states, tribes, local governments,
    and regulated parties. In many cases, it appears that the achievement
    of a program's goals would be highly dependent on such relationships.
    How does the performance plan recognize this condition in establishing
    performance goals and measures?
        Answer. Many of the Agency's core environmental protection
    activities are delegated to the states and tribes, and entail risk
    management measures performed by regulated entities. The Agency relies
    on the performance of these key parties to produce the gains in cleaner
    air, water and land that the Agency seeks for the nation. Consequently,
    among the performance goals and measures the Agency reports in its
    fiscal year 1999 Annual Plan are those activities which states and
    tribes perform and report to the Agency as part of state grant
    assistance (i.e., ``core measures'' and associated reporting
    requirements provided in the National Environmental Performance
    Partnership System). We intend to make clear (where possible) in our
    Annual Performance Reports the relative contributions to goals and
    objectives made by the Agency and other parties.
        However, the preponderance of the goals and measures specified in
    the Plan are associated directly with Agency activities. In part, the
    selection of annual goals and measures is guided by the imperative to
    represent as closely as practicable the actual activities performed by
    EPA during the fiscal year. For practical purposes, this means the
    preponderance of reported performance targets relate to those
    activities for which the Agency is directly responsible. For example,
    the goals and performance indicators specified under Goal 9 (``Credible
    Deterrent and Greater Compliance'') exclusively represent the planned
    activities, workload and accomplishments of EPA's compliance and
    enforcement staffs, and not the totality of nationwide compliance and
    enforcement activities.
                                     ______

                      Questions Submitted by Senator Leahy

                            clean air act: voc study
        Question. The 1990 Amendments to the Clean Air Act included a
    requirement for studying the emissions of volatile organic compounds
    (VOC) from consumer and commercial products and depending on the
    results of the study, to regulate the VOC levels of these products but
    only if warranted. Specifically, Clean Air Act Section 183(e) mandates
    this study. What is the status of this mandated study as outlined in
    Section 183(e) of the 1990 Clean Air Act Amendments? I am interested in
    knowing the specific findings of the reactivity study, if it has been
    conducted. Please provide me with the detailed findings of the
    reactivity study as soon as possible. Furthermore, have you updated
    your reactivity findings as the science has developed?
        Answer. EPA completed the study required by Section 183(e) of the
    Clean Air Act in March 1995, and considered reactivity in carrying out
    the study.
        The Clean Air Act Amendments of 1990 require EPA to regulate VOC
    emissions from consumer and commercial products, after conducting a
    study to assist in prioritizing product categories for regulation. EPA
    issued the study in six volumes and summarized the results in a Report
    to Congress. Based on a broad survey of consumer and commercial product
    emissions, and a large body of scientific knowledge on reactivity and
    the role of VOC in ozone formation, EPA determined that consumer and
    commercial products have the potential to contribute to ozone
    nonattainment. The study also established criteria for prioritizing
    product categories for regulation.
        In developing the criteria, EPA considered five different factors
    listed in the statute: the uses, benefits and demand for the product;
    the health or safety functions of the product; those products which
    emit highly reactive VOC into the air; relative cost-effectiveness of
    controls for products; and the availability of alternative products.
    Reactivity was but one of the factors that the statute required EPA to
    consider.
        Also in March 1995, after ranking product categories based on the
    criteria, EPA issued the list of product categories to be regulated, as
    required by the Clean Air Act. EPA addressed reactivity both in
    developing the study and the ranking of products for regulation. This
    is discussed in more detail in two attachments: (1) testimony that Rob
    Brenner, Acting Deputy Assistant Administrator for Air and Radiation,
    recently provided to a Subcommittee of the House Science Committee, and
    (2) a document in question-and-answer format. Also attached is a one-
    page description of EPA efforts to advance understanding of reactivity
    issues.
        It is important to note that States and the bulk of the affected
    industries strongly support EPA's efforts to issue national rules to
    reduce emissions of VOC from consumer products and architectural
    coatings. States are counting on these reductions to meet their Clean
    Air Act requirements. Without these emission reductions, states will
    have to regulate emissions from other local businesses to meet the
    Act's requirements. The majority in industry support these rules
    because, without them, they have to incur the costs and burdens of
    complying with an growing patchwork of differing state requirements.
                            analyzing electric power
        Question. Analyzing Electric Power assumes that power plant units
    have a lifetime of 65 years, after which they will be retired. Why was
    age 65 chosen? When these plants were built, what lifetime was assumed
    in submissions to respective utility regulatory agencies? Is there a
    statutory or regulatory requirement that these facilities be retired at
    age 65, or is there any statutory or other requirement that these
    facilities reduce their environmental release? What is the share of
    emissions (SO2, NOX, mercury, PM2.5 (particularly
    sulfur-based fine particles), PM10 and CO2) contributed by
    these powerplants to (a) the national inventory and (b) the burden on
    the states east of the Mississippi River? Please prepare an analysis
    indicating the emissions from these plants by state, and ambient levels
    of these pollutants listed in the previous sentence in out years,
    assuming a 30 year lifetime compared to the current 65 lifetime.
        Answer. The 65-year life assumption applies only to medium and
    large steam-electric power plants that use fossil fuels. The assumption
    is based on engineering judgment on how much life extension actions can
    extend the life of these units. This assumption was similar to what
    other national energy models were using when the assumption was made by
    EPA in 1996.
        There is not a statutory, or regulatory requirement for retirement
    at age 65. These units are subject to Clean Air Act regulations like
    any other existing electric generation unit.
        We do not have an analysis available on the emissions from these
    facilities. The analysis you are requesting would require extensive
    time and resources to conduct. It is also unclear, whether you want to
    know today's emissions, expected future emissions, or both. Further, we
    only have good data on current emissions to do an analysis for
    SO2, NOX, and CO2. We recommend that
    your staff contact Sam Napolitano of the Office of Atmospheric Programs
    at (202) 564-9751 to arrange a meeting to discuss your needs.
                   electric power: exceeding 30 year lifetime
        Question. Please provide the following information relative to
    plants that have exceeded the 30 year lifetime expectation: (a) by
    state, how many units would be affected; (b) by state, what is their
    current electrical production (e.g., megawatt hours generated); (c) by
    state, what are the most current estimates of total emissions from
    facilities of particulates, sulfur dioxide, nitrogen oxide, carbon
    dioxide, carbon monoxide, mercury, and other heavy metals; and (d) how
    many of these units are located in non-attainment areas for any of
    these pollutants.
        Answer. We have not completed an analysis that answers this set of
    questions.
        For current electric generation statistics, we recommend that you
    contact the Energy Information Administration (EIA). EIA has current
    electric generation statistics data that is readily available.
        We can use our Acid Rain data base to provide current emissions of
    sulfur oxides, nitrogen oxides, and carbon dioxide, for units that
    reported this data to us under Title IV of the Clean Act. EPA's Acid
    Rain Division will provide you with this information by June 30, 1998.
    We are unable to answer your question for carbon monoxide, mercury, or
    other heavy metals.
        Please note that EPA has not required plants to report the age of
    their generation units, and we rely on information from EIA on unit
    age.
                                  technologies
        Question. There are several commercially available technologies for
    generating electricity from fossil fuels, but at substantially lower
    emissions rates. I would appreciate a description of each of these
    technologies based on data obtained from their manufacturers and
    reflecting actual operating histories. These include combined cycle
    systems, pressurized fluidized bed combustion, integrated gasification-
    combined cycle and fuel cells. Based on data obtained from operating
    experience, I would appreciate a projection of the aggregate emissions
    reductions and rate impacts of replacing utility units with these new
    technologies upon reaching the age of 30, with the new technologies
    operating at optimum heat rates and continuing to utilize the same
    fuels.
        Answer. We assume that you are suggesting that new units produce
    less pollution than units over 30 years old. This is true for all types
    of fossil units because new units are more efficient in their fuel use
    and generally have combustion and post-combustion controls on them when
    they are installed. These points are made in Analyzing Electric Power
    Generation under the CAAA, July 1996. Note that this report has been
    updated and can be obtained from the Clean Air Power Initiative web
    site. The address is: http://www.epa.gov/capi.
        The analysis that you are requesting would require extensive time
    and resources to conduct, and could be done a number of different ways.
    We recommend that your staff contact Sam Napolitano of the Office of
    Atmospheric Programs at 202-564-9751 to arrange a meeting to discuss
    your needs.
                       standby or moth-balled facilities
        Question. Some analysts have expressed concern regarding the
    applicability of Title IV of the Clean Air Act Amendments of 1990 to
    facilities that were on standby or moth-balled status at the time of
    the enactment of the 1990 amendments. Please review those amendments
    and provide your view as to whether moth-balled or standby plants could
    be returned to operation without being subject to the ``affected
    units'' restraints contained in the 1990 amendments. Please also
    provide a list of these facilities, by state, and their projected
    emissions increases should they return to service, assuming a capacity
    factor of 65 percent.
        Answer. For sulfur oxide control under Title IV of the CAAA, moth-
    balled and standby units would be ``affected units.'' For
    NOX control, under Title IV of the CAAA, they would not. We
    cannot provide you the emissions data that you want, because EPA only
    has a list of the standby, or mothballed units, and no other data that
    is needed for an assessment of their potential emissions.
                                     ______

                   Questions Submitted by Senator Lautenberg

           conduct sampling along the new jersey coast of floatables
        Question. I have been impressed by your commitment to improving the
    public's understanding of potential threats from bacteria and other
    water-borne pollutants in the ocean. A major part of this effort is the
    ability of EPA Region 2 to conduct sampling along the New Jersey coast
    of floatables and other hazards. However, your budget requests
    ($300,000) only enough funding for summer-time sampling. Can you
    justify why EPA is not seeking funding for year-round sampling?
        Answer. The 1999 request of $300,000 for helicopter monitoring
    represents an increase of $60,000 over the amount provided for this
    activity in the 1998 appropriation. This funding is likely to be used
    during the summer months as a greater proportion of the population is
    susceptible at that time. The summer months represent the height of
    recreational activity on the coastal shores. Therefore, our requested
    level for the helicopter will support our highest-priority monitoring
    activities.
                         superfund orphan share request
        Question. The President requested that $200 million be set aside
    for mandatory funding of orphan shares in Superfund settlements. Does
    EPA expect that the $200 million will be sufficient to meet all of the
    demands for orphan share funds made in Senator Smith's bill reported
    out of the Environment Committee a few weeks ago?
        Answer. Preliminary estimates by EPA indicate that the $200 million
    requested by the President for fiscal year 1999 would fall
    significantly short of that needed to pay for ``orphan share'' as
    defined by Senator Smith's bill (S.8). The definition of ``orphan
    share'' proposed by the Administration differs from that in S.8 in
    several important ways. EPA defines ``orphan share'' as the share
    attributable to non-viable and defunct parties and its proportionate
    share of wastes which cannot be attributed to a specific party. In
    contrast, Senator Smith's definition of ``orphan share'' is much
    broader and it includes the shares of parties whose liability is
    otherwise limited or exempted by S.8. These include the shares
    associated with certain recycling transactions, exempted small
    businesses, and limitations to liability for municipalities and to
    generators and transporters of municipal solid waste.
        In addition, the scope of EPA's proposal to pay ``orphan share''
    would be limited to response work performed under future settlements
    and would not provide ``orphan share'' funding for existing settlements
    or work performed under unilateral administrative order (UAO's). By
    comparison, S.8 would expand ``orphan share'' funding to parties
    performing response work under both consent decrees and UAO's.
    Furthermore, S.8 would also reopen final consent decrees and UAO's to
    provide ``orphan share'' funding where post enactment costs exceed $1
    million and the ``orphan share'' (as defined by S.8's broader
    definition) associated with those costs exceeds $500,000. Even where
    EPA has completed construction at a site, there may be significant long
    term operations and maintenance costs and groundwater cleanup costs
    which could cause the S.8 threshold for reopening existing consent
    decrees and UAO's to be met.
                         superfund: brownfields cleanup
        Question. During the hearing, Senator Mikulski asked about progress
    on brownfields cleanup in Baltimore. Please explain the anticipated
    effects of the brownfields provisions in S.8, as it was reported out of
    the Environmental and Public Works Committee in March, on the pace and
    the quality of brownfields cleanup. In particular, please describe the
    nature of the changes that the bill could make to EPA's existing
    brownfields grants process.
        Answer. Brownfields Provisions of S.8.
        Title I: BROWNFIELDS REVITALIZATION as reported in S.8 requires the
    Administrator to establish a brownfields grant program for a
    brownfields site characterization and assessment and performance of
    response actions at brownfields facilities. The Administrator also is
    required to establish a State loan fund.
    EPA's Current Program
        Presently EPA operates a brownfields assessment demonstration grant
    program which awards grants to States, cities, counties, towns, or
    tribes to perform site assessments. To date, EPA has awarded 157 pilot
    assessment grant awards. These awards may be made in amounts up to
    $200,000. EPA also has awarded 24 grants in fiscal year 1997 to States,
    cities, counties, towns, or tribes to capitalize revolving funds so
    that these entities may in turn make loans (``RLF's'') to public or
    private entities seeking to conduct cleanup. RLF capitalization grants
    are in amounts up to $350,000.
        To assist in determining who should receive grant awards, EPA
    developed criteria based upon input from the National Environmental
    Justice Advisory Committee, whose members include a broad spectrum of
    stakeholders from industry, communities, environmental groups, and
    environmental justice organizations. EPA updates these criteria
    annually. Criteria for the award of site assessment grants include a
    demonstration of need, the extent of the local commitment to the
    proposed cleanup and redevelopment plans, implementation plans, and the
    potential for long-term benefits and sustainability which includes
    measures of success and national replicability. (See, ``The Brownfields
    Economic Redevelopment Initiative--Proposal Guidelines for Brownfields
    Assessment Demonstration Pilot,'' EPA 500-F-97-156, October 1997).
    Criteria for the award of grants to capitalize revolving loan funds
    include an ability to manage a revolving loan fund; an applicant's
    need; the applicant's commitment to creative leveraging of EPA funds
    with public-private partnerships and in-kind services; a plan for
    ensuring that the cleanup and redevelopment meet environmental
    requirements; and a plan for recouping loaned dollars. ( ``The
    Brownfields Economic Redevelopment Initiative--Proposal Guidelines for
    Brownfields Cleanup Revolving Loan Fund,'' EPA500-F-97-147, April
    1997).
    Concerns with S.8
        The brownfields program as reported by the Senate Environment and
    Public Works Committee in S.8 raises several concerns.
        S.8 would significantly reduce the role of municipalities,
    unnecessarily increase the complexity of funding mechanisms, fail to
    ensure adequate resources for assessment of brownfields, allow for
    grants to private developers to clean up contamination on their own
    property.
                1. S.8 would significantly limit the role of
                        municipalities.
        Under EPA's pilot program, and under prior versions of S.8, both
    local governments and States were eligible to receive capitalization
    grants for RLF programs. EPA encourages State-wide applications to be
    targeted toward specific communities. State-wide proposals that offer
    tangible cleanup and redevelopment success stories within the two-year
    time-frame of the awards will be considered; however, proposals that
    specify the target location of these activities are stronger proposals
    than those that do not. EPA is working to build strong partnerships
    with States. Thus, even when the Brownfields Assessment Demonstration
    Pilot recipient is a local government, EPA ensures that the STATE-EPA
    partnership efforts are supported. Local governmental entities must
    provide documented evidence of support from State and local
    environmental, economic development, and health agencies. In addition,
    the application must describe the legal authority--State or municipal
    Superfund or voluntary action/cleanup programs or other local, State,
    Territorial, or Tribal regulatory programs available for identifying,
    assessing, and remediating brownfields. EPA strongly encourages States
    and municipalities to work together to identify and improve brownfields
    strategies. EPA also encourages municipalities to use existing tools
    such as State voluntary cleanup programs to enhance their Brownfields
    efforts.
        S.8, as reported, provides that instead of municipalities receiving
    grants to make loans for brownfields activities, States will receive
    grants to make loans to municipalities. Municipalities may only receive
    grants after a State has made a determination not to act and even then
    only cities with populations over one million would be eligible
    recipients. This has the added impact of introducing another layer of
    authority and action that is unnecessary. EPA presently awards grants
    directly to States, municipalities, or Tribes. Most applications and
    most awards, however, have been made directly to municipalities, towns
    and communities. Indeed, a recent report ``Recycling America's Land''
    prepared by the United States Conference of Mayors indicates that
    municipalities have aggressively seized brownfields assistance
    opportunities, whereas some States have shown little interest. The
    report gives states ``mixed reviews in their support for brownfield
    activities,'' noting that ``only 30 percent of the cities gave their
    states a `very active' rating; 47 percent said their state was
    `somewhat active'; and 23 percent cities said their state was
    `inactive.'''
        Of the 157 assessment demonstration grants awarded to date, 5
    tribes, 7 states and Puerto Rico have been awarded grants.
                2. S.8's `State Loan Fund' provisions will supplant
                        brownfields characterization and assessment grants.
        The State loan fund provisions have the very serious potential to
    entirely supplant any brownfields characterization and assessment grant
    program. This would dilute the assistance that municipalities currently
    receive. Communities may well find themselves limited to a loan program
    as the only means of funding support for brownfields. (See above.)
        A loan program differs considerably from a grant program. Loans
    must be repaid; grants are not repaid. For many communities this
    difference will define whether assessment, cleanup, reuse and
    redevelopment of brownfields sites take place, or whether abandoned,
    idled properties remain. Many communities will not view loans, despite
    the fact that grants are unavailable, as a viable tool for brownfields
    redevelopment.
        In addition, by collapsing the two grant programs into one, without
    any assured set-aside for assessment grants, grants for cleanup could
    consume too many of the limited Federal dollars, and leave too little
    for site assessments, the critical first step in initiating brownfields
    cleanup and redevelopment activities. For a relatively small
    investment, an assessment grant potentially opens the door to
    redevelopment; often assessments reveal relatively light or no
    contamination, and redevelopment can proceed. On the other hand, if,
    based on conditions discovered through an assessment, a developer
    decides not to proceed, assessment costs may not be recouped. Providing
    grants for assessments creates a heightened incentive to conduct
    assessment, the necessary first step toward cleanup; and, since
    assessments are less expensive than cleanup, Federal money will go
    further if a minimum amount is reserved for assessments.
        Many other problems with the State Loan Fund provisions are evident
    and include, but are not limited to, provisions that fail to clearly
    express what the loans would be for and fail to provide sufficient
    mechanisms for accountability or actually forgive loan debt. The Agency
    is also concerned about the provision which would create an allotment
    process to provide funds to states which does not take into account
    community needs.
        With respect to the allocation formula, the brownfields loan fund
    will involve relatively small sums of money. A requirement to develop a
    formula introduces unnecessary complexity and potential delay into our
    ability to disburse brownfields assistance. Further, S.8 would require
    that the formula be updated at least every two years. The amount of
    money involved simply does not justify so resource intensive a funding
    mechanism, particularly considering the risk of delay. Moreover, there
    is no need for a formula. The combination of criteria and statutorily
    specified caps (contemplated in all previous legislative proposals)
    would work well to ensure fair distribution of scarce Federal dollars.
                3. S.8 provides that private developers can receive cleanup
                        grants.
        Under S.8 private developers (who may also be potentially
    responsible parties) could receive cleanup grants. S.8 and prior drafts
    of S.8 would have provided only loans for cleanup. We appreciate that
    in some instances it may be appropriate to award a cleanup grant to a
    public entity, particularly where a brownfield may be returned to a use
    such as a public park, which will not produce revenue. However, it is
    bad policy to give money to private developers, who will presumably see
    returns on their investments and therefore can, and should, replenish
    the RLF's. EPA does not support paying private investors to clean up
    their own properties. Moreover, and perhaps most importantly, we do not
    support violation of the polluter pays principle.
                4. S.8 does not address the full range of activities
                        presently conducted under the EPA Brownfields
                        Initiative.
        S.8 does not adequately address the breadth of EPA's current
    brownfields program. It omits technical support and funding for job
    training and workforce development.
                5. S.8 brownfield grants for response actions at
                        brownfields facilities are not a good use of
                        Superfund.
        Under the current EPA program for grants for site assessment
    pilots, or for grants to capitalize revolving loan funds for cleanup,
    neither cities nor EPA are undertaking direct site cleanup. S.8
    contains a reference to performance of response actions (section 127(b)
    at brownfields facilities under the brownfields grant program, assuming
    that the State loan program does not otherwise supplant this section).
    EPA has always avoided funding direct site cleanup activities. Directly
    funding site cleanups through a grant mechanism would not result in the
    leveraging of these funds for additional cleanups.
        Finally, to the extent that Fund monies are made available for
    response actions at any site, the Administration has consistently
    supported the principle that responsible parties should pay for cleanup
    costs and that such costs may be recoverable from responsible parties.
    The brownfields grants program for assessments and the capitalization
    of a revolving loan fund has always been operated in a manner
    consistent with the polluter pays principle and with the need to
    maximize leverage of Federal cleanup funds. We would not wish to see
    changes such as those envisioned by S.8 to this program.
    Conclusion
        S.8, as reported, would deny the very positive contribution EPA's
    Brownfields Economic Redevelopment Initiative. Unlike many of the
    environmental programs of the past, the initiative starts and ends at
    the local level. Cities decide what their problems are--and the
    bankers, lenders, investors, developers, and businesses of every stripe
    decide along with community residents how to solve them--EPA acts as
    the catalyst for change--not its manager. States play a role, too, but
    that role is as an equal partner. As the Brownfields program has
    developed, communities are telling us that it is vital that their voice
    not be filtered through an interpreter. Communities are the key to
    success and their voice must be heard clearly and directly.
        The reported bill fundamentally changes the program thereby making
    brownfields efforts less effective and less efficient.
               gao report critical of pace of superfund cleanups
        Question. During the hearing, Senator Bond referenced a GAO report
    that was critical of the pace of Superfund cleanups, and the amount of
    dollars spent on lawyers, etc., rather than cleanups. Was the report
    accurate?
        Answer. The report is not accurate. Both the methodology and the
    data used in the durations report portray a program that is slowing the
    pace of cleanups, when the opposite is true. Superfund cleanup time
    frames are decreasing, not increasing. The report does not reflect the
    realities of the current Superfund program. Recognition that Superfund
    is a fundamentally different program is paramount in any durations
    report and is currently lacking in the GAO report.
        More than twice as many Superfund sites have had construction of
    the remedy completed in the past five years than in the first 12 years
    of the Superfund program combined. There were 149 of these
    ``construction complete'' National Priority List (NPL) sites as of
    September 30, 1992, and an additional 349 since then, for a total of
    498 ``construction completions'' as of the end of fiscal year 1997. The
    bulk of the almost 1,400 superfund sites on the NPL can be cleaned up
    and are being cleaned up in a more timely fashion than in the past.
    Eighty percent of the sites on the NPL are under construction or are
    through the construction of the remedy. In the past five years,
    Superfund has clearly benefitted from dozens of major program reforms,
    contract management improvements, and the experiences of the first
    twelve years.
        With regard to enforcement, the Agency seeks to maximize
    potentially responsible party involvement in site cleanup while
    emphasizing fairness in the settlement process. Activities supporting
    this goal include protecting small contributors to site contamination
    from costly litigation; these settlements are reported annually.
    Reductions in private party legal costs are not available to the Agency
    but are an accompanying benefit to the Agency's approach toward
    achieving site cleanup.
                         rcra remediation waste reform
        Question. I understand that the Administration recently released
    legislation specifications on RCRA Remediation Waste Reform? Do these
    differ from the approach in Senator Lott's draft legislation,
    circulated in January? Is legislative reform necessary? Will there be
    environmental benefits realized as a result of such reforms?
        Answer. The Administration has long believed that appropriate
    targeted legislative changes are needed to address RCRA remediation
    wastes. These targeted changes include: application of the RCRA land
    disposal restrictions; minimum technology requirements; and permitting
    requirements to hazardous wastes generated and managed during cleanups
    (remediation waste). These changes would enhance environmental
    protection by encouraging aggressive remediation of contaminated sites
    where such remediation might not otherwise occur, might occur more
    slowly, or might occur in a way that emphasized less treatment and/or
    less permanent remedies. This conclusion was also made in the 1997 GAO
    report, ``Hazardous Waste: Remediation Waste Requirements Can Increase
    the Time and Cost of Cleanups'' U.S. General Accounting Office, GAO/
    RCED-98-4, October 1997.
        The approach to remediation waste reform outlined in the
    Administration's legislative specifications differs from the approach
    taken in Senator Lott's draft legislation in a number of important ways
    including: (1) remediation wastes would remain in the RCRA subtitle C
    system, explicitly preserving existing RCRA enforcement and citizen
    suit provisions; (2) remediation waste would be subject to clear
    national standards for treatment and management, providing a certain
    amount of site-specific flexibility while maintaining a clear national
    baseline; (3) remediation waste management facilities would be subject
    to RCRA subtitle C permitting requirements which would be streamlined
    and more flexible than existing RCRA permits but would preserve the
    RCRA cradle to grave management system.
        The environmental benefits that would result derive from reducing
    existing barriers to cleanup and thereby encouraging faster and
    additional cleanups. Cleaning up contaminated sites reduces risks to
    surrounding populations and ecosystems form exposure to contaminants.
    Ground-water contamination is a particular concern. The long-term
    impacts of this exposure vary depending on the type of contamination
    and the extent of exposure. Health effects can include cancer, nervous
    system effects (tremors, sensory abnormalities), effects on the
    endocrine and reproductive systems, high blood pressure, and memory and
    concentration problems. While the Agency is addressing the need to
    control exposure at the highest risk sites on a priority basis, faster
    and additional cleanups will provide greater protection and lower costs
    in the long run. The legislative specifications encourage state
    cleanups and independent and voluntary cleanups at low and medium
    priority sites, where otherwise cleanup might occur more slowly.
                 chemical safety and hazard investigation board
        Question. I am pleased to see that even with its tiny fiscal year
    1998 budget of $4 million, the Chemical Safety and Hazard Investigation
    Board is off to a promising start. The Board, of course, will always
    need to draw from the expertise of EPA, OSHA, and other agencies. Is
    the Agency prepared to play a supporting role in the Board's
    investigations?
        Answer. Yes. EPA recognizes the Chemical Safety Board has the lead
    in investigating the causes of chemical accidents, and we stand ready
    to support them. To this end, EPA and the Board are developing a
    Memorandum of Understanding to clarify each agency's role. The MOU will
    cover coordination of field activities as well as research, information
    sharing, accident databases, international activities and other areas
    of chemical safety.
        We do not expect to complete this agreement for several months
    because the Board is obligated by law to establish MOU's with OSHA and
    NTSB first. In the meantime, we will support the Board in the following
    manner with the available resources:
        Accident Investigators.--EPA has a small, but effective team of
    accident investigators. Each member is trained and has experience in
    accident investigation techniques and procedures. Investigators can
    perform a wide-range of site-related activities such as collecting/
    examining evidence, conducting interviews, analyzing documents and
    materials, and examining chemical processes.
        Outside technical experts.--Through contracts, EPA has developed a
    network of technical experts who we can make available to the Board.
    These experts have special knowledge in such areas as specific chemical
    families and particular types of chemical accidents.
        In-house experts.--EPA's program staff at Headquarters, in regional
    and field offices are available to perform specific technical,
    analytical and logistical support tasks the Board may require during an
    accident investigation.
        It is also important to stress that a complementary accident
    prevention effort will ensure success in investigating and preventing
    chemical accidents. As EPA transitions to its new role, our priority
    will be to continue to build with our available resources a credible
    accident prevention program in cooperation with the Board, OSHA and
    other agencies. We will concentrate our activities on:
        Respond to and Implement Board Recommendations.--As EPA's accident
    report activity winds down in early fiscal year 1999, we anticipate a
    significant growth in workload to respond to and take actions on the
    Board's recommendations to EPA resulting from their investigations and
    other responsibilities. This is a statutorily mandated responsibility
    for EPA under CAA Sec. 112r(6)(I) which became effective with the
    board's funding, and reflects the experience of other agencies with
    independent investigatory boards; i.e., DOT and DOE.
        We expect that several recommendations will be generated by
    accidents investigated by the Board and that these recommendations
    would likely be related to emergency planning, lists of substances
    subject to emergency planning or chemical accident prevention, and
    hazards analysis, process safety management, or emergency response
    under the Risk Management Program for prevention of chemical accidents.
    The recommendations might call for regulatory action, outreach or
    guidance to the regulated community or state and local levels.
        Information Gathering.--We will gather information in the field to
    improve our understanding of how to prevent accidents, so we can
    respond faster and more effectively to Board recommendations. This
    activity will be a small but essential part of the program. It stems
    from our authorities for accident prevention under the CAA Sec. 112(r)
    and CERCLA Sec. 104 and information gathering under CAA Sec. 114 and
    Sec. 307 and CERCLA Sec. 104. The work will be done in cooperation with
    other agencies such as the Board and OSHA and would complement their
    efforts (much as FAA and NTSB work together in the field).
        Prevention Actions.--In addition to what EPA learns from the
    Chemical Safety Board, we will also act to prevent accidents, based
    upon what we learn in the field and from other sources (e.g., chemical
    safety audits, past accident investigations, research, compliance,
    enforcement, etc.). Our chemical safety responsibilities under CAA
    Sec. 112r (1), (3), (7), (8), and (9) and CERCLA Sec. 104 (b) and (e)
    require us to take actions to prevent accidents. A top priority will be
    to ensure that accident stakeholders are notified promptly so they take
    steps to minimize risk. As warranted, we will also develop guidance,
    modify existing rules and develop new ones, conduct and promote
    research, and communicate with industry, government and the public to
    enhance the application of safety measures.
                              toxic use reporting
        Question. For years, the Administration has publicly supported the
    concept of toxic chemical use reporting. Will the Administration
    support legislation to promote such reporting?
        Answer. EPA continues to support chemical use reporting. EPA
    believes that chemical use data could improve the public's
    understanding of and ability to evaluate environmental issues that
    arise from the use of toxic materials at chemical facilities. Materials
    accounting information could improve the public's ability to evaluate
    facility source reduction and pollution prevention performance, focus
    emergency planning efforts related to the transportation of chemicals
    through communities, provide understanding on the amounts of chemicals
    going into products, and address worker safety and health issues.
        In what is known as the Toxic Release Inventory (TRI) Phase 3
    initiative, EPA is itself contemplating adding chemical use information
    to the TRI. (The concept of chemical use refers to ``materials
    accounting'' information: the amounts of chemicals entering a facility,
    the amounts manufactured or consumed on site, and the amounts leaving
    the facility in products and wastes). The Administration has placed a
    high priority on the TRI Phase 3 initiative. In an August 1995
    memorandum to the EPA Administrator, President Clinton directed EPA to
    expedite TRI expansion `` * * * including information on mass balance,
    materials accounting, or other chemical use data.''
        EPA has held public meetings on the TRI Phase 3 initiative and has
    issued an advance notice of proposed rulemaking (ANPR), receiving over
    40,000 comments in response. EPA has reviewed the comments and issues,
    has reviewed two state programs (Massachusetts and New Jersey) that
    collect chemical use information, and is continuing to evaluate a
    number of other issues, prior to making a decision on how best to
    proceed.
                                  atsdr budget
        Question. I am a big supporter of the Agency for Toxic Substances
    and Disease Registry (ATSDR), because of their good work at several New
    Jersey sites, including two in Toms River (Ciba Geigy and Union
    Carbide) and the Lipari Landfill. I notice that the Administration
    actually asked to cut $10 million from ATSDR's budget. How do you
    justify the requested budget cut?
        Answer. Congressional add-ons from fiscal year 1998 were not
    sustained in the Agency's fiscal year 1999 Request. With a reduction of
    $10 million, ATSDR's funding level in fiscal year 1999 remains at the
    fiscal year 1998 President's Budget level of $64 million.
        ATSDR is a valuable partner for EPA at priority Superfund sites--
    particularly at sites moving into the remedy selection/construction
    phase. ATSDR's assessments can, and are, used effectively to
    communicate the risks and threats being addressed by Superfund
    cleanups. However, our investments must focus on our efforts to
    actually remove the threats we know to exist at the Nation's worst
    sites. Not withstanding ATSDR's importance to safeguarding public
    health, EPA needs the additional funding to meet its construction
    completion goals which will prevent populations from exposure to
    hazardous waste.
                     pesticides: registration of lower-risk
        Question. What steps are EPA taking to expedite registration of
    lower-risk replacement pesticides, especially for ``minor use crops,''
    such as cranberries?
        Answer. EPA is committed to making every effort to ensure that
    farmers have the critical tools they need to grow our food. EPA wants
    all affected growers to be able to anticipate and plan for our actions.
    We do not want, and do not expect, any disruption in the availability
    of pest control tools without warning. We are balancing tolerance
    reassessment with the introduction of new products and pest control
    methods to help ensure that both chemical and non-chemical alternatives
    are available.
        EPA has stepped up its efforts to provide better, safer choices of
    pesticides for farmers. In the past few years, EPA has created two new
    programs aimed at expediting reviews and ultimately market entry of
    lower risk products and safer substitutes. The Agency created the
    Biopesticides and Pollution Prevention Division. The types of products
    registered in this Division generally have a non-toxic mode of action.
    By combining the risk managers with the review scientists in one
    division, we have been able to streamline the entire review process.
    About half of post-Food Quality Protection Act (FQPA) new active
    ingredients have been for biopesticides.
        The second program, known as the Reduced-Risk Pesticide Program,
    has been in place since 1994. Applications that come in under the
    Reduced-Risk Program are placed at the head of the review queue. To
    date, 17 new chemicals have been approved as reduced risk alternatives.
    This program clearly provides an incentive for companies to develop
    lower-risk products and safer substitute products. Among the 13
    chemicals currently under review as part of this program, 5 new active
    ingredients are potentially significant substitutes for some
    organophosphate registered uses for which reviews should be completed
    before tolerance reassessment on organophosphate pesticides is
    completed. EPA has also proposed a draft policy to give expedited
    consideration to applications for reduced risk pesticides that may be
    alternatives to the organophosphates. As stated in the Vice President's
    April 8 memorandum on food safety, EPA is establishing an advisory
    process to ensure broad stakeholder involvement in the development and
    implementation of an approach to tolerance reassessment for
    organophosphate pesticides.
        EPA is particularly concerned that options are available for minor
    crop growers. The Agency has put in place a priority system for minor
    uses which allows applications to be expedited, created a minor use
    team with an ombudsman within the pesticide program, and has broadened
    communication efforts with growers and trade associations concerned
    about minor use issues. In addition, we have published guidance on the
    minor use prioritization criteria and held a workshop on minor use
    registration.
        In addition, EPA works with the U.S. Department of Agriculture
    (USDA) on a regular basis to ensure that the impact of its regulations
    and decisions on farmers is considered. EPA and USDA also have a
    Memorandum of Understanding to foster cooperative efforts to provide
    replacements for pesticides that are likely to be subject to
    cancellation or suspension by EPA, or are subject to voluntary
    cancellation based on risk or economic concerns.
                             fqpa: organophosphates
        Question. EPA has indicated that it intends to reassess
    organophosphates under the Food Quality Protection Act (FQPA) to
    determine if they meet the new health standard under the Act. I
    understand that organophosphates can be toxic to the brain and central
    nervous system, yet few of them have been tested for their effects on
    developing brain and nervous system of infants and children. What steps
    is EPA taking to reevaluate their testing requirements to specifically
    reassess these chemicals for their developmental neurotoxicity?
        Answer. In the past, EPA has utilized its data call-in authority to
    request developmental neurotoxicity studies where the potential for
    certain developmental effects existed. The need for more routine use of
    developmental neurotoxicity testing was one of the topics discussed at
    the March 1998 meeting of the Federal Insecticide, Fungicide, and
    Rodenticide Act Scientific Advisory Panel (SAP) and the Agency is
    reviewing the SAP's comments. The SAP did not reach consensus on a path
    the Agency should follow but urges the Agency to continue evaluation of
    the core tests required and evaluation of the design inherent in these
    required tests to optimize the likelihood of detection of developmental
    toxicity. In addition, EPA is currently revising its testing
    requirements for developmental neurotoxicity and expects to publish
    proposed guidelines in June 1998.
                        fqpa: organophosphates exposure
        Question. While I understand that data on some sources of exposure
    to organophosphates are incomplete, does EPA currently have sufficient
    data to determine that there is reason for concern about exposure of
    the public to organo-phosphate pesticides?
        Answer. EPA certainly believes there is reason to conduct a more
    detailed risk assessment of the organophosphate pesticides, which is
    currently being done. As you know, organophosphates are in the first
    group of pesticides to be reassessed under the stricter Food Quality
    Protection Act (FQPA) standard. EPA and the U.S. Department of
    Agriculture have formed an Advisory Committee (Tolerance Reassessment
    Advisory Committee--TRAC) to consult on the framework for
    organophosphate tolerance reassessment. Specifically, this group will
    discuss appropriate processes for making pesticide tolerance decisions,
    what documentation is needed, and how to ensure appropriate public
    participation and transparency. While this group will focus on
    organophosphates, it is hoped that their advice will help establish
    principles for tolerance reassessment of all pesticides.
                      fqpa: tolerance reassessment process
        Question. You mentioned at the hearing that EPA will be
    establishing an advisory committee to provide input on EPA's tolerance
    reassessment process. How will this advisory committee impact EPA's
    ability to meet its FQPA deadline to reevaluate \1/3\ of all pesticide
    tolerances by August 1999?
        Answer. The Tolerance Reassessment Advisory Committee (TRAC) was
    recently formed and held its first meeting on May 28-29. As mentioned
    previously, the Committee will focus on organophosphates in an attempt
    to assist EPA in developing a framework for making decisions during
    tolerance reassessment. This Committee will largely be providing advice
    on broad policy issues and is not a technical, scientific advisory
    group. The Agency's refined risk assessment for organophosphates will
    continue on a parallel track with the Advisory Committee's work. Once
    the risk assessment is completed, the Committee's recommendations will
    assist EPA in reassessing the tolerances by August 1999.
        Question. How will the Agency meet this deadline?
        Answer. At this point, EPA still anticipates completing its review
    of the organophosphates by August 1999. It is important to note,
    however, that the Agency is continuing to reassess tolerances for other
    pesticides and will have completed a number of these other
    reassessments by August 1999, thereby contributing to the \1/3\ of
    tolerance reevaluations mandated by the Food Quality Protection Act
    (FQPA).
                        fqpa: public health implications
        Question. Some in the agricultural and chemical industry have
    suggested that the Agency should not make assumptions about levels of
    exposure and not consider these other exposure sources until actual
    data are submitted by the chemical companies. What are the public
    health implications if EPA fails to consider other sources of exposure
    to pesticides when reassessing these chemicals? If EPA does not
    consider other exposure sources when data on those exposures are
    incomplete, can they comply with the requirement of FQPA that pesticide
    tolerances take into account aggregate exposure?
        Answer. EPA uses the best data available. Where data are
    incomplete, EPA may compensate by using an additional uncertainty
    factor or making a reasonable health-protective assumption. This has
    long been EPA's practice and the Food Quality Protection Act (FQPA)
    emphasizes the importance of uncertainty factors where data are
    incomplete. Where risk estimates are used, for instance in drinking
    water exposure, EPA relies on actual data supplemented with
    scientifically reviewed models and not on worst-case assumptions. Where
    detailed data, such as monitoring data, are not available, EPA uses
    screening procedures to identify pesticides that are unlikely to get
    into drinking water. This screening process allows the Agency to make
    timely decisions without requiring additional data from registrants
    that are not necessary to make a decision. If a pesticide does not pass
    this screen, EPA considers factors such as the nature of the health
    concern, overall risk, and the potential magnitude of drinking water
    contamination. The Scientific Advisory Panel and the International Life
    Sciences Institute is providing expert advice and review of our
    methods.
        EPA feels this approach is appropriate, both to facilitate the
    registration of new, reduced-risk alternatives to conventional
    pesticides and to allow action on pesticides where available, reliable
    data indicate there is unacceptable risk.
                              fqpa: ten-fold kids
        Question. Just last week, several scientists and pediatric experts
    told Congress at a briefing that there were significant shortcomings in
    EPA's toxicological data with respect to the safety of pesticides for
    infants and children. In addition, a recent study by Rutgers University
    suggests that some home-use pesticides previously thought to dissipate
    may actually accumulate on the surface of children's toys for weeks
    after the initial application. How is EPA implementing the 10-fold
    kids' safety factor to account for these uncertainties with respect to
    exposure and toxicity?
        Answer. The Food Quality Protection Act of 1996 (FQPA) provides
    important new protections for the Nation's consumers, with special
    emphasis on measures to ensure the protection of infants and children.
    For example, FQPA requires for the first time that EPA make an explicit
    determination that pesticide tolerances be set at levels that are safe
    for infants and children.
        In January 1998, EPA submitted its approach to the FQPA safety
    factor to the Scientific Advisory Panel for review, including how the
    Agency is dealing with exposure and toxicity issues. This approach
    described how the Agency considers the completeness of the toxicity
    database, the type and severity of the effect observed, and the nature
    and quality of the available exposure data. The application of the FQPA
    safety factor is not a matter simply of uncertainty, but is also a way
    of assuring an extra measure of protection for infants and children in
    cases where special sensitivity or exposure for these subgroups is
    identified. The retention, reduction, or removal of the FQPA safety
    factor is based upon a weight-of-evidence evaluation of all applicable
    data and reflects sound scientific judgment and principles. An internal
    FQPA Safety Factor Committee consisting of toxicologists, exposure
    scientists, and risk managers recommends whether to retain, reduce, or
    remove the FQPA safety factor.
        To allow for transparency in the Agency's approach, EPA has asked
    for advice on applying the FQPA safety factor from independent
    scientific experts and invited stakeholder consultation through the
    Scientific Advisory Panel (SAP) and the Pesticide Program Dialogue
    Committee (PPDC). The SAP is generally supportive of the new approach
    but identified the need for more clarity. The Agency will be sending a
    revised guidance on the FQPA safety factor to the SAP in July.
        In addition, on February 25, 1998, EPA Administrator Carol Browner
    and Deputy Administrator Fred Hansen requested that the Office of
    Prevention, Pesticides, and Toxic Substances, the Office of Research
    and Development, and the Office of Children's Health Protection conduct
    an evaluation of the Agency's implementation efforts regarding the FQPA
    safety factor. An intra-Agency workgroup established in response to
    this request will soon release its initial report. The group is
    evaluating both the adequacy of the data used for making decisions
    about the additional factor and also the adequacy of procedures for
    consistency, transparency, and documentation.
        clean air act: proposed noX emissions trading program
        Question. I commend the Administration for developing its
    ``Comprehensive Electricity Competition Plan'', but I am concerned
    about the impacts it might allow on air quality in the Northeast, as
    well as unfair economic advantages that would be enjoyed by coal-fired
    units in the Midwest that were grand-fathered under the Clean Air Act.
        Under the proposed NOX emissions trading program, will
    the allowable emissions of air pollutants per kilowatt-hour be
    levelized between competing electricity?
        Answer. The Administration's Comprehensive Electricity Competition
    Plan does not seek to eliminate existing differentials in emission
    standards for electricity generating units. However, the plan would
    clarify EPA's authority to implement a cap-and-trade mechanism to limit
    power plant emissions of nitrogen oxides (NOX) in 22 eastern
    states and the District of Columbia.
                   clean air act: midwestern coal-fired units
        Question. Will Midwestern coal-fired units continue to enjoy the
    ``environmental subsidy'' of compliance with lower emission standards?
        Answer. Under the Administration's electricity competition plan,
    all generating units would be subject to the same National Ambient Air
    Quality Standards as before. All units are already subject to the
    national requirements for SO2. The generating units in the
    22 eastern states would be required, under the proposed plan, to lower
    their NOX emissions with the assistance of the cap-and-trade
    mechanism authorized in the plan.
              northeast states for coordinated air use management
        Question. Are the recent findings of the Northeast States for
    Coordinated Air Use Management (NESCAUM), reported in ``Air Pollution
    Impacts of Increased Deregulation in the Electric Power Industry: An
    Initial Analysis'' consistent with your views on the potential impacts
    of deregulation? If so do you believe that additional controls are
    needed to offset increased generation by our nation's coal plants?
        Answer. EPA is concerned about changes in electricity generation
    patterns between 1995 and 1996 that have resulted in increased
    emissions of NOx from power plants, as cited by NESCAUM.
    Increased emissions for whatever reason, particularly if they persist
    into the future, are a matter of great concern to EPA.
        In November 1997, EPA proposed a rule that would direct 22 eastern
    states and the District of Columbia to substantially reduce
    NOX emissions in order to address the transport of ozone.
    With further authority to implement a cap-and-trade mechanism for power
    plant NOX emissions, as proposed in the Administration's
    electricity competition plan, EPA believes it can effectively prevent
    such emissions from increasing in the eastern U.S.
                  clean air act: noX emissions cap
        Question. Would additional controls, such as a cap on emissions of
    NOX, give the EPA sufficient authority to offset the
    economic incentives that Midwestern coal plants will have to increase
    utilization in a deregulated environment?
        Answer. EPA believes that a cap on NOX emissions, with
    trading, would effectively remove economic incentives for increased
    utilization of coal-fired plants that might otherwise occur in a
    deregulated generation market due to differences in environmental
    standards.
                    diesel emissions: promote voluntary sip
        Question. New Jersey is the leader in promoting voluntary SIP
    credit programs for diesel retrofits. I hope that, with EPA's support,
    this program will be undertaken by other states. Please provide me an
    update of EPA's initiative to promote voluntary SIP credit programs for
    diesel retrofits.
        Answer. EPA and its partners are developing a retrofit protocol
    that will provide the basis for voluntarily obtaining SIP credit
    programs for diesel retrofits. The protocol is in the final stages of
    development with a completion target by September 30, 1998. EPA's
    partners in this effort include the Northeast States for Coordinated
    Air Use Management (NESCAUM), New Jersey Department of the Environment,
    and numerous industry groups.
        EPA is developing a procedure that maximizes flexibility while at
    the same time providing a high degree of assurance that the credits
    generated are related to real-world emission reductions. The protocol
    is being written such that it will apply to a wide range of retrofit
    technologies, and will serve as the basis for numerous other retrofit
    protocols/programs.
        EPA's Office of Mobile Sources (OMS) will be promoting the New
    Jersey retrofit program as the first Voluntary Measures protocol
    developed under EPA's Voluntary Measures Policy and will be promoting
    voluntary diesel retrofit programs for other areas at regional
    workshops around the United States. Four workshops are currently
    planned. These workshops will be publicized nationally and will be
    attended by numerous state, regional, and local government officials as
    well as private industry representatives. In addition, the concept of
    obtaining SIP credit for diesel retrofits will be promoted through
    other channels to the EPA regional offices, state and local
    governments, and other stakeholders. Information will also be available
    at EPA's web site, at the retrofit pages.
                   clean air act: noX enforcement
        Question. There are two specific issues before EPA dealing with
    NOX. One involves a challenge from Mid-west governors and
    utilities; the other involves enforcement action against diesel engine
    manufacturers. Could you please update us on the status of each and
    your judgment on the time-table for settling each matter?
        Answer. On November 7, 1998, the Environmental Protection Agency
    published in the Federal Register a proposal to require 22 states and
    the District of Columbia to submit state implementation plans that
    address the regional transport of ground-level ozone, the main
    component of smog. In addition to the original proposal, EPA published
    a supplemental notice to this rulemaking on May 11, 1998. The comment
    period for the supplemental notice extends through June 25, 1998. EPA
    has received a considerable amount of comments on this rulemaking from
    states, affected industries, and other stakeholders, including
    Midwestern governors and utilities. EPA will continue to work over the
    next several months to address comments submitted for both the notice
    of proposed rulemaking and the supplemental notice. EPA expects to
    complete the final rulemaking in September 1998.
        EPA and the Department of Justice are negotiating settlements with
    the manufacturers of heavy duty diesel engines that are alleged to have
    been built with defective emission control devices. Negotiations should
    be finished by the end of June 1998.
                     gpra: epa goals vs environmental goals
        Question. Could the Agency provide me a list of those activities
    which promote clean air, clean water, safe food and each of the other
    environmental goals, which are now characterized as supporting
    ``credible deterrence,'' ``right to know,'' ``sound science,''
    ``pollution prevention,'' and other EPA ``goals'' that are actually
    means to achieving environmental goals?
        Answer. You will find a listing of the activities implementing the
    three goals you cite in the description provided in the combined
    budget/annual plan document. However, we are unable to provide an
    authoritative disaggregation of these activities in terms of the
    specific contribution made to the three goals you cite. Part of the
    reason for the goal structure is to represent the Agency's efforts at
    improving the means of environmental protection. However, please note
    that much of what the Agency expects to accomplish (expressed as
    ``performance measures'' in the budget/annual plan document) in these
    areas relate to contributions to water quality, drinking water, air
    quality and the like. To point out two general examples, the
    performance measures contained in Goal 9 break out compliance and
    enforcement workloads by the kind of environmental program they support
    (e.g., mobile sources, water--pollution discharges, pesticide and toxic
    inspections, etc.). In the second case, many of the ``deliverables''
    committed to in Goal 8 relate to better understanding of the
    interrelations of multiple receptors of pollution, of benefit to
    multiple media environmental control programs.
                      gpra: achieving environmental goals
        Question. Could the Agency please provide me the means by which it
    tracks the effectiveness of its activities in achieving the
    environmental goals of clean air and water and safe food?
        Answer. You will find a listing of the activities by which the
    Agency plans to achieve its objectives for clean air, water and safe
    food in the description provided in the combined budget/annual plan
    document. We acknowledge that such measurement of program effectiveness
    is a matter for continuous improvement. For example, part of our
    commitment to implement GPRA is to institute an ongoing ``multi-year
    planning'' effort in each of our 10 goals, for the explicit purpose of
    fashioning a ``roadmap'' for improving the performance goals.
    Specifically, our agenda is to make more of our annual performance
    goals expressions of discrete, incremental progress towards longer-term
    targets of explicit environmental-quality improvements.
            gpra: tracking progress of individual commercial sectors
        Question. Does the Agency track the progress of individual
    commercial sectors in reducing their air and water pollution and waste,
    and in providing safer products and services?
        Answer. EPA does not have a sector-specific tracking system for
    environmental performance. However, the Agency makes use of its various
    data bases in working with specific industries in its sector programs,
    using these data to assess the environmental performance and
    improvement opportunities for the selected industries. Data bases such
    as TRI enable the aggregation of environmental performance data on a
    sector-specific basis. Programs such as the Agency's Sustainable
    Industry Program and Sector Profile Program provide an important
    foundation of information on which to base sector-specific program and
    policy development.
        In addition, the CSI Metal Finishing Sector has recently launched a
    voluntary, sector-wide Strategic (Performance) Goals Program. This
    first-of-its-kind reinvention program includes a multi-stakeholder
    endorsed system for tracking the progress of the sector in achieving
    its goals for improved resource utilization, emission reduction,
    compliance, and regulatory burden reduction. (Several Connecticut
    stakeholders contributed to the development of this program.)
        With regard to safer products and services, these outcomes are
    closely tied to continuous, cost-effective improvement in environmental
    performance--the stated goal of EPA's sector-based environmental
    programs. The Agency does not track these performance criteria, largely
    because it extends beyond EPA's scope of responsibility; the Consumer
    Products Safety Commission may have a product safety data base that is
    sector-based.
           gpra: promoting progress of individual commercial sectors
        Question. How does the Agency assess the extent to which its
    enforcement, right-to-know, technical assistance, and voluntary
    partnership activities promote progress in individual commercial
    sectors?
        Answer. EPA makes a particular effort to assess whether the sum of
    its activities and initiatives (such as right-to-know, enforcement, and
    technical assistance) promote progress in individual commercial sectors
    when such sectors are identified as being especially important sources
    of pollution that adversely effect human health and/or the environment.
    In these cases, it is the Agency's responsibility to determine whether
    its efforts are effectively reducing if not eliminating the problematic
    discharges and emissions. If discharges are not being adequately
    reduced, then the sector approach will often help determine alternative
    approaches that may yield the desired improvements. Sectors that
    discharge high volumes of highly toxic chemicals and other types of
    pollutants are typically those that fall into this category. Past
    efforts to holistically assess the effects of EPA's activities have
    included sectors such as pulp and paper, petroleum refining, printing,
    and dry-cleaning.
                       gpra: moving toward strategic plan
        Question. Does EPA intend to move, at some point, to a strategic
    plan in which ``EPA's Goals'' are environmental goals exclusively, and
    in which all activities are developed and assessed in terms of their
    effectiveness of achieving the environmental goals?
        Answer. A strategic plan that could express objectives purely in
    terms of environmental measures may indeed be a worthy ideal. However,
    two practical considerations work against achievement of such an ideal.
    First is the reality of being able to accurately represent the
    contribution from the necessary support activities, including those
    enhancing the means of improving environmental quality.
        Secondly, environmental protection is more effectively and
    efficiently achieved by giving citizens the means to know their
    problems at the grassroots and to solve them, by better scientific
    understanding of the problems and their solutions, and by more
    efficient compliance with essential standards through a better
    appreciation of the deterrence value of enforcement. Hence, all these
    are essential Agency priorities on a par with the Agency's basic
    responsibilities to see that levels of environmental quality are
    sustained and improved. The Agency is committed to ``working smarter,''
    to foster a new way of achieving environmental protection, and its
    choice of strategic goals reflects that commitment. This commitment
    embodies the realization that sustained improvements in the quality of
    the air, water, food and other kinds of environmental media that we all
    seek will depend, in the long run, on fashioning new ways of doing
    business that build on the successes to date. Sometimes better
    ``means'' are as valuable as better ``ends.''
                                     ______

                      Question Submitted by Senator Hagel

                  combined animal feeding operations (cafo's)
        Question. EPA has proposed broadly regulating this nation's
    livestock producers and their operations. In Nebraska, it is clear that
    the onerous ``one-size-fits-all'' approach of Federal livestock
    regulatory standards is not appropriate. It fails a ``real world''
    test. In reality, this will add another frustrating level of Federal
    bureaucracy on our livestock producers, on top of regulations already
    imposed and enforced by the Nebraska Department of Environmental
    Quality (DEQ). What is the cost of forcing these EPA regulations on our
    livestock producers? What is the impact on local main street commerce?
    These questions are completely disregarded by an EPA bureaucracy that
    regulates from Washington with no understanding of the implications of
    their actions in the real world. And for what? Why?
        Answer. EPA is presently working with the U.S. Department of
    Agriculture to develop a joint strategy on animal feeding operations
    (AFO's). This strategy will give priority to the development of
    voluntary, incentive based approaches to assisting livestock producers
    in efforts to protect the environment. The vast majority of animal
    feeding operations are likely to be addressed using these voluntary
    approaches.
        Some large producers now have permits under the Clean Water Act and
    the strategy may call for some additional producers to obtain such
    permits over a specific period (e.g. by 2005). Some States now require
    livestock producers to address water quality and related environmental
    issues. National minimum regulations related to animal feeding
    operations help assure that large facilities have a ``level playing
    field'' and that producers in States with strong environmental
    programs, like Nebraska, are not at a competitive disadvantage in
    competing with producers from States with less protective requirements.
        The costs to a given facility of any future Federal requirements
    for reducing water pollution from large animal feeding operations will
    vary based on several factors including the specific pollution control
    requirements and the extent to which some facilities may already have
    implemented some or all of the requirements under local, State or
    Federal laws.

                              subcommittee recess

        Senator Bond. The subcommittee will stand in recess until
    May 7.
        Ms. Browner. Thank you.
        Senator Bond. Thank you.
        [Whereupon, at 11:53 a.m., Tuesday, April 30, the
    subcommittee was recessed, to reconvene at 9:30 a.m., Thursday,
    May 7.]

     DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
            INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1999

                                  ----------

                            THURSDAY, MARCH 5, 1998

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 9:33 a.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Christopher S. Bond (chairman)
    presiding.
        Present: Senators Bond, Burns, Stevens, Mikulski, and
    Boxer.

                      FEDERAL EMERGENCY MANAGEMENT AGENCY

    STATEMENT OF JAMES LEE WITT, DIRECTOR
    ACCOMPANIED BY:
            GARY JOHNSON, CHIEF FINANCIAL OFFICER
            MICHAEL ARMSTRONG, ASSOCIATE DIRECTOR, MITIGATION DIRECTORATE

                    OPENING STATEMENT OF CHRISTOPHER S. BOND

        Senator Bond. The subcommittee will come to order.
        Today's hearing is the first VA-HUD Subcommittee hearing
    for the fiscal year 1999 appropriations process. Once again, we
    will be confronted with a very tough task in crafting the 1999
    appropriations bills as the discretionary budget caps
    established in last year's budget agreement provide for no real
    growth in nondefense discretionary spending.
        Unfortunately, the President and the Office of Management
    and Budget did us no favor in proposing a 1999 budget which
    breached those caps by using what I consider to be phony
    offsets. Moreover, the President's budget request in a number
    of key areas within this subcommittee's portfolio falls short
    of the need, including veterans medical care, housing for the
    elderly, and FEMA disaster relief, which we will be discussing
    today.
        Clearly, we will be forced to make some difficult tradeoffs
    in order to accommodate such critical funding requirements.
        This morning we will take testimony from the Federal
    Emergency Management Agency, followed by the Corporation for
    National and Community Service.
        We welcome James Lee Witt, Director of the Federal
    Emergency Management Agency and those accompanying him this
    morning.
        Mr. Witt, while we in Washington have enjoyed a very mild
    winter courtesy of the weather phenomenon known as El Nino,
    other parts of the country have not been so fortunate. FEMA
    currently is responding to major disasters in more than a few
    States which are reeling from El Nino-related weather events.
        Mr. Witt, once again you and the FEMA staff deserve praise
    in your response effort and we acknowledge your good work. We
    look forward to getting an update on the status of disaster
    relief efforts in New England, Florida, and California and
    other States and territories suffering major disasters in
    recent weeks.
        Turning to the budget request, FEMA is requesting $831
    million for fiscal year 1999, including $308 million for
    disaster relief. In addition, FEMA is requesting $2.3 billion
    in disaster relief contingency funds outside of the
    discretionary caps.

                                 safety of dams

        For the operating programs and the emergency food and
    shelter program, FEMA's request is modest and represents little
    change from the current year. We do, however, have serious
    concerns with the proposed $11 million cut to State and local
    assistance and the $1.4 million cut to the new dam safety
    program. I am very disappointed that the powers that be at OMB
    have not recognized the value of your disaster mitigation
    program as it relates to FEMA's dam safety program. The program
    is authorized at $3.9 million this year, a measure I fought
    hard to get in the authorization because we know too well the
    disasters that occur when dams fail. Yet OMB saw fit only to
    request $1.5 million.
        As you may recall, last year the administration requested
    zero funding for the dam safety program. OMB, our good friends
    of budget cutters----
        Senator Mikulski. Shouldn't that be safety of dams?
        Senator Bond. The safety of dams?
        Senator Mikulski. It sounds like the damn safety program.
    [Laughter.]
        Senator Bond. The way they are funding it, I prefer to call
    it the dam safety program. When they give it full funding, we
    will call it a safety of dams program. [Laughter.]
        Our good friends at OMB are often accused of knowing the
    cost of everything and the value of nothing. That seems to fit
    in this instance.
        The $1.5 million request is unacceptable. We will work to
    remedy it in the committee bill. And if my distinguished
    ranking member insists on calling it the safety of dams
    program, we will so designate it.
        Not surprisingly, we will focus on disaster relief issues
    today. FEMA's proposal to take off budget $2.3 billion in
    fiscal year 1999 disaster relief costs is extremely troubling.
    Moreover, FEMA's budget request for fiscal year 1999, including
    the off-budget contingency funds, is not even enough to cover
    anticipated requirements for fiscal year 1999 and prior year
    disasters.

                       burgeoning cost of disaster relief

        Once again, the VA-HUD Subcommittee will be confronted with
    a need to replenish the FEMA checkbook. Had the administration
    budgeted for those requirements under the caps, it would have
    made our job a lot easier. That would have been the fiscally
    prudent course to follow.
        As you know, Mr. Witt, I have long been concerned with the
    burgeoning costs of disaster relief. In the last 5 years, we
    have appropriated a staggering $18 billion to FEMA for disaster
    relief, compared to $6.7 billion for the prior 5 year period.

                      cost containment in disaster relief

        Nature has not been that much worse. Costs clearly are out
    of control and something just has to be done about it.
        For several years, I requested FEMA to submit a legislative
    plan to control disaster costs. After much cajoling, arm
    twisting, and threats of reduced funding, FEMA finally
    submitted a proposal for reforming the Stafford Act last
    summer.
        The proposed amendments address several very important
    areas, including new incentives for mitigation, streamlining
    the grant process, and eliminating certain facilities currently
    eligible for disaster relief, such as golf courses.
        It did not include all of the reforms recommended by the
    inspector general or the GAO, such as the need for disaster
    criteria, but it was a good first start and I appreciate the
    work that you put into that proposal.
        I remain hopeful--I am not sure why, but being an eternal
    optimist, I have some hope--that the legislation will be acted
    upon by the authorizing committee this year and I would
    strongly urge you and request you to do all you can to
    encourage such action by working with members of those
    committees, as well as such stakeholders as the States, cities,
    counties and others.
        While legislative changes may not be feasible in the near
    term, I believe there is more FEMA can do to control costs
    without amendments to the Stafford Act. But FEMA has not made
    cost containment a priority, as demonstrated by the fact that
    FEMA's strategic plan does not even address this issue.
        I must tell you that I am disappointed that FEMA still has
    not yet issued a final rule limiting the number of appeals, an
    administrative change which has been promised for some time.
    Without legislative or administrative changes to the current
    disaster relief program, we can expect that disaster relief
    costs will continue to rise each year. This simply is not
    sustainable.
        We must get a handle on disaster relief costs. I would hope
    you would be willing to make disaster cost containment as much
    the hallmark of your tenure as you have made mitigation.
        Let me also add that there are many reasons for the
    increase in disaster costs, not the least of which is the
    numbers and severity of earthquakes, hurricanes, and other
    disasters. But we should also acknowledge that, as FEMA has
    become more proactive, States have become increasingly reliant
    on Federal aid.
        In the past 5 years, the number of requests from Governors
    for major disaster declarations has increased by 36 percent.
        I firmly believe that the State-FEMA relationship must be a
    true partnership. There must be a strong State commitment to
    preparedness, there must be accountability. If States are not
    doing their share, are not requiring adequate insurance on
    municipal facilities, are not undertaking appropriate
    mitigation measures, there ought to be consequences, possibly
    in the form of reduced Federal aid.
        That is not a popular stance. That is taking away the
    dessert plate. That is taking away the candy and ice cream. But
    I believe it is a fair stance.

                        predisaster mitigation criteria

        Moving on to mitigation, an area you have made a top
    priority, FEMA is requesting $50 million for its new
    predisaster mitigation program, called Project Impact. While
    the concept of building disaster resistant communities is
    excellent and your focus on this critical issue is commendable,
    I am concerned that we have not seen reasonable, quantifiable
    criteria or guidelines for how this program should work.
        Recognizing the importance of mitigation, we agreed to
    provide $30 million for Project Impact for fiscal year 1998,
    but did so with very few details from FEMA. This program must
    have clear criteria and performance measures. It must be more
    than a new grant program, but a strategic element of a national
    strategy to encourage actions to mitigate future disasters. And
    we must understand the distinctions between this program and
    the hazard mitigation grant program under section 404 of the
    Stafford Act for which $1 billion currently remains
    unobligated.
        I continue to have concerns with the fact that the States
    are not spending these funds and question the establishment of
    a new program when the existing one is not being fully
    utilized. We understand that a report is underway and due to us
    at the end of the month, which we hope will address these
    issues.
        Mr. Witt, I understand that in testimony before our House
    counterparts earlier this week you stated that it is your real
    friends who tell you what you need to hear.
        Well, by now I hope that you will consider us your very
    good friends.
        Let me turn to my distinguished ranking member, Senator
    Mikulski.
        Senator Mikulski. Mr. Chairman, in recognition that the
    full committee chairman is here, I would defer to him and
    extend the courtesy.
        Senator Stevens. I thank you very much. I am here to listen
    and just make one comment. But I would be pleased to hear what
    you have to say, too.

                         STATEMENT OF BARBARA MIKULSKI

        Senator Mikulski. Thank you very much, Mr. Chairman.
        Mr. Witt, we welcome you once again to the Appropriations
    Committee and want to thank you and also the very able staff of
    FEMA and also the FEMA people in the field who have responded
    to the tremendous number of disasters that we have had this
    year, whether it has been Maine ice storms, tornadoes in
    Florida, disasters de jour in California, and also throughout
    the United States of America there seems to have been,
    particularly in the last 3 years, an increase in natural
    disasters.
        We look forward to hearing what you need in order to be
    able to respond. But, as you know, when you took responsibility
    for this agency and brought under this rapid response, we
    talked about two things: one, preparedness. In other words,
    what can we do before a disaster occurs to make sure that FEMA
    and the people in the States were fit for duty.
        We would like to hear where you are in preparedness and
    what financial resources you need to do that.
        Second, we are looking for predisaster mitigation. As you
    and I know, it is often the infrastructure of local communities
    or a variety of other aspects of a specific community that
    makes them disaster prone. We cannot stop the forces of nature
    though we can often predict what a community will do.
        I will be interested to know how we can, using predictions,
    prevent at least the consequences to property and to human
    lives. I think that is really one of our biggest challenges in
    the area of prevention.
        The other area I would like to be able to take up in my
    questioning, though, is something not caused by nature but
    something caused by the rogues and scum of this world and it is
    those who have biological weapons, those who are developing
    right now the repugnant, despicable, ghoulish weapons of mass
    destruction.
        I know that you are a vital part of the President's team to
    make sure that we would be able to prevent and have the ability
    to respond to a biological or chemical terrorist attack on the
    United States of America or one of its communities.
        I look forward to hearing as much as you can share in an
    unclassified briefing what FEMA is doing so that we stand ready
    in the event that there is any attempt to attack the United
    States of America, we have our defenses from the military and
    we have our civil defense.
        Thank you, Mr. Chairman.
        Senator Bond. Thank you, Senator Mikulski.
        Now I turn to our distinguished chairman for his comments.

                            STATEMENT OF TED STEVENS

        Senator Stevens. Thank you, Mr. Chairman.
        It is nice to see you, Mr. Witt.
        I have come because I share the feeling that Senator Bond
    has just expressed. The amount of money that we have going out
    on disaster relief I do not criticize as much as I am trying to
    analyze. It does seem to be on a very sharp curve upwards and
    it comes at us in a way that we can hardly deny the next
    victims the same level of support that the victims of the last
    disaster received.
        And yet, I am not sure that we have looked at those
    services and payments with really an analytical eye in terms of
    ability to afford in view of the caps we live under now. I have
    come to ask you this.
        I was going to ask GAO to take a look at it. But have you
    studied how the changes in the past few years in terms of the
    benefits that are available to victims of disaster,
    particularly with regard to those who are living in areas that
    seem to have the same disaster pattern every 2 or 3 years?
        I saw someone from one State that said well, yes, he had
    rebuilt his house three times.
        Now somewhere there has to be a limit that says if you
    rebuild it once, that ought to be enough for the taxpayers. If
    it is destroyed again by a flood or the same kind of disaster,
    it would seem to me that there was some risk taking in staying
    in an area where there are flood plains, for instance, or
    hurricane patterns.
        With due regard to my friend from California, I remember as
    a young man when one whole area of California slid into the
    sea. I was interested to see that it was the area behind that
    that slid in this year.
        We have to get some standards, I think, and some criteria
    so that we can be freer, particularly when I realize that the
    new Madrid Fault Line is still there and it has not rung the
    bells in Boston for 100 years.
        We are going to get a massive one, soon, and if we apply
    the same level of assistance to people in massive disasters, we
    just will not be able to afford it.
        Are you making a review on that now?
        Mr. Witt. Yes, sir.
        Senator Stevens. When would we see the results of that
    review?
        Mr. Witt. We hope very soon. We are looking at the entire
    disaster program across the board including individual
    assistance grants and the public assistance program, which we
    are reengineering and streamlining.

                    loans versus grants for disaster relief

        Senator Stevens. I remember so well the 1964 earthquake in
    Alaska. We got a series of loans to rebuild our homes.
        I noticed that in recent disasters, people get grants to
    rebuild their homes.
        Mr. Witt. Some of them do qualify for grants.
        Senator Stevens. We have changed the standards considerably
    through the program. Is that an unfair judgment?
        Mr. Witt. I don't think the standards have been changed,
    Senator. The loan program that you are referring to is an SBA
    program.
        Senator Stevens. Yes.
        Mr. Witt. The individual and family grant program, is a
    program that FEMA funds at a 75/25 match with the States who
    run the program.
        The average grant to homeowners nationwide is about $3,500.
    The maximum allowable under that program is $13,400.
        The homeowners may be eligible for up to $10,000 to make
    their home livable in lieu of receiving temporary housing under
    the Disaster Housing Assistance Program. But before applicants
    can qualify for an IFG grant, they have to go through the SBA
    to see if they are eligible for a loan.
        Senator Stevens. All right.
        I do not want to prolong this, but I do think the problem
    of fairness is going to come on us if we have a massive
    disaster and we try to make available benefits at the same
    level we have had for these unfortunate, but fairly small,
    disasters on a localized basis.
        We have to make some tough decisions in advance of those
    big ones and I don't see how we can do it unless we have some
    real statistical data to see what is the fair thing to expect
    the taxpayers to pay in the event of people suffering from
    disasters like we may incur in the near future.
        Thank you very much, Mr. Chairman. I do have one question.
        Senator Bond. Thank you, Mr. Chairman. I appreciate your
    support on this. It is not just the rebuilding of homes, but
    FEMA recently paid $400 million with a 10-percent cost share to
    rebuild a university hospital. Frankly, the university is in a
    lot better financial condition than the U.S. Government.
        This approach is not sustainable. I very much appreciate
    the support of the chairman of the committee and I assure you
    that we will be following up.
        We are delighted to have Senator Boxer with us.

                           STATEMENT OF BARBARA BOXER

        Senator Boxer. Thank you, Mr. Chairman, thank you Senator
    Mikulski for your leadership.
        James Lee Witt, it is always good to see you. I,
    unfortunately, get to see you too often in my State.
        As a matter of fact, I would say to my colleagues that on
    Saturday, the President sat at the LAX Airport and he met with
    survivors of our recent El Nino storms and people who had been,
    literally, pushed by the force of mud out of their homes. There
    were families with babies, just an unbelievable array of people
    and stories.
        I just want to thank him, even though the President
    obviously is not in this room right now. I wanted to thank him
    again for doing that. Also I wanted to thank Vice President
    Gore for visiting us and also, of course, Director Witt, who is
    always there. We consider you an honorary Californian.
        I don't know how much more of this we are going to have. It
    is just a very eerie feeling because you go out there and the
    sun is shining, and yet you know what they are telling us. So
    far what they have told us is true. If this is so, we are going
    to see more of this, the force of nature.
        I think what struck most people this time, Mr. Chairman,
    was when the two highway patrolmen were killed. You look at
    them and feel these guys are just going to be able to do
    anything they want. Well, they lost their lives trying to
    rescue folks who had fallen into one of these mudslides.
        It is really quite amazing.
        Let me get to the purpose of this hearing which is to
    discuss the future.
        I am concerned about the immediate future, about the
    ability of FEMA to meet the need. I know that Senators,
    Congresspeople, and you will do all that we can. But I read
    yesterday in the press from a news wire that the President is
    submitting an amendment to the 1999 budget to use $1.86 billion
    of disaster funds to pay for the full cost of Bosnia.
        I just would like for you to clarify that because that is
    clearly troublesome and I am hopeful, from the way you are
    already shaking your head, that that is in error.
        I look forward to hearing you say that.
        Let me just quickly ask if I can put my whole statement in
    the record and just make three quick points here, if I might.
        Senator Bond. We would be happy to accept your full
    statement, Senator Boxer.
        Senator Boxer. Thank you.
        What I want to share with my colleague, Senator Mikulski,
    who came out to California for an El Nino summit, for which I
    was so grateful to her, and with you, Mr. Chairman, who have
    been so passionate toward all of us who have gone through this
    is that our El Nino summit and the fact that James Lee Witt was
    there and prepared for it really helped us.
        We repaired all the flood damage from our 1997 storms. So
    we were ready. The levies so far are holding, knock on wood. We
    have streamlined the permitting process to get channels cleared
    and gave every good sized city and county information on how to
    prepare.
        Also, because of our efforts, those of all of us, more
    people got flood insurance. We had a 40-percent increase in
    those folks who had flood insurance because we were out there
    before the rains started, giving out phone numbers.
        Usually we sit here and complain about things. It is not
    that we do not have some complaints. But this was a good step
    forward. The agency has responded magnificently in terms of
    allowing us to rebuild freeways.
        Just recently, this week, Santa Barbara will be able to
    move forward in cleaning out debris basins, which is very
    important.
        As I say, we expect more storms and we cannot afford to not
    be vigilant. We know what is coming. We are grownups and have
    been warned.
        I just want, once again, to say to James Lee Witt and to
    both my colleagues thank you very much. I am so honored to be
    on this particular subcommittee. It is not a theoretical
    assignment. It is such an important assignment for my State.

                               prepared statement

        I thank both of you and I again thank James Lee. I look
    forward to hearing from him and getting some reassurances on
    the budget.
        [The statement follows:]

                      Prepared Statement of Senator Boxer

        I first want to thank you, the President and Vice President Gore
    for your recent trips to California to visit with many of our people
    who have suffered through the awesome destructive power of the El Nino
    winter storms. These visits boosted spirits and added greatly to our
    efforts to recover from these storms.
        I was there with the President when he met with those who suffered
    through the ordeals of this horrific mudslides.
        The new FEMA was successful again in working with our State and
    local agencies to be ready to assist recovery efforts the instant the
    President issued his declarations. Since our El Nino summit last year,
    we have done a lot in California to prepare for the storms. We repaired
    all the flood damage from the 1997 storms, streamlined the permitting
    process to get our channels cleared and gave every good-sized city and
    every county information on how to prepare.
        I am proud to know that as a result of our efforts, the number of
    National Flood Insurance Policies increased by 40 percent from 1996 to
    1997, the largest one year increase in California in the program's
    history. I would like to hear further from you on how well we did in
    preparing State and local communities for this disaster and any
    suggestions for future improvements.
        I want to thank you also for the news this week that Santa Barbara
    County was approved for $4.5 million in FEMA assistance for the
    clearance of 13 debris basins. I know my field staff worked very
    closely with local agencies and FEMA for this request. That will be
    critical for preparing the county for the next round of El Nino storms.
        Mr. Witt, as you know, we still face another series of El Nino
    storms. I would like to hear your best estimate of the impact of these
    storms, considering the fact that we now have a large snowpack in the
    Sierra mountains that will be melting soon and overflowing rivers and
    reservoirs. All indications say the El Nino storms are not finished.
    Since you are now an honorary Californian, let me thank you for
    returning ``home'' again and being there to assist us in our time of
    need.

                             importance of buyouts

        Senator Bond. Thank you very much, Senator Boxer. As one
    who represents a State that has been heavily hit by disasters,
    particularly in the 1993 and the followup 1995 flooding
    disasters, we know how important the disaster relief is. We
    want to do everything to make sure that FEMA is well equipped
    to go there.
        The rule that was put down for the Midwestern States after
    the floods was we will help you this time, but do not go in
    harm's way again.
        We have worked with FEMA and other agencies for buyouts to
    get people out of the hazard areas. A recent article in the
    Washington Post, actually on Tuesday, mentioned a city in
    California that, since its incorporation 7 years ago, has had
    six federally declared natural disasters, resulting in actual
    and projected governmental costs of $15 million.
        I think this is why we need to emphasize mitigation.
        Senator Boxer. Absolutely.
        Senator Bond. When we help people out, let's help them not
    out of the current disaster but to get out of harm's way in the
    future. I believe this is a goal we all share and want to work
    toward.

                               prepared statement

        Senator Craig is unable to attend today's hearing, but has
    requested that his full statement be inserted in the record at
    this time.

                      Prepared Statement of Senator Craig

        Thank you, Mr. Chairman. I would first like to thank the Chair and
    the Ranking Member for holding this hearing in such a timely manner. I
    will not take long, but would like to take this opportunity to speak to
    the annual budget of the Federal Emergency Management Agency (FEMA).
        Mr. Chairman, I am pleased to see my friend FEMA Director James
    Witt before us today. As you know, Director Witt has had a busy year. A
    great deal of his attention has been directed towards my home State of
    Idaho, which recently experienced a series of devastating natural
    disasters. A majority of the counties in Idaho have been named as part
    of a Presidential Declaration at one time or another during the last
    two years. Some were hit by ice storms, others experienced severe
    flooding or other disasters--many communities are still struggling with
    recovery efforts.
        In each case, FEMA was quick to respond to our immediate needs.
        Of course, Mr. Chairman, the needs of these communities continue
    long after the water recedes or the power comes back on. It is this
    continued need that I want to address here today. Last year, as part of
    the Senate Report which accompanied FEMA's fiscal year 1998
    appropriations, the Committee noted:

              ``The Committee recognizes the need for better coordination
            among Federal agencies and departments during the long-term
            recovery process following a natural disaster. The current lack
            of formal coordination of long-term recovery efforts stands in
            contrast to the recent experience of effective short-term
            coordination by FEMA. Accordingly, the administration is
            requested to submit a plan to Congress to provide for the
            designation of a single agency with the responsibility and
            authority to coordinate all long-term recovery efforts among
            the various participating Federal agencies. In addition, the
            Committee encourages the legislative committees to examine this
            important issue.''

        The need for such coordination was recently highlighted when the
    communities of Kellogg and Wardner, Idaho, experienced what has been
    called a ``rain on snow event.'' With the ground already frozen and
    covered in snow, rainwater was unable to be absorbed. The result was a
    massive flood of water, snow, and mud through the heart of these two
    communities. Left in its wake was damage in excess of $10.8 million.
        To help begin putting these two communities back together, FEMA
    assigned a special project coordinator to assist in the development of
    a long-term recovery solution. His assistance and knowledge of how
    Federal agencies function proved invaluable in initializing a
    coordinated recovery effort. While this appears to be the first
    coordinated effort of its kind, community and State leaders continue to
    struggle with a few remaining Federal agencies which have yet to fully
    engage in the recovery process. I continue to believe that what is
    needed is for the administration to develop a strategy to coordinate
    long-term recovery efforts.
        I must report, Mr. Chairman, FEMA did an exceptional job in keeping
    the communities informed throughout this entire process. Likewise, the
    Idaho Bureau of Disaster Services has responded well above the call of
    duty to the ongoing needs of these communities. If nothing else, our
    experience has shown the need for better inter-agency coordination
    during the long-term recovery phase. I implore the Chairman to again
    stress to the administration the need to act on the Committee's request
    in this effort.
        Mr. Chairman, I have one more item I would like to draw to the
    Subcommittee's attention. Included in the administration's request for
    funding is a net reduction of $11.4 million in State and local
    assistance grants. The changes would effectively replace the current
    Federal-State cost-sharing formula with a 50-50 split. I was surprised
    to learn from Director Witt's testimony yesterday before our
    counterparts in the House, that only a few States would be impacted by
    this dramatic reduction. Idaho State officials have informed me that my
    State is not fully prepared for such a shift in funding and that
    emergency efforts there would be severely jeopardized--putting many
    Idahoans at risk.
        I will have several questions for Director Witt concerning this
    matter and would welcome any explanation he might give on this
    important issue.
        Again, thank you Mr. Chairman for this opportunity. I look forward
    to the testimony here today and to working with you over the next few
    weeks to make sure the needs of the Nation are met.

                          Statement of James Lee Witt

        Senator Bond. Having given a full description of FEMA,
    perhaps it is time for us to hear from the witness.
        So, Mr. Witt, thank you very much for being here. We will
    accept your full statement as submitted for the record for all
    the members of the committee and would invite you to provide us
    whatever highlights you wish to at this time.
        Mr. Witt. Thank you, Mr. Chairman. Thank you, Senators.
        First, I would like to introduce Gary Johnson, our Chief
    Financial Officer, who is with me. Also, Mr. Chairman, we have
    some new faces in the hearing today. I would like to introduce
    JoAnn Howard, who is the new Federal Insurance Administrator,
    to you. Also we have Mike Armstrong, the new Associate Director
    for Mitigation, and Michelle Burkett, whom I think you know,
    was our Regional Director in Chicago but is now over our Office
    of Policy and Regional Operations at FEMA headquarters.
        Mr. Chairman, I want to make my opening statement brief and
    focus on a little of what we are doing, I know our time is
    short and you have a lot of questions that we hope to be able
    to answer.
        In October of last year, Senators Boxer and Mikulski came
    to California to help us to address the El Nino predictions
    that were facing us. Because of their support and because of
    local government support, we had over 600 local officials at
    that El Nino summit.
        Because of that summit and the awareness that grew out of
    it--every TV station in California was at the summit--
    communities cleaned up their channels, communities cut dead
    trees and dead limbs away from power lines, and there were
    communities that even had their citizens adopt storm drains,
    they actually provided them a raincoat and a rake to keep those
    storm drains open.
        The city of Berkeley officials told me last week that they
    had probably saved over $7 million because of the preventative
    measures they took before El Nino. There are many, many other
    communities that experienced the same thing.
        El Nino has cut a wide swath through our country, from
    California to the Gulf States, from Florida to the New England
    States. A lot of people have lost their lives--over 40 people
    in Florida, over 17 in California, several in the New England
    States, 7 in Tennessee, and some in North Carolina.
        It has been a very unusual year. We had a typhoon in Guam
    in December. I can tell you the employees of FEMA should be
    commended for the way they responded to the typhoon in Guam and
    the dedication that they showed. They left their families
    during the Christmas holidays to help the people of Guam, just
    as they have across the country. I just want to thank them for
    their efforts.

                               prepared statement

        I am looking forward to sharing with you what we are doing
    to contain disaster costs and with Senator Mikulski about our
    antiterrorism program.
        I would be happy to answer any questions, Mr. Chairman.
        [The statement follows:]

                      Prepared Statement of James L. Witt

        Good morning Mr. Chairman, members of the subcommittee and staff. I
    am pleased to be with you today to discuss FEMA's budget for fiscal
    year 1999.
        I am joined today by my Chief Financial Officer, Gary Johnson who,
    together with his staff, has done so much to make FEMA's budget easy to
    understand and the agency more accountable. Also with me are the rest
    of our executive management team, which contains some new faces and new
    perspectives.
        For FEMA it has been another busy year. Last spring the Red River
    flood in the upper Midwest was devastating. In the fall we were blessed
    with a relatively quiet period, particularly during hurricane season.
    But at the end of the year, on December 17th, typhoon Paka devastated
    the northern part of Guam. Many FEMA employees from across the country
    spent their holidays away from family and friends to deliver assistance
    to those who'd lost so much.
        I'm very proud of the employees at FEMA who make these sacrifices
    and just think of it as part of their job. That is why I have worked
    hard to keep our salaries and expenses at a level that can keep us
    fully staffed. With the responsibilities FEMA faces, we need our
    talented staff.
        Recently the ice storms in the northeast created incredible damage
    in New York, Maine, Vermont and New Hampshire. My staff in operations
    support sent a convoy of trucks up to the region. Those trucks were
    filled with generators that provided emergency power so that life and
    work could continue.
        These generators and other supplies were available through our
    Disaster Information Systems Clearinghouse (DISC) and our Territorial
    Logistics Center (TLC). The TLC was part of last years initiative to
    reduce disaster operating costs. By recycling and maintaining equipment
    used in a disaster operation, we saved over $13 million last year on
    computers, printers, fax machines and cellular telephones.
        Right now we are dealing with what we knew was coming: El Nino. It
    has caused devastating floods around the country from California to the
    east coast and killer tornadoes in Florida. When scientists predicted
    El Nino, we worked with the highest risk States and communities to have
    people better prepared than ever before and I know that work helped
    make a difference.
        As we look at our budget I first want to call your attention to our
    request for the disaster relief fund. This year we have asked for
    $307.7 million for the fund, including $121 million for disaster
    support costs. In addition, we have requested $2.26 billion in
    emergency contingency funds. Together this totals over $2.5 billion,
    which is our five year average for obligations, not including the
    Northridge disaster, plus disaster support costs. Such an appropriation
    would ensure that, regardless of disaster activity, we could continue
    to pay down our overall requirements from more than four hundred open
    disasters. We urge your careful consideration and support.
        Another initiative this year is to aggressively work to reduce the
    hundreds of open disasters I just referenced. We have formed three
    territorial disaster close-out teams. They will be reporting to Gary
    Johnson and me on their progress. As the teams close out old disasters
    we will be deobligating funds from some of those events.
        This can really make a difference. Our eastern team's first target
    was working on closing out a few old, and difficult, issues from
    Hurricane Andrew in Florida. We worked closely with the State, kept
    Senators Graham and Mack and other Florida offices informed as to our
    work, and we have made real progress.
        What is required here isn't magic--but a clear focus on getting a
    job done. That is what these teams are doing. We will keep you apprised
    of our progress in closing out old disasters.
        Our disaster response activities, as always, are critical, but I
    want to focus more on preparing for disasters and preventing repetitive
    damage. This leads to our request for $50 million for pre-disaster
    mitigation spending.
        I don't think I've talked about any subject more than the need for
    pre-disaster mitigation. But I don't tire of talking about this subject
    because it is the future and it matters.
        I'm especially anxious to discuss this project with this committee.
    Whether a family budget or a national budget, how we spend money
    reflects what we care about. FEMA's spending is the same.
        And that is why my most significant initiative for this budget--a
    $50 million initiative--is for pre-disaster mitigation.
        When we at FEMA talk about pre-disaster mitigation we are referring
    to project impact: Building disaster-resistant communities.
        This is a partnership between FEMA and communities across the
    country that is powered by shared experience, local initiative and a
    determination to reach out to new partners with the belief that we can
    make a difference in reducing long-term disaster losses and human
    suffering.
        To many communities, the multiple hazards they face, and have
    experienced in the past, made lasting impressions.
        These are areas where I've visited too frequently. They are
    communities that are ready to reduce the loss of lives and property--
    communities that are tired of paying the price emotionally and
    financially.
        The new partners I mentioned are the private sector businesses that
    have concluded that the better prepared a community is, the more likely
    the business will maintain operations after a disaster.
        A company will stay in business if the town's infrastructure is
    able to withstand a disaster and, most importantly, they will be open
    for business if their workers can make it work, knowing that their town
    and their schools are safe and functioning.
        Let me give you just a few examples of what is happening in our
    pilot communities:
      --In Deerfield Beach, Florida, work is already underway to retrofit
            the high school, which also serves as the town's emergency
            shelter against the threat of hurricanes. At the same time the
            community is working closely with State Farm Insurance to
            construct an emergency operations center and meeting facility
            that will be retrofitted against local hazards. This model
            facility, which will be located along the I-95 corridor, will
            then be open to the public to provide mitigation information.
      --In Seattle, the community is taking many creative and important
            steps to lessen their risks from earthquakes; from residential
            retrofitting to increasing school safety. Seattle is going to
            match our $1 million commitment with nearly $6 million in cash
            and in-kind contributions toward project impact.
      --In Pascagoula, Mississippi, we are working closely with the city
            government and with Ingalls shipyard on a public awareness
            campaign that has something special to offer: Special loan
            arrangements by Merchant & Marine Bank to those homeowners who
            are taking out home improvement loans to make their homes safer
            from the threats of hurricanes, tornadoes, flooding and other
            potential disasters.
      --In Alameda County, California, we are working with two communities
            that are not waiting for the worst to happen. The ``Partnership
            for a Safe Oakland'' is working to identify hazards and risks
            and implement long-term mitigation measures that could begin to
            counter the effects of future disasters. In Berkeley, the
            community has levied nearly a quarter billion dollars of taxes
            on itself to retrofit its schools against potential, future
            seismic damage.
        In many project impact communities the Corporation for National
    Service, ``AmeriCorps'', is sponsoring a ``spring break'' event where
    its members will spend a week on project impact activities.
        These are all exciting projects and we believe this is the future
    of emergency management. The time is now. Let's implement our knowledge
    and do those things to make our communities safer.
        It is our hope, by the end of this year, to have one disaster-
    resistant community in each of the 50 States. I know we can do this
    with your support.
        In a very fundamental way, project impact is being supported
    throughout the FEMA:
      --Its objectives are included in training for our staff and State and
            local emergency managers and fire chiefs and other fire
            officials;
      --It complements our work in flood insurance to address repetitive
            losses;
      --It implements the knowledge developed by FEMA and its partners in
            the National Earthquake Hazards Reduction Program;
      --It is another area of increased partnership with State emergency
            and floodplain managers; and
      --It is encouraging improved flood mapping at the local level that
            can enhance our own mapping capability.
        As we move forward on project impact, our Hazard Mitigation Program
    continues to work with States to move structures out of floodplains
    across the country. Over the last four years, we have moved more than
    20,000 structures out of harm's way. This effort complements FEMA's
    National Flood Insurance Program.
        Since the passage of the Flood Reform Act in 1994, and our ``cover
    America'' advertising campaign, we have expanded the number of flood
    insurance policies in the country from 3.2 million in 1995 to more than
    3.9 million as of January 1998. During this last year, until the recent
    El Nino activity, we've had a slight break in flooding events. These
    factors have combined to help us reduce our borrowing for the flood
    insurance fund from $917 million to less than $810 million.
        In addition, the Reform Act created the Flood Mitigation Assistance
    Program, which provides additional funds to remove endangered
    properties. We are working to target these funds and make them
    complement both project impact and our mitigation projects.
        We are also working to help State and local partners mitigate their
    communities' fire risk through fire data analysis, new technological
    approaches to fire safety, public fire education and fire mitigation
    training.
        Let me take this opportunity to connect our actions, because I want
    to demonstrate a full picture of emergency management that makes sense
    and is going to save us in the future.
      --We are increasing the awareness of the risks facing the Nation
            through project impact and ``cover America'';
      --The number of flood insurance policies are on the rise as people
            choose to protect themselves;
      --We are responding more quickly, effectively and efficiently to
            disaster events;
      --By implementing business process re-engineering FEMA will
            streamline our process for funding infrastructure repair in the
            wake of a major disaster;
      --Following a flood disaster, we are implementing the hazard
            mitigation program to take vulnerable properties out of the
            floodplain;
        as we move these structures, we reduce the Government's risk to the
    older construction with subsidized rates and also reduce our exposure
    to disaster relief costs.
        As project impact communities multiply we are creating a positive
    movement that helps communities help themselves and others in reducing
    risk and increasing public health and safety.
        Our first responder training for terrorism is widely recognized by
    local public safety officials as some of the finest training available
    to help communities prepare for this threat.
        It's our own experience that tells us we are moving in a direction
    that inspires people to become involved in reducing the future risks
    both to themselves and to their children.
        In fact, during the El Nino storms, one of the most hopeful stories
    was related to me by Congressman Sam Farr. As bad as the flooding has
    been, Congressman Farr said that the terrific work FEMA and State and
    local governments had done together after the floods of 1995 to
    relocate residences was making a difference right now. There were
    families no longer in danger. Floodwater was coursing through areas
    that used to have homes but now was open space.
        That shows it can be done. We can make a difference. This is an
    exciting time and a creative, exhilarating mission. We at FEMA
    appreciate the help the committee has given us to reach this point.
        Another budget feature I want to call to your attention falls under
    our preparedness, training and exercises directorate. The program is
    REP--Radiological Emergency Preparedness. This program has successfully
    assisted State and local communities in assuring a responsible
    preparedness posture for communities surrounding nuclear power plants.
    Historically, FEMA's appropriation has been offset by fees collected
    from NRC licensees for our REP Program activities.
        What we are requesting in our budget for the program is a one-time
    start up appropriation of $12.8 million for fiscal year 1999. This
    would transition the program to a self-supporting fund beginning in
    fiscal year 2000 which will assess and collect fees from licensees.
        Recognizing Congress' support in 1998 for the Dam Safety Program,
    FEMA's budget for fiscal year 1999 also includes a request of $1.5
    million for training assistance and training for dam owners and State
    dam safety staff.
        One other initiative I want to take particular note of is our work
    to protect the health and safety of FEMA's remarkable staff. Our fiscal
    year 1999 budget includes an increase of nearly $2.2 million for health
    and safety abatement projects at our training center in Emmitsburg,
    Maryland as well as in our Denton, Texas and Bothell, Washington
    regional offices.
        Let me conclude with my original point that our budget announces
    who we are and what we care about. At FEMA, we care about responding to
    disasters, assisting people and communities to recover from disasters
    and helping communities to lessen their risks in the future. This
    budget reflects those priorities.
        I again want to thank this committee for their strong support over
    the last five years. All of us at FEMA appreciate the backing you've
    given us time and again that has increased our morale and helped us to
    do a better job.
        Thank you for your time and attention. Together with my senior
    staff, I would be happy to answer any of your questions.

                              disaster relief fund

        Senator Bond. Thank you very much, Mr. Witt.
        What is the balance in the disaster fund? Do you have
    sufficient funds available to meet obligations for the
    remainder of the fiscal year?
        Mr. Witt. Yes, sir; we have sufficient funds to meet
    obligations for the remainder of this year.
        Senator Bond. The administration sent up a supplemental to
    Congress yesterday that did not include FEMA funding. I was
    interested to know why they were not looking at a request in
    view of the fact that there are not sufficient funds on hand,
    as I understand it, to meet fiscal year 1998 and prior year
    requirements.
        You say you have adequate cash. But there are still
    disaster obligations out there that are not funded. Is that not
    correct?
        Mr. Witt. Gary, would you respond, please?
        Mr. Johnson. That is correct to a degree, Mr. Chairman.
    Through the support of this subcommittee and the Congress as a
    whole, the disaster relief fund was appropriated $3.3 billion
    last year.
        By taking that action, you did, in fact, make our disaster
    relief fund current with prior year requirements and
    requirements up through the end of fiscal year 1997.
        The appropriation for the current year, $320 million, may
    be problematic as we begin to get into more disaster activity.
    We may become short on requirements for the current year. Of
    course, the problem, as you are well aware, rolls into fiscal
    year 1999 and has implications relative to our budget request
    for 1999, sir.
        Senator Bond. You are requesting $2.3 billion in
    contingency funds for 1999. That amount, coupled with the on-
    budget request of $307 million, represents the historical 5
    year average. But I understand that that is not enough.
        Is it not true that your budget request is actually $1.1
    billion short, assuming normal disaster activity for the rest
    of fiscal year 1998 and 1999?
        Mr. Johnson. That is correct, Mr. Chairman, it is $1.1
    billion short to meet obligations through fiscal year 1999.
        Senator Bond. Why isn't FEMA requesting what is needed?
    Would you agree that you think it is fiscally irresponsible to
    request funds off budget, particularly when the costs are
    clearly anticipated?
        Mr. Johnson. Mr. Chairman, we did request OMB for a direct
    appropriation of $2.6 billion, which included the 5-year
    average less Northridge plus disaster support costs.

                       community development block grants

        Senator Bond. In other words, OMB, again, has short-changed
    the disaster needs. That is distressing.
        But at least the agency recognizes the need.
        Let me turn to another aspect that has been rather
    troubling to me.
        In recent years, there has been a growing interest in
    earmarking CDBG funds for disaster relief, community
    development block grant funds. Yet there is no authorized CDBG
    disaster program and it appears that CDBG funds might be
    duplicating what is provided by other agencies, such as the
    Economic Development Administration.
        What is FEMA's role in developing national plans and
    policies for disaster relief programs Governmentwide?
        Mr. Witt. Mr. Chairman, several months ago I had a meeting
    at the Old Executive Office Building with all the Federal
    agencies to talk about what we need to do and where we need to
    go in the future, as well the issue of duplication of programs.
    I, myself, visited Frank Raines, Director of OMB, and indicated
    that we seriously need to look at the duplication of disaster
    programs.
        I am not an authority on HUD and CDBG dollars, but it is my
    understanding that when the CDBG dollars get into the States'
    and local communities' hands, then they are spent under their
    guidelines. They have used CDBG dollars to help match disaster
    costs, such as in the 1993 Midwest floods and in other areas.
        Also, the CDBG funds have been used to help buy out
    property that is in flood prone areas in communities that we
    are trying to relocate and get out of harm's way.
        So that is, basically, what we have tried to do.
        We are continuing to work with other agencies on this
    issue. We just finished a long-term recovery report for the New
    England States that the President asked us to do which clearly
    shows a lot of areas that need to be tightened up and other
    areas of duplication.

                     natural disaster reduction initiative

        Senator Bond. Again, referring to the Tuesday Washington
    Post, there was an article in there discussing the Commerce
    Department initiative called natural disaster reduction
    initiative, which includes grants to communities to encourage
    economic development officials and emergency planners to train
    together and improve coordination.
        What is FEMA's role in the initiative? Do you have any say
    in that? Do you know anything about it? How does it relate to
    FEMA's Project Impact?
        Mr. Witt. The only thing I know about that particular
    initiative is what I read in the paper, Mr. Chairman, but I am
    meeting with Secretary Daley tomorrow.
        Senator Bond. That would be a good idea. Give him my best.
        Mr. Witt. I will, sir.
        Senator Bond. I would like to know how that is going to
    work.
        Mr. Witt. Let me follow up and say that EDA has met with us
    and is going to target some of the high-risk areas in Project
    Impact and help them make mitigation a goal.
        Senator Bond. Thank you, sir.
        We somehow have not gotten our light system back from the
    Christmas recess. So I figure that, while it is still on
    recess, I have probably used up 5 minutes. I would like to make
    sure that all of our members have an opportunity to ask
    questions prior to the 10:30 vote.
        So I will now turn to our distinguished ranking member,
    Senator Mikulski, for her questions.

                       preparedness for terrorist attacks

        Senator Mikulski. Thank you, Mr. Chairman.
        Mr. Witt, you have been one of the prime movers to move
    FEMA from being an old civil defense agency to a risk-based
    strategy, all hazards responding agency. I think we all became
    complacent after the end of the cold war that America would not
    face the direct attack of an intercontinental ballistic nuclear
    missile on the United States.
        Now recent events have shown that we are vulnerable, that
    within our own borders we are vulnerable to the attack of
    terrorism. A terrorist is unlikely to unleash a nuclear bomb,
    but could unleash a biological bomb.
        I am concerned, in reviewing the material, listening to the
    deputy sheriff of Los Angeles on ``Nightline,'' listening to
    how Los Angeles would respond to this, that we might not be as
    fit for duty as we need to be or perhaps that we need to focus
    greater attention and greater resources on it.
        The responses that I have heard seem to be based on the
    fact that if we would be hit by a biological bomb of anthrax,
    ebola, botulism, and a variety of other very repugnant and
    ghoulish biotech weapons, we would be working on the assumption
    that we would have lots of warning, that we would have good
    weather, and we would have a compliant population, eagerly
    sitting by their radios to be told exactly what to do.
        I do not think any of those criteria exists. I hope we
    would have plenty of warning. But good weather is something we
    could not predict. Also, anthrax is an airborne illness, as are
    some of the others I have mentioned, and a compliant population
    is unlikely to happen if they think their children or their
    mothers, their aged mothers, are at risk.
        So I now turn to you for you to tell me what is FEMA's role
    in the whole issue of America being ready for any attack within
    its own borders from a new kind of bomb, biological or
    chemical, waged against our own people.
        Mr. Witt. Thank you, Senator Mikulski.
        We are asking for $6.8 million in terrorism funding this
    year. Our role in terrorism is consequence management.
        Senator Mikulski. Mr. Witt, I can't hear you.
        Mr. Witt. We are asking for $6.8 million in
    counterterrorism and antiterrorism funding this year. Our role
    in the Government's terrorism program is on the consequence
    management side. The Justice Department has the lead role on
    the criminal or crisis management side.
        Included in this $6.8 million, is $3.2 million for grants
    to States for terrorism planning exercising and training
    activities of which $1.2 million is for State and local grants,
    and $2 million is for firefighter training. Approximately $1
    million is for consequence management planning and coordination
    for special events such as the World Games, interagency
    planning, and maintenance of the rapid response information
    system. Another $0.6 million is for planning, training,
    exercise programs, and related travel; and $2 million is for
    FEMA personnel protection measures, including our Federal
    Regional Center needs.

                    fema's role in federal terrorism efforts

        Senator Mikulski. Mr. Witt, what exactly is FEMA's role,
    though. When you say Justice is on the criminal side and I am
    on this side, we are really all on the same side.
        Mr. Witt. Exactly.
        Senator Mikulski. So tell me what exactly is FEMA's role?
        Mr. Witt. Our programs are supporting DOD and Justice. We
    have worked with them to develop----
        Senator Mikulski. Tell me in concrete terms from the
    perspective of a local community or a State emergency
    management what is your role and is $6 million enough to get
    America ready to deal with this?
        Mr. Witt. Because of the difficulty in dealing with a
    terrorist situation, I do not think all of our State and local
    governments are prepared to respond so our role is to support
    their efforts to prepare and respond to incidents like this.
        On Friday I met with the Deputy Secretary of Defense and
    the Acting Secretary of the Army, Mike Walker to go over the
    terrorism program. We talked about what is happening in 120
    metropolitan cities. I think we need to cover more people,
    particularly fire service people who are going to be first
    responders on the scene.
        We should not reinvent the wheel but utilize the existing
    structures that we have in place, such as State fire training
    academies, State training offices of emergency management, and
    National Guard units in each State, and through a team effort
    at the State and local level, train these people to know what
    to do should a terrorist incident occur.
        Senator Mikulski. Mr. Witt, do you believe that there is a
    sense of urgency within the task force to begin to have these
    plans? Do you believe there is a sense of urgency?
        Mr. Witt. Yes; I do.
        Senator Mikulski. Is the coordinating task force of
    Defense, Justice, FEMA, et cetera, meeting with regularity?
        Mr. Witt. We are working very closely together and very
    hard.
        Senator Mikulski. Are you meeting with regularity?
        Mr. Witt. Yes.
        Senator Mikulski. And then, in terms of that, what is the
    role of HHS to back you and the Department of Defense and the
    National Guard up?
        Mr. Witt. HHS has responsibility for the disaster medical
    teams that would be trained and equipped to respond. HHS, EPA,
    FEMA, DOD, and Justice all have important roles in this. We are
    also annexing this into our Federal Response Plan as well.
        Senator Mikulski. Mr. Witt, I would like to pursue this
    with you in more detail. I understand that yesterday there was
    a hearing with the intelligence community. Senator Gregg, our
    colleague, and State-Justice-Commerce are pursuing this.
        I do not want to sound the alarm in terms of exacerbating
    fear among the American people. I know that there will be a
    classified briefing. I would like to discuss this with you
    further, where we have marshaled the resources of the Federal
    Government to be ready and that we are ready, building on
    existing Federal response structures, and also our existing
    public health network.
        Unlike a fire or a hurricane, where it is disaster relief
    that comes in, the first responders here will be the people in
    emergency rooms who might not know what is happening.
        So I would like to discuss this with you further and also
    the aspect of whether $6 million is enough to do it.
        Do I have another minute or is my time up?
        Senator Bond. You have 1 more minute.
        Senator, I know that we have votes at 10:30. I want to give
    all the members here an opportunity for questioning the
    Director.
        Senator Mikulski. Let me cooperate with you in that, Mr.
    Chairman.
        You know my concerns, really, the whole issue of
    preparedness, meaning prediction, also what we need to do for
    disaster mitigation and then also we do share Senator Bond's
    concerns about fiscal matters.
        But let me yield to my colleagues in that spirit of the
    vote.
        Senator Bond. Thank you very much, Senator. I very much
    appreciate your bringing up that important consideration.
        Let me turn, on a rotating basis, now, to Senator Burns.

                    national association of counties [naco]

        Senator Burns. Thank you, Mr. Chairman. I have another
    hearing going on now, a budget hearing, and one of my favorite
    people to beat up on is Secretary of Interior Babbitt, who is
    there. So I don't want to spare him that exercise. [Laughter.]
        Mr. Witt, thank you for coming this morning. I only have
    one question and will be very quick.
        How many meetings did you or your people have with the
    representative with NACO, that meeting just concluding this
    week here in town?
        Mr. Witt. Several staff people from our offices met with
    NACO this week.
        Senator Burns. Did you meet with any of the folks at NACO?
        Mr. Witt. I was not invited to, sir.
        Senator Burns. You were not invited to?
        Mr. Witt. No, sir.
        Senator Burns. Oh.
        I want to go down the same line that Senator Mikulski went
    down because that is the only group that comes to this town
    that does not have their hand out and is not asking for
    something. They come to town with solutions and most of them
    are on the ounce of prevention side in some of our disasters.
        Mr. Witt. Yes, sir.
        Senator Burns. I am concerned that they did not get a very
    good audience from this administration. I am sorry we crossed
    up in communications. Maybe we can work on that. But I met with
    three other groups. One of them was a public safety group and
    they sort of complained that they really did not get the
    audience that they wanted to get. Now whether that was a snafu
    in scheduling or whatever, I don't know.
        But I would suggest that this is a group that is actually
    the first responders. They are actually the people who are on
    the front line.
        We have to be aware that it does not take missile launching
    capabilities to hit this country with the kind of weapons that
    bad people have nowadays. The kind of weapon that is out there
    right now that probably grows as much fear in the American
    people can be delivered in a briefcase. It can walk through any
    airport at any time of day and get into this country. County,
    first responders, are concerned about this.
        So Senator Mikulski raises a very valid point. In that
    structure, even though you are talking to Defense, and even
    though you are talking to HHS, talking to all of these
    Government agencies, let's not overlook the role that the
    counties will play in the event of an emergency.
        I think they have to be in on the very, very first of the
    discussions when we talk about response to an emergency of that
    kind.
        That is the only thing I have to say today. I think you are
    doing a great job.
        Mr. Witt. Thank you.
        Senator Burns. I just would suggest that this is what I
    picked up from their organization. I do not know the details on
    it and I would not go into the details because I know how those
    things happen.
        Mr. Witt. Mr. Chairman, if I could respond. Senator, I was
    a member of NACO as a county official for 10 years, and I know
    how important that organization is.
        Senator Burns. I am one of those old county commissioners,
    too.
        Mr. Witt. I have spoken to and worked with NACO many times
    when they have been to Washington. NACO is part of our
    emergency management task force, as is the National Emergency
    Management Association [NEMA].
        Mike Armstrong, Associate Director for Mitigation, and Bob
    Adamcik of the Response and Recovery Directorate, spoke to the
    emergency committee at NACO while they were here.
        I would be happy at any time to meet with them. I think
    they are the greatest. They are at the grassroots level.
        Senator Burns. Yes; it sure is. I know you are aware of
    that.
        Mr. Witt. Yes, sir.
        Senator Burns. I just wanted to make that suggestion and
    say to the rest of my colleagues that this is where it is going
    to be. The first decision made in any kind of emergency of that
    kind is very, very critical as to whether we get the response
    started right or wrong. That is the basis of that.
        So I appreciate your sensitivities to that and congratulate
    you on that.
        That is the only thing I have to say, Mr. Chairman. Thank
    you very much.
        I will now go upstairs and beat up on Babbitt. This is beat
    up Babbitt day, or BBD. [Laughter.]
        Senator Bond. Senator Burns, thank you. Thank you for
    coming here in such a kind, cooperative spirit. We appreciate
    that. We appreciate hearing your kinder, gentler side.
        I will now turn to my colleague from California.
        Senator Boxer. Things get pretty bad when Senator Bond
    turns to me to bail him out of a problem here. Things are very
    interesting. [Laughter.]
        Senator Mikulski. Is this a hearing on encryption? I mean,
    what is going on?
        Senator Boxer. I don't know, but we are going to wait to
    find out.
        Senator Bond. Senator Boxer.
        Senator Boxer. As Senator Burns is leaving, and he has
    admitted that he is an old county official, since we are all
    admitting how old we are, I, too, am an old county official. I,
    of course, would echo those words.
        I think that both Senators Mikulski and Burns have pointed
    out the fact that those are the folks who are at the front
    lines. No one understands that more, James Lee Witt, than you
    do.
        I would say when he backed Senator Mikulski in her line of
    questioning that I would add he talked about a bomb sneaking
    through an airport. In Oklahoma City, of course, it was from
    one of us. So it is even more of a devastating threat because
    it could be a threat from within as well as from without.
        Without getting off into that line of questioning, I just
    want to say, Mr. Chairman, that if there is a way for this
    subcommittee to focus a little bit more on the issue Senator
    Mikulski did raise, I think it would be important. I think we
    are so focused now, because of El Nino, that it is hard to turn
    our attention from that. But, clearly, you are doing it and I
    hope you will let us know if you do not feel you have the
    resources that you need.

                     budgetary source for bosnia amendment

        In the 4 minutes I have left, I have a few questions. You
    did not answer my first question which was this wire service
    story, the U.S. wire story that says for 1999, the President's
    budget contains an allowance for emergencies and national
    disasters but that he is submitting an amendment to use $1.86
    billion of those funds to pay for the full cost of Bosnia
    operations.
        Mr. Witt. I could not answer you, Senator, because this is
    the first time I have heard of it.
        Senator Boxer. OK. Could you check that out?
        Mr. Witt. Yes; I certainly will.
        Senator Boxer. That will be helpful because I think, if
    that is the case, we have some problems here.

                               flood predictions

        I want to ask, as we look at California, what is your best
    prediction or the predictions that you are getting from NOAA
    and others of further flooding this spring when the snow pack
    melts and El Nino brings more storms? They are talking about
    through April.
        Mr. Witt. I am very concerned about it, Senator Boxer, and
    have met with General Furman of the Corps of Engineers. I also
    talked to many of the State and local elected officials in
    California. The snow pack is within 2 inches of breaking the
    record.
        Senator Boxer. It is what?
        Mr. Witt. It is within 2 inches of breaking the record,
    which means if we get a warmup with warm rains, we could
    seriously be looking at some damaging flooding. We are trying
    to get prepared for that and do as much prevention as we can.
        The Corps has done a great job out there doing that.

                        hazard mitigation grant program

        Senator Boxer. Right.
        Mr. Chairman, you talked about the importance of hazard
    mitigation. I could not agree with you more. I know that this
    director wants to make mitigation his legacy.
        I am concerned in my State, Mr. Chairman, because my State
    has received a good deal of funding for mitigation, as you
    know, at the end of every disaster. We have an excellent
    program to make a certain percentage of the damage available
    for mitigation.
        In my State, it seems to be taking a long time to spend
    this money. Mr. Chairman, when you are looking at fiscal
    responsibility, I think we need to see that the States are
    spending this money in a timely fashion, the mitigation funds.
    In my State, we are just having a little bit of a hard time.
        I wonder, Mr. Witt, if you would support some kind of
    timeframe in which the States have to spend that money. I know
    we want to give them flexibility. For example, if we have an
    earthquake and we get a percentage of that damage, we have
    already said that we would like to see them use it to mitigate
    for flooding and other things, not necessarily earthquakes.
        What about putting a timeframe on that?
        Mr. Witt. Senator Boxer, Mike Armstrong has been working
    with the NEMA mitigation committee to streamline the process so
    that rebuilding can be done more quickly.
        In addition to that streamlining, we have established a 2-
    year limit for the States to have the money obligated and the
    project finished. If they do not have it finished within that
    2-year period, then they lose the money.

                      california hazard mitigation grants

        Senator Boxer. Thank you.
        I have some other questions about seawalls and mudslides,
    but in the interest of time I will submit those.
        My one last question is do you have an accurate number for
    how much money is still sitting in the State of California from
    old disasters that they have not yet spent on mitigation?
        Mr. Witt. Mike, would you answer that?
        Senator Bond. Would you use the microphone and for the
    record identify yourself and your title, please?
        Mr. Armstrong. Mr. Chairman, Senator, I am Michael
    Armstrong, Associate Director for Mitigation.
        In unobligated balances for open disasters, as of the end
    of January, a total of $459.4 million in hazard mitigation
    grant program funding remains for California disasters; $417
    million of this is from the Northridge earthquake.
        Senator Boxer. How many years ago now is that? That was
    1991? No; 1994?
        Mr. Witt. 1994.
        Senator Boxer. So we have these funds sitting there, almost
    one-half billion dollars, over $400 million since 1994, is that
    correct?
        Mr. Armstrong. That's correct.

                    time limit for hazard mitigation grants

        Senator Boxer. Mr. Chairman, I think I am such a fan of
    mitigation. We have so many things to do. I think the States,
    just speaking honestly, should have a deadline because there
    are so many things we could do, such as retrofitting bridges.
    There are some wonderfully important things that we could do.
        I would urge that we perhaps should take a look at setting
    a deadline.
        James Lee Witt, can you do that administratively or do we
    have to do that legislatively, set a deadline?
        Mr. Witt. We have set the 2-year deadline, as I mentioned.
        Mike, do you want to respond?
        Mr. Armstrong. Again, we have done several things to try to
    streamline and move along the hazard mitigation grant program.
    As Director Witt said, we have set a deadline of 2 years for
    obligation of dollars. We have also streamlined the
    environmental review process.
        Senator Boxer. OK. That's great. But this is 4 years.
        Mr. Armstrong. We just instituted the 2-year deadline.
        Senator Boxer. Oh. Good.
        Senator Bond. Is it a final regulation? Have you gone
    through the process? Has it been published and commented on?
        Mr. Armstrong. It has gone through the regulation process.
        Senator Bond. Pardon?
        Mr. Witt. It is a regulation.
        Senator Bond. And it is now in effect, is that correct?
        Mr. Armstrong. Yes.
        Mr. Witt. Yes.
        Senator Boxer. Good. In other words, are you saying to me
    is it retroactive or is it just for the future? Where do we
    stand with this money? In other words, should I call the
    Governor and tell him to move forward?
        Mr. Witt. Let me respond first.
        I talked to Dick Andrews when we were in California and I
    asked him when we could expect to see those mitigation grant
    projects funded and finished because we are expecting more El
    Nino events coming in.
        He told me that they were prepared to send in 524 grant
    applications. I notified my staff to make sure that the region
    was ready to receive and process them very quickly and get them
    turned around.
        I don't think we've received them yet.
        Mr. Armstrong. They have a March 9 deadline.
        Mr. Witt. To get those in.
        Mr. Armstrong. All applications.
        Senator Boxer. Holy cow. OK.
        Thank you very much. I am getting right on the phone. Thank
    you.
        Thank you, Mr. Chairman.
        Senator Bond. Thank you, Senator Boxer.
        Senator Mikulski, were there other questions you wanted to
    ask?

                   results of predisaster mitigation efforts

        Senator Mikulski. Mr. Witt, what do you think have been the
    results of your predisaster mitigation efforts so far for
    disaster resistant communities?
        Mr. Witt. Senator Mikulski, we have not only saved lives
    but we have saved property and helped cut disaster costs. There
    is no doubt about that. I think you have seen that.
        The reason I feel Project Impact will make such a
    difference is because the program operates at the grassroots
    level in the community. For every dollar we spend on
    mitigation, we save $2 in response and recovery costs.
    Predisaster mitigation can save a lot of property.
        For the past 5 years, we have all seen devastating
    disasters like this country has never seen before. I have seen
    people lose everything they worked all their lives for in the
    blink of an eye. What is interesting is we are now seeing
    Governors, like Governor Batt in Idaho, introduce legislation
    to prevent people from building in the flood plain. We are
    seeing mayors talk about issuing stiff fines for people
    building or developing in a flood plain.
        Before, we had never seen this type of initiative on the
    mitigation side. Project Impact is about eliminating the risk
    before we have the disaster.
        I cannot tell you the extent of enthusiasm, interest, and
    support we have seen for this effort.

                       support for predisaster mitigation

        Senator Mikulski. It is important that you have the support
    of the National Governors Association on this because,
    ultimately, they are the ones that provide the leadership,
    particularly in rural areas.
        Mr. Witt. Yes; I have met with the Western Governors
    Association, and they are supporting prevention. Each of the
    Governors I talk to supports the prevention before we have a
    disaster.
        The interesting thing is that private industry is
    supporting this very strongly as well. They are actually
    contributing more to the project in the communities, sometimes
    6 and 7 times more, than we are putting into it. So it will
    make a difference.
        We respond and spend money for response and recovery and
    then do mitigation to prevent the losses from happening again.
    If we focus on prevention in particularly high risk
    communities, we are going to save lives, protect jobs, save
    property, and cut costs. That is the goal of Project Impact. I
    think we can prove to Congress and this committee that
    predisaster mitigation works, and we are looking forward to
    doing that.

                    technical assistance for project impact

        Senator Mikulski. I know that in Maryland, where we have
    received a modest grant, first of all, the involvement of the
    private sector has been tremendous--not only with State and
    local government, the role of Governor Glendening, but the role
    of the Corps of Engineers in giving us sound advice. So we knew
    we were going to make wise use of this.
        Everything from Kmart to Fidelity Bank, Potomac Dairy Farms
    to Interfaith Housing has pledged their support to work with
    you in Project Impact. I think what it has done is to bring the
    community together before the disaster. The American people
    will always rise to the occasion at a disaster, but this has
    been truly community building and I have been very heartened by
    the role, first, of the private sector.
        I feel what we are pursuing is very sound because we have
    had the advice of the Corps of Engineers.
        Where do you want to go or what are you recommending this
    Project Impact or disaster resistant do for communities? Where
    is the technical assistance provided so that we really know
    that we are not just spending money and that it is not just a
    new form of money to local communities, but that the
    engineering, the civil engineering, is sound.
        Mr. Witt. What the appropriation committees have asked us
    to do is to establish a blue ribbon panel. We are working now
    to have a report in to Congress by March 31. It is a peer
    review panel. The goals of this panel are to support the
    requests from Congress related to how we are going to go
    forward, how we are going to allocate the money, and what
    criteria we are going to use to carry out the program. The
    panel is going to review and comment on alternative mitigation
    strategies, and provide FEMA with recommendations.
        Senator Mikulski. Wait 1 minute. I am lost in the panels,
    commissions, and things.
        Mr. Witt. What Congress has asked us to do is to set up a
    committee to look at developing a national predisaster
    mitigation plan that lays out where we are going with this
    project, how it is going to be developed, and what it is going
    to do.
        Senator Mikulski. So we are going to have a commission on
    this?
        Mr. Witt. A committee, Senator. They will be finished with
    their report by March 31.

                 objective criteria for predisaster mitigation

        Senator Bond. May I just interject one thing? I want to see
    the objective criteria on how the projects are going to be
    selected.
        Fifty million dollars is not going to go a long way. I want
    a credible, objective, readily ascertainable set of criteria
    that any community, any State, any county wanting to get into
    it can know that it will be used to judge their project.
        As I mentioned to you in our discussions, we want to make
    sure there are objective criteria and I will expect that on
    March 31.
        I will not be disappointed, will I?
        Mr. Witt. Senator, I am not going to disappoint you.
        Senator Bond. I want to know how it is being allocated.
        Senator Mikulski. Senator Bond, I could not agree with you
    more. I think maybe one of the criteria to consider is that
    there are sound engineering solutions and that by any objective
    standard--like in our case in western Maryland, Governor
    Glendening convened a task force, but it was the corps that
    gave us the sound engineering solutions. I mean, if you cannot
    trust the corps, then I am just not sure.
        So if you do not have good engineering and it is just kind
    of make-believe, then I don't think you should get the money.
        So you need to have sound engineering. Then perhaps the
    other criteria is that there be a demonstrated commitment of
    local support. In that way we know where communities are at the
    most risk, where are the engineering solutions that could be
    achieved, what is the cost of achieving those engineering
    solutions, and is there local support so it is just not a new
    form of Government money--something along those lines.
        I think if we are not on a sound engineering footing, then
    we don't know what we are going to get for our money.
        Mr. Witt. I wholeheartedly agree with you. The Corps of
    Engineers and we have met and we work very closely together.
    The Corps of Engineers has been involved in the prevention side
    right along with us.
        Senator Bond. I think Senator Mikulski has given you a good
    start on the criteria and we will be willing to provide
    additional money for Project Impact when we have that list of
    criteria and not before. That is easy enough, isn't it?
        Senator Mikulski. OK.
        Senator Bond. No criteria, no money.
        Let me move along.
        Are you finished?
        Senator Mikulski. Sure. I'm happy.
        Senator Bond. I have a number of additional questions that
    I will be submitting for the record.

                                   dam safety

        Senator Mikulski. I am ready to talk about dam safety.
    [Laughter.]
        Senator Bond. We would be delighted to show you some of our
    damn problems. [Laughter.]
        Senator Mikulski. Oh, I worry about that.
        Senator Bond. It is actually a very serious thing, of
    course.
        Senator Mikulski. This is like a talk show over here.
        First of all, I know it is very serious. We always think of
    big dams. But throughout many of our communities in our country
    it is exactly the small and midsized dams that are aging. Many
    were built during WPA days and are really of grave concern.
        Senator Bond. I appreciate your support on that because we
    do have many of those dams that hold back significant bodies of
    water. They may not be the great hydroelectric dams which are
    usually inspected and in which there is a great interest in dam
    maintenance. But there are still earthen dams with significant
    bodies of water, communities, activities, and people below them
    which can be put in danger.
        Senator Mikulski. Yes; it is scary.

                         ways to reduce disaster costs

        Senator Bond. With the time I have remaining, I would like
    to go back to the Stafford Act and the legislative proposal for
    reducing disaster costs.
        If the legislation which the administration sent up were
    enacted, how much do you estimate the Federal Government could
    save over, say, the next 5 years?
        Mr. Witt. Our inspector general and other staff members
    tried to determine the most realistic estimate based on the
    recommendations.
        Senator, $3 billion over 5 years. It was about $580 million
    a year, I believe.
        Senator Bond. Can FEMA implement some of these proposed
    changes without legislation? Could you propose a rulemaking in
    some areas or talk to the authorizing committee to determine
    the feasibility of making some of the changes through the
    regulatory process?
        Mr. Witt. I have asked our General Counsel that very
    question. We can do that. We will have to go out to the State,
    local, private, and nonprofit rural electric authorities, as
    well as members of Congress, to get comments. Then, based on
    those comments, we could implement some of the changes.
        Senator Bond. We just congratulated you on putting the 2-
    year regulation limit on mitigation funds. When will we see the
    regulations coming forth from FEMA? When will you be prepared
    to propose those for comment?
        Mr. Witt. Mr. Chairman, the House is having a hearing on
    March 26 on the Stafford Act amendments. We will need to see
    how it goes at that hearing.
        Senator Bond. Are you going to await the outcome of that
    hearing before making any decision on regulatory matters?
        Mr. Witt. We can go ahead and be prepared.
        Senator Bond. I would think it would be very helpful if you
    offered specific examples before the authorizing committee and
    presented that to the authorizing committee in the Senate
    because I believe, as we look at all aspects of disaster
    assistance, making sure we can continue to afford disaster
    relief for people who truly are in need is very important. To
    do that we must make sure that there are reasonable, defined
    limits on the money available.
        I gather you have already issued a rule disallowing
    disaster relief for trees and shrubs, is that so?
        Mr. Witt. Yes, sir.
        Senator Bond. That's bold, very bold.
        Mr. Witt. Very bold. [Laughter.]
        I took a lot of heat on that one. [Laughter.]

                              declaration criteria

        Senator Bond. OK. I see that votes are supposed to occur in
    the next 5 minutes.
        The Stafford Act authorizes the provision of Federal
    disaster aid when State and local capabilities are overwhelmed.
    Again, there is no criterion as to what that threshold ought to
    be.
        At last year's hearing, you testified that you would be
    submitting comprehensive legislation, including the criteria
    for disaster declaration. I have heard that even the State
    emergency managers are looking at the need to establish
    objective measures that will insure fairness in the declaration
    process.
        I do not recall that your proposed legislation addressed
    the need for this criterion. If not, why not? Wouldn't it help
    make sure everybody understands when a disaster can be declared
    and deal with sometimes the very urgent but often political
    requests for disaster relief?
        Mr. Witt. I agree with you, Senator. We are working with
    NEMA on this as we work through the reengineering of the public
    assistance program. Hopefully, we will be able to have that
    criteria.
        Senator Bond. Not hopefully. When will you have it?
        Mr. Witt. I will just have to let you know the date,
    Senator.
        Senator Bond. We will be awaiting that information.

                                   mudslides

        I see the vote is occurring. I want to ask just one or two
    questions.
        For our friends from the Corporation for National and
    Community Service, we have two votes and we will try to vote as
    soon as we can on the second vote. But there will be some time
    delay. So I would expect at least 15 minutes of recess when we
    go over to vote.
        On Project Impact, I have already asked questions about the
    criteria. I will submit others for the record.
        On mitigation, this article in the Washington Post
    described the disaster-rebuild cycle in coastal California in
    areas susceptible to mudslides, earthquakes. Again, Malibu is
    one of FEMA's biggest disaster aid recipients for its size,
    most of it going for infrastructure rebuilding and cleanup.
        What is FEMA's role in this problem and how does FEMA's
    mitigation strategy address the need to look for ways to break
    the cycle of build/disaster/rebuild/disaster?
        What are you doing about that, on the mudslides?
        Mr. Witt. We do not fund rebuilding the mudslides. We do
    help to stabilize a slide if it is a threat to life/safety
    issues.
        Senator Bond. But you do pay relief.
        Mr. Witt. Debris cleanup. Yes, sir.
        Senator Bond. Well, now, if the mudslides have occurred--
    and I believe Senator Stevens mentioned that this is not a new
    phenomenon--is it not appropriate that there be an effective
    mitigation strategy? We are not going to continue to pay, what
    is it, 6 out of 7 years that I think we had disaster relief.
        Where is the end of that cycle?
        Mr. Witt. Malibu and, of course, California itself is a
    unique situation. They went through the fires in Malibu which
    destroyed the vegetation on those hillsides. The people and the
    elected officials of Malibu have taken a very strong stance in
    favor of mitigation. As a result of the fires in Malibu, they
    have passed resolutions for homeowners to keep the brush
    cleared away from their homes. The fire chief now goes out and
    inspects those.
        The residents of Topagna Canyon have even adopted their own
    predisaster mitigation program.
        They have taken a lot of preventative measures.
        Senator Bond. But there is a broader need to address the
    mudslide problems.
        Mr. Witt. Yes, sir.
        Senator Bond. We all know what the problems were in flood
    insurance and we have taken many steps to prevent the flood
    disasters. We have worked with you on that.
        For example, according to the article, the President has
    promised to consider a request for federally sponsored mudslide
    insurance. I assume that that will be on an actuarially sound
    basis. Do you know anything about it?
        Mr. Witt. I read about it in the paper, too, Mr. Chairman.
        Let me follow up just briefly here. We try to work with the
    States and give them as much flexibility as possible to
    prioritize their proposed mitigation projects. But the history
    of landslides in California is something we all recognize as a
    problem. So to plan better for the future, we are working with
    the State and USGS to keep the database of historical
    landslides current so that the State, county, and cities can
    improve planning and development.

                insurance requirements for municipal facilities

        Senator Bond. Speaking of State actions, 3 years ago, FEMA
    initiated a Performance Partnership Program with the States.
    So-called PPA's were intended to provide flexibility in
    exchange for improved accountability, replacing the old
    stovepipe micromanaged projects of providing preparedness
    grants to the States.
        Can you explain to me what progress has been made in
    implementing performance partnerships, how the States are held
    more accountable than in the past--for example, requiring
    States to hold adequate insurance on municipal facilities?
        What is going on in that area?
        Mr. Witt. The insurance--I did talk to the State directors
    when they were in Washington. I have asked the Response and
    Recovery Directorate to go out to all the States and request
    that the States report to us once a year on what buildings they
    self-insure, or have insured, from the State down to the local
    level, and how much per square feet they are self-insuring or
    are insuring.
        Senator Bond. Mr. Witt, thank you very much. Thanks to your
    colleagues as well.

                         Additional committee questions

        We will submit additional questions for the record. I hear
    the master's voice, our bells. With that, the committee will
    stand in recess.
        Mr. Witt. Thank you, Mr. Chairman.
        [A brief was recess was taken.]
        [The following questions were not asked at the hearing, but
    were submitted to the Agency for response subsequent to the
    hearing:]

                      Questions Submitted by Senator Bond

                          disaster relief fund balance
        Question. What is the balance in the disaster relief fund and do
    you have sufficient funds available to meet obligations for the
    remainder of the fiscal year, assuming ``normal'' disaster activity
    during the balance of the year?
        Answer. As of February 28, the unobligated balance in the disaster
    relief fund was $3,292,412,000. Assuming ``normal'' disaster activity
    (i.e., that requirements from disaster activity in the remaining months
    of the fiscal year are in line with the five year average of
    obligations less Northridge), there are sufficient funds to meet
    obligations for the remainder of the fiscal year.
        Question. How much do you need to meet all requirements anticipated
    for fiscal year 1998 and prior year disasters, again assuming normal
    disaster activity for the balance of the year?
        Answer. Using data as of February 28, 1998, FEMA estimates that it
    will need $1.6 billion in additional resources by the end of fiscal
    year 1998 in order to meet requirements anticipated for fiscal year
    1998 and prior year disasters.
        Question. A supplemental was sent to Congress yesterday by the
    administration, but did not include FEMA funding. Why isn't the
    administration requesting a supplemental for disaster relief in view of
    the fact that there will not be adequate funds on hand to meet fiscal
    year 1998 and prior year requirements?
        Answer. FEMA was not part of the Administration's original request
    for a supplemental. However, on March 24, the Administration requested
    $1.6 billion in emergency contingency funds to meet FEMA's estimated
    requirements through September 30, 1998.
                    fiscal year 1999 ``off-budget'' request
        Question. FEMA is requesting $2.3 billion in contingency funds for
    fiscal year 1999. This amount, coupled with your ``on-budget'' request
    of $307 million, represents the 5-year historical average cost of
    disaster relief. According to current projections, your budget request
    is $1.1 billion short of what is needed to meet anticipated
    requirements. Why isn't FEMA requesting what is needed to meet
    anticipated requirements?
        Answer. Estimates as of the end of February, which factor in
    estimated requirements from the El Nino related storms in California
    and Florida, actually leave an estimated shortfall of $1.5 billion to
    meet anticipated requirements at the end of fiscal year 1999. This
    estimated shortfall assumes passage of the appropriation request and
    the $2.3 billion in contingency funds. However, even using the February
    estimates, FEMA still anticipates an unobligated balance of $369
    million at the end of fiscal year 1999. Because of the magnitude of the
    contingency fund that would have been requested to meet requirements,
    the administration opted to request a more conservative amount that
    should meet estimated obligations.
                            presidential task force
        Question. I understand FEMA is heading up a Presidential task force
    addressing long-term recovery issues following the Northeast storms.
    Could you describe the role of the task force and its findings and
    recommendations on recovery issues?
        Answer. The President activated the Long-term Recovery Task Force
    to assist the States of Maine, New Hampshire, New York and Vermont
    recover from the devastating ice storm that struck the Northeast in
    January 1988, and designated me as the Task Force Chair.
        In early February the Task Force members met with representatives
    from each of the States to identify the areas of greatest impact and to
    determine how the Federal departments and agencies might best assist
    the individuals, businesses and communities recover from the storm.
    Based on that information the Task Force identified the following six
    areas of impact and developed a ``Blueprint for Action'' to guide the
    recovery efforts.
      --Energy and Infrastructure Losses
      --Agricultural Losses
      --Damage to Forests and Trees
      --Recreation and Tourism Losses
      --Health and Safety Concerns
      --Special Population Needs
        The recommendations in the ``Blueprint for Action'' generally
    identify measures that can be taken to ensure that the existing Federal
    programs provide the assistance needed in each of these areas. Where it
    appears that there may be a gap in Federal authorities or funding, the
    report recommends that the Office of Management and Budget and the
    pertinent Agency further investigate the possible gaps. A copy of the
    ``Blueprint for Action'' is attached.
        FEMA will take the lead in organizing a meeting with Federal and
    State recovery officials this summer to both monitor the progress of
    recovery and better identify any long-term agricultural, forestry or
    other impacts that may not yet be evident.
        Question. In recent years there has been growing interest in
    earmarking CDBG funds for disaster relief, yet there is no authorized
    CDBG disaster program, and it appears that CDBG funds could duplicate
    what is provided by other agencies such as EDA. What is FEMA's role in
    developing national plans and policies for disaster relief programs
    government wide?
        Answer. The fundamental plan that guides the Federal response to
    disasters and that ensures coordination of assistance is the ``Federal
    Response Plan.'' Twenty-seven Federal agencies and the American Red
    Cross are signatories to this plan. An effort is now underway to update
    the ``Federal Response Plan.'' This update will include development of
    a Recovery Annex that outlines how the traditional disaster recovery
    agencies, including the Department of Housing and Urban Development,
    the Economic Development Administration and the Small Business
    Administration, interface and coordinate after disasters.
        For extraordinary disasters such as the upper Midwest flooding in
    the spring of 1997 the President may choose to activate the Long-term
    Recovery Task Force. FEMA chairs the Task Force efforts and convenes
    the Task Force members and affected States to coordinate the long-term
    recovery. The Task Force identifies the programs that can assist
    individuals, businesses, communities, and States recover, as well as
    any gaps in programs or funding.
        For example, in Drayton, North Dakota FEMA is coordinating with EDA
    and HUD to develop a project that would remove structures from risk,
    yet ensure the sustained viability of the community. This project
    involves potential funding from FEMA to acquire five commercial (one of
    which houses the County medical clinic) and eight residential
    structures. The land to be acquired is primarily threatened by erosion,
    and would become open space. EDA may provide a grant to purchase
    another commercial building outside the floodplain and convert it into
    a ``mini-mall''/retail office facility. The clinic, as well as the
    other businesses would relocate to this facility. HUD funding would
    support bringing the clinic's office space up to current medical codes
    and standards.
        While this is but one example, it shows how the Federal family
    coordinates the delivery of assistance after disasters to meet State
    priorities and community needs.
        Question. There are several agencies involved in buyouts, including
    FEMA, HUD, and the Army Corps of Engineers. What is the national buyout
    plan, why are so many agencies involved, and what are the different
    roles and responsibilities of the various agencies.
        Answer. Removal of structures from the floodplain (referred to as
    ``buyouts'') is one element of a multi-hazard approach to reducing the
    long term impacts of natural disasters on the nation. To achieve these
    cost-effective projects, several Federal departments and agencies have
    authorities that give them the capability to acquire properties. These
    include FEMA, the Department of Housing and Urban Development (HUD),
    the Army Corps of Engineers (USACE), and the Economic Development
    Administration (EDA). While the programs may all support acquisition
    projects, they are designed to address different needs at the local
    level, and as such, form the basis for a coordinated acquisition
    strategy.
        FEMA programs have provided funding to acquire over 23,500 flood-
    prone properties throughout the U.S., and are for the specific purpose
    of reducing or eliminating future damage and risk to life and property
    from natural hazards. Under HUD's programs, acquisition can be
    undertaken for a broader array of purposes including re-housing
    strategies, urban renewal, economic development, and affordable
    housing. The USACE primarily funds land acquisition to support large-
    scale structural flood control, flood storage, and wetlands management
    projects. Additionally, communities often seek EDA support to ensure
    their open space acquisition projects do not deplete the local housing
    stock. These programs operate in tandem providing communities with
    essential flexibility to meet their hazard mitigation and recovery
    needs.
        An example of how these programs can work together can be found in
    South Pembina, North Dakota. In this community, FEMA is funding the
    acquisition of approximately 20 residential structures and mobile
    homes. The land acquired will be used for open space and recreational
    purposes. To ensure adequate housing outside the floodplain is
    available for Pembina's labor force, EDA is providing a grant to
    develop a 20-site mobile home park, and to acquire land for the future
    construction of a 24-plex residential apartment structure. The local
    community is using HUD funding to provide the matching fund requirement
    under the EDA grant. The availability of differing, yet flexible
    Federal programs enables communities to satisfy a broad range of
    disaster recovery and hazard mitigation needs.
        Question. An article appearing earlier this week in The Washington
    Post discussed a Commerce Department initiative called the Natural
    Disaster Reduction Initiative, which includes grants to communities to
    encourage economic development officials and emergency planners to
    train together and improve coordination. What is FEMA's role in this
    initiative, and how does it relate to FEMA's Project Impact?
        Answer. FEMA and the Department of Commerce (DOC) have been
    involved in discussions about fostering tighter linkages between FEMA's
    Project Impact and the DOC's Natural Disaster Reduction Initiative. One
    of the ways in which we hope to work together is through the
    development of training for economic development officials and
    emergency planners at the local level on how to work more closely
    together and incorporate mitigation into economic development planning.
        Over the next few weeks, FEMA and DOC's Economic Development
    Administration (EDA) hope to finalize an agreement whereby EDA will
    provide the funding and technical assistance to support development of
    the subject training, and FEMA will utilize its staff and resources at
    its Emergency Management Institute (EMI) to prepare the course
    instruction. Under the agreement, FEMA and EDA will work together to
    offer the training to economic development and emergency planning
    officials at EMI. The training would also be made available to
    officials in Project Impact communities on an as-needed basis so that
    they can strengthen mitigation components of their community and
    economic development planning. As we move forward, FEMA and the
    Department of Commerce will continue to identify opportunities for the
    two agencies to work together through the two respective initiatives.
                            state cost-share waivers
        Question. What are the criteria for recommending to the President
    that the 25 percent state cost-share be reduced, and has this per-
    capita threshold been closely adhered to in recommending cost-share
    reductions?
        How long has this criteria been in place and when will the updated
    threshold be implemented?
        The Senators from Maine have requested a legislative cost-share
    reduction for Maine. What is the per-capita damage in Maine? Do you
    have a position on this request?
        Answer. Currently, FEMA's policy is to recommend that eligible
    Public Assistance disaster costs be reimbursed at 90 percent Federal
    funding only for those disasters which are of a catastrophic nature and
    the statewide per capita impact exceeds $64. This criterion has been in
    place since 1985. The present criteria has consistently been used for
    all 38 cost share adjustments granted to date with the exception of the
    August 5, 1997, legislative cost share adjustment for the State of
    Minnesota (FEMA-1175-DR, the Presidential Disaster Declaration for the
    Red River flood). In this case, Congress included within the 1998
    Budget Reconciliation, Public Law 105-33, which was signed by the
    President, a 90/10 cost share adjustment for six counties even though
    the State did not meet the $64 threshold.
        The Committee on Appropriations Report 105-53 expressed a concern
    that FEMA had not updated the standard it uses to determine when to
    increase the Federal share of disaster costs since 1985, and that the
    standard was not in regulation. In response to that concern FEMA
    prepared a proposed rule that would raise the $64 threshold now used to
    recommend cost-share adjustments up to current dollars, and would
    adjust that threshold annually. Based on the Consumer Price Index the
    new threshold would be $100 per capita. However, since this is such a
    large increase, the rule proposes to raise this threshold over a two-
    year period, with $80 per capita as the interim threshold. The
    projected annual cost-savings from this rule is $38 million. The
    proposed rule was published in the Federal Register for comment on
    March 5, 1998, with comments due May 4, 1998.
        As of March 17, 1998, the Federal obligations for the Maine
    disaster (FEMA-1198-DR), declared January 13, 1998, is $9,578,002.
    Based on a 1990 statewide population of 1,227,928, the statewide per
    capita impact of this event is $7.80. FEMA strives to administer the
    President's Disaster Relief Fund program in a fair and equitable manner
    in each disaster.
                        business process re-engineering
        Question. I understand you have underway a process to improve and
    streamline the grants process for infrastructure projects. Could you
    describe what improvements you plan to implement and what sort of cost
    savings are anticipated? Do you anticipate FEMA will be able to close-
    out disasters much faster as a result of the new process?
        Answer. The goal of the New Public Assistance Program is to better
    serve our customers by obligating 50 percent of emergency work funding
    within 30 days of declaration, obligating 80 percent of permanent work
    funding within 180 days of declaration and closing 80 percent of
    disasters within two years. The new program involves four components:
    people, policy, process and performance. To better serve our customers'
    needs, our staff must be very knowledgeable about program issues and
    possess good interpersonal skills. To this end, we are developing a
    program to credential our staff and to provide more training to our
    State partners. Secondly, we are simplifying our policies and
    publishing them in paper and in electronic formats so that our staff,
    as well as State and local partners can easily access them. This will
    promote more consistent decision making throughout the program, which
    will increase customer satisfaction and reduce the number of appeals.
        The third component of the new program is process. We are
    streamlining the process to make it less bureaucratic and more
    responsive to our customers' needs. We are empowering our staff in the
    field with authority to make program decisions, which reduces the need
    for multiple reviews at the disaster field office. Our objective is to
    provide timely assistance to applicants.
        Lastly, we want to provide effective, efficient and consistent
    assistance to our customers. To help evaluate our performance, we will
    conduct customer satisfaction surveys after each disaster. Further, we
    are building critical performance indicators into our process. This
    will allow us to adjust process components to improve customer
    satisfaction.
        The estimated savings in administrative costs for the New Public
    Assistance Program will be approximately $9 million annually. We
    anticipate that 90 percent of the disasters will be closed
    programmatically within two years.
        Question. Last spring FEMA initiated a pilot grants acceleration
    program for Northridge projects. Is participation more or less than
    FEMA anticipated? What has been learned so far?
        Answer. Participation has been favorable. Of the approximately 120
    Subgrantees who owned the approximately 400 eligible projects
    (generally, at least one large building no more than 75 percent
    complete), 77 Subgrantees requested offers on at least one facility. As
    of March 13, 1998, 104 settlement offers were made. Of those, 69
    settlement offers were accepted, 16 were rejected, and the balance is
    pending.
        FEMA has worked swiftly since September 1997 to develop
    professional cost estimates, validate them and convey them to the
    Grantee/Subgrantees. In addition to those offers already made, FEMA has
    an additional number of estimates in process. And some Subgrantees have
    indicated that they intended to request settlement offers on additional
    buildings after reviewing initial cases.
        Levels of interest vary; some enthusiastic Subgrantees have asked
    for settlements on projects that are not even part of the program;
    others who opt not to participate prefer the assurance that all
    eligible actual construction costs will be met by FEMA, as in the
    current Damage Survey Report (DSR) process. We have found that some
    Subgrantees are very pleased with the program. And, in general, we are
    finding that the Subgrantees prefer the GAP option to the traditional
    DSR process because they have a reduced administrative burden and know
    the dollar amount within which they must manage.
        Question. The Northridge pilot involves capping settlements up
    front, with no appeals allowed. Will this concept be applied on a
    broader basis?
        Answer. The cost estimating methodology developed for Northridge
    and validated for national use, now is being provided nationally as a
    tool to make better initial estimates of damage costs. However, without
    statutory change, final settlements on estimates will not be
    implemented on a larger scale. Because the law currently provides
    appeal rights on program matters, we do not envision a full-scale
    implementation of settlements based on estimates without appeal.
                                 project impact
        Question. FEMA is requesting $50 million for the new pre-disaster
    mitigation program called Project Impact in fiscal year 1999, and
    received $30 million in fiscal year 1998, most of which has not yet
    been distributed.
        How will FEMA target these grants to areas with the highest risk of
    disasters?
        Answer. In looking for communities in which to pilot Project
    Impact, we are looking at areas of high risk as one of the critical
    factors of selection. Indicators we are looking toward to determine
    high risk include number of disaster declarations and repetitive
    losses. The way in which the process of mitigation will be applied in
    each community will be driven by the community culture and
    vulnerabilities. In addition to any priorities identified at the local
    level, FEMA will be encouraging the communities to address those
    problems that directly affect disaster expenditures, such as vulnerable
    infrastructure.
        Question. I understand that Project Impact has never been announced
    in the Federal Register. Will all local communities nationwide be given
    an equal opportunity to apply for Project Impact funds?
        Answer. The Administration has set a goal of having one Project
    Impact community in each State by the end of the current fiscal year.
    We have pilot projects well underway to field-test a new process for
    engendering an on-going commitment to mitigation in a variety of high-
    risk communities. As we learn from these first two rounds of
    designations, we are developing what we expect to be the parameters of
    a program in the future. Once this is established we anticipate local
    communities nationwide will be invited to participate as partners in
    Project Impact.
        Question. What role will States play in the selection and
    implementation of Project Impact grants?
        Answer. States are considered to be critical partners to the
    success of Project Impact. We are counting on the State emergency
    management agencies to manage a process within the State with all
    appropriate stakeholders to identify and recommend to FEMA communities
    that are appropriate for Project Impact. In addition to risk and
    organizational qualities within the communities, we would hope that the
    communities recommended to FEMA by the States will fit within the
    overall strategic mitigation plan and activities of each State.
        Question. You have indicated that you would like a Project Impact
    grant in every State. Are all States interested and are there strong
    candidate projects in all States?
        Answer. Momentum for Project Impact is growing with each passing
    week. Currently we have communities under consideration in all States.
    Some of the States have forwarded their recommendations to us; others
    are still working with our regional offices to determine which
    communities would be most appropriate.
        Question. What criteria does FEMA plan to use to measure the
    success of Project Impact, and how does FEMA plan to ensure that the
    appropriate level of outside effort and resources are channeled into
    the program?
        Answer. The success of the Project Impact initiative will be
    demonstrated by the public and private partnership actions taken by the
    community that demonstrate lives and property are at less risk from the
    natural hazards that threaten them.
        FEMA is currently developing several methods in which to measure
    short and long-term risk reduction in Project Impact communities. One
    effort underway is the development of a systematic methodology to
    document the processes and implementation of the actions that pilot
    communities have identified to lessen their future losses from natural
    disasters. The University of Delaware Disaster Research Center is
    working with FEMA to conduct an evaluation study, with four specific
    objectives: (1) to describe the processes through which pilot
    communities developed their plans and objectives under the Project
    Impact initiative; (2) to monitor and document the progress pilot
    communities are making toward achieving their stated goals; (3) to
    identify factors that encourage successful program development and
    implementation in the pilot communities; and (4) to make
    recommendations and point out factors that FEMA should take into
    account in implementing the program on a national scale. FEMA will also
    be looking at specific indicators within each Project Impact community
    that demonstrate mitigation is working and true risk reduction is
    occurring.
        To ensure that the appropriate level of outside effort and
    resources are channeled into the program, FEMA will continue to seek
    support from the Congress, the Administration, national organizations,
    and the private sector. In addition, we are developing tools and
    training to assist our employees in fostering partnership approaches in
    communities as a way to effectively leverage this initiative.
        Question. Obviously, every community will not receive a Project
    Impact grant. What else is FEMA doing to encourage mitigation in
    communities nationwide? Do you believe additional incentives are
    needed--such as tying federal disaster assistance or preparedness
    grants under the cooperative agreement with States--to mitigation?
        Answer. FEMA provides a wide range of assistance to communities on
    a regular basis to assist them in meeting their own risk reduction
    priorities and needs. This assistance includes the publication and
    dissemination of guidance and technical materials, the delivery of
    direct technical assistance on state-of-the-art mitigation measures and
    practices, providing training and education opportunities, and
    disseminating mitigation outreach materials for their use within their
    own jurisdictions. Through FEMA's National Flood Insurance Program,
    communities have their floodplains mapped to provide local officials
    with the information they need to develop smartly and in a disaster
    resistant way. FEMA also provides funding through State and local
    grants to help localities develop emergency management capabilities,
    and funds certain high-priority mitigation measures through the Flood
    Mitigation Assistance and National Hurricane Programs. These types of
    assistance will continue to be made available to communities interested
    in promoting mitigation and preparedness activities outside of a
    Project Impact designation.
        FEMA also works with county and local associations, including the
    National Association of Counties, and the International City and County
    Managers Association, and others to develop and disseminate mitigation
    and preparedness information that meets community needs. Partnerships
    such as these provide valuable support to local efforts to reduce risk.
        Despite these types of assistance, FEMA believes that additional
    incentives are needed if we are ever to have a significant impact with
    mitigation across the nation. For this reason, FEMA is currently
    working with the private sector, including the insurance industry,
    financial institutions, and even officials on Wall Street, to develop
    additional incentives that can be applied in communities across the
    country, such as reduced interest mitigation loan products, risk-based
    community bond ratings, and reductions in premiums or deductibles on
    hazard insurance. FEMA is working with State and other Federal agencies
    to leverage resources to promote mitigation activity. Additional
    incentives are also being pursued within FEMA's existing programs. It
    is our hope that in the next several years, a multitude of new
    incentives will be available to assist communities in addressing their
    own risks and priorities.
                            hazard mitigation grants
        Question. When will a final rule be published in the Federal
    Register limiting the timeframes States have for obligating Hazard
    Mitigation Grant Program (HMGP) funds?
        Answer. FEMA does not plan on publishing a final rule in the
    Federal Register at this time. Instead, FEMA issued policy guidance in
    December 1997 that reaffirms existing regulations on timelines under
    the HMGP. The deadlines for States to submit applications remain the
    same as currently outlined in the HMGP program regulations.
        This new policy does, however, place a new deadline on FEMA staff
    in reviewing project applications in a more efficient manner. FEMA will
    be required to obligate all funds within approximately 24 months of a
    disaster declaration. FEMA is working with States to ensure that the
    regulatory deadlines are met and to provide limited extensions where
    warranted.
                          state capability assessments
        Question. This week FEMA released its long-awaited Capability
    Assessment of the States which we asked for several years ago owing to
    concern that we did not have a good assessment of State's ability to
    respond to major disasters. FEMA's report is based on State self-
    assessments.
        Do you really believe self-assessments will establish an accurate,
    honest picture of capabilities?
        Answer. We believe that self-assessments are the most effective
    option for a number of reasons. First, because we did not tie funding
    to the assessment results, the States had no incentive to game the
    assessment in an attempt to gain additional funds. Secondly, States
    indicated in their responses whether the assessment was based upon real
    world experience, exercise experience, or whether the specific area
    being assessed was untested. We believe that the assessment is
    generally an honest depiction of the State emergency management
    experience. This is reflected in the detail provided by numerous State
    responses to the assessment, which in many cases went beyond the scope
    of the questions, and were self-critical and introspective.
        Most States conducted their Capability Assessment Readiness (CAR)
    reviews with on-site Regional involvement. Some Regions formed CAR
    teams to partner with their respective States in the process and the
    assessment. It is FEMA's position that an honest, accurate assessment
    occurs when there is the opportunity for the partners to be jointly
    involved in conducting the assessment and reviewing the results.
        Question. Why would any State rate itself negatively in any area?
    How will FEMA validate the accuracy of the assessments?
        Answer. States have a vested interest in reviewing their own level
    of preparedness and correcting deficiencies where identified. The CAR
    establishes a set of performance criteria that have been accepted by
    the States as a baseline for performance measurement. Validation of
    results occurs in the process. The State conducts a self-assessment,
    then the State and FEMA jointly review that self-assessment face-to-
    face, and discuss the State assessment; and/or the State and FEMA
    conduct the self-assessment together to provide a more valid
    perspective on the status of the emergency management partnership. As a
    result, emergency management partners mutually develop actions that
    address areas identified by the assessment as needing improvement, and
    incorporate actions into the Performance Partnership Agreement and the
    annual Cooperative Agreement (PPA/CA).
        Question. Did the self-assessments include an assessment of the
    risks faced by the State? If not, how can a State rate it's capability
    without first assessing what it is preparing for?
        Answer. Yes, the assessments included State Hazard Identification
    and Risk Assessment.
        Question. How will these assessments be used? Will the results of
    the assessments be used to make funding decisions?
        Answer: FEMA has embraced several strategies, long and short term,
    to address the areas needing improvement identified by the CAR process,
    and to ensure that areas identified as strengths continue to be
    maintained. These strategies shape the way States and localities
    utilize grant funds through: (1) Performance Partnership Agreement
    reviews with the States during fiscal year 1998; (2) emphasis on the
    State annual Cooperative Agreements; (3) improvement of individual
    Emergency Management Functions based on State requirements; (4)
    refinement of the CAR review process; and (5) participation in the
    development of an accreditation process for State and local emergency
    management organizations. We do not intend to directly link financial
    assistance to States based upon the CAR results for fear that this
    would serve as an incentive to slant results to garner funds, when what
    is needed is an honest assessment.
        Question. Specific areas identified as needing specific improvement
    included planning for a response to nuclear, biological and chemical
    terrorist incident; resource management; and coordination between State
    emergency management agencies and the private sector. What are FEMA's
    plans to address these important weaknesses.
        Answer: FEMA Regions will utilize the CAR results to review the
    existing State and FEMA Performance Partnership Agreements, revise them
    as necessary, and negotiate the annual Cooperative Agreements with
    States to focus on correcting identified areas for improvement. In
    addition, exercises and training programs will emphasize areas
    identified as needing improvement.
        Question. In your report, it is noted that there were questions
    about the quality and validity of the results, and that ``the initial
    effort is only a starting point. The process will take time to
    evolve.'' What are your specific plans for refining the ``capability
    assessment for readiness?''
        Answer: We began discussions with our State partners immediately
    after completion of the fiscal year 1997 CAR to identify and work on
    components of the CAR process that could be improved. Workshops with
    Regions and States have been conducted which focused on reviewing the
    CAR in support of the Performance Partnership Agreements and the annual
    funded Cooperative Agreement. The purpose of the workshops was to (1)
    plan and implement a more effective CAR process for the future; (2)
    identify specific ways to support customers to gain greater value from
    the assessment; and (3) continue to build the partnership between FEMA
    HQ and customers in the Regions, States, locals and related public,
    private and volunteer communities.
        The recommendations of these workshops, which involved 57 States
    and territories and 10 regions, were as follows: (1) refine questions
    to avoid duplication; (2) weight questions more comparably; (3) develop
    standard guide for facilitation of joint FEMA/State sessions; (4)
    refine frequency of assessments; and, (5) perform regional assessments.
    We will be implementing these recommendations in the next CAR process,
    and will continue this feedback cycle to ensure that the instrument
    remains effective and useful for all parties to the process.
                           state and local assistance
        FEMA's budget proposes a cut of $11 million to state and local
    assistance, and an increase in the state cost-sharing of these grants.
    The states obviously are quite concerned with this proposed reduction.
    According to a survey of states, potentially 154.5 positions on state
    emergency management staffs would be eliminated.
        Question. Why is FEMA proposing such a drastic reduction?
        Answer. The 1999 request represents an overall reduction of
    $11,646,000 from the 1998 level, and is related to the Agency phasing
    out Federal requirements funded by State and Local Assistance (SLA)
    grants that previously were of higher priority, but no longer warrant
    100 percent funding.
        The reduction in SLA grants also reflects one of many adjustments
    made by the Agency to achieve 1999 budget targets driven by the
    Balanced Budget Agreement. Since 1993, FEMA has absorbed the greater
    share of budget reductions at the national level or at the expense of
    other programs, holding States harmless as much as possible until the
    1999 budget. For example, funding levels for SLA grants between 1993
    actual obligations and the 1999 request reflect a decrease of only 4.2
    percent, despite the fact that FEMA's Emergency Management Planning and
    Assistance (EMPA) appropriation has been reduced by over 20 percent.
    During the same period, however, overall Performance Partnership
    Agreement (PPA) grants to States funded from EMPA have increased by 4.7
    percent, and now include funding for State Hazard Mitigation Officers
    and Hazardous Materials preparedness. (For comparability purposes, the
    Radiological Emergency Preparedness amount is included in the 1999
    figure.)
        The decision, in addition to helping meet budget targets, begins to
    transition support for State and local emergency management planning
    functions to no more than 50 percent in accordance with congressional
    direction in the Conference Report on the 1996 appropriation and the
    House Report on the 1997 appropriation. The results of this change will
    uniformly provide 50 percent funding for emergency management planning
    positions at State and local levels, and 100 percent funding for
    emergency management training and planning activities related to
    hazardous materials incidents.
        Question. Were states given fair warning that this reduction was
    coming, so state legislatures could act to increase state funding?
        Answer. In 1995, as part of FEMA's implementation of reinvention
    under the National Performance Review, we simplified our program
    structure and devolved management of a number of program activities to
    the States under Performance Partnership Agreements. Five programs,
    including three that historically had no cost-share requirements, were
    consolidated into the State and Local Assistance (SLA) program. Of the
    resources consolidated into SLA, 75 percent originated in programs that
    required State and local governments to at least match the amount of
    the Federal contribution.
        FEMA's program guidance for fiscal year 1996, as originally issued
    in July 1995, specified that all funding provided under SLA would have
    to be equally matched by the State and local governments. Some States
    expressed concern that they would not be able to obtain resources from
    their legislatures to meet this matching requirement on short notice.
    FEMA then revised the fiscal year 1996 guidance by adding language to
    the effect that some FEMA funding would be available `` * * * without
    State cost share for fiscal year 1996.'' This FEMA action was
    recognized in the Conference Report on the 1996 Appropriation which
    directed FEMA to continue funding ``certain planning positions'' at 100
    percent as we had in the past, but to plan to reduce the Federal share
    to no more than 50 percent for fiscal year 1997 and beyond.
        FEMA continued working with the States and, in response to their
    continuing concerns, asked Congress for legislation to permit a
    consistent 75 percent Federal, 25 percent State cost share for all
    preparedness programs authorized by the Robert T. Stafford Disaster
    Relief and Emergency Assistance Act, as amended. This action was made
    public in May 1997. During this same time frame, letters were sent to
    State Governors from the FEMA Regional Directors urging the States to
    seek the resources necessary to match all SLA funding in fiscal year
    1999. While FEMA was unable to provide information regarding the
    content of the 1999 budget request until such time it was submitted to
    Congress in the President's budget, we believe that these actions
    should have made it clear to the States that there was a need for them
    to seek additional State and local resources for activities funded
    through SLA.
                                   borrowings
        Question. The level of borrowing in the Flood Insurance program is
    unprecedented. What amount currently is owed Treasury and what are
    FEMA's plans and timeline for repaying the debt?
        Answer. The outstanding borrowing reached $917 million at the end
    of June 1997. Through repayments, including $72 million in interest,
    the outstanding borrowing is down to $810 million.
        Since levels of flooding are still the critical determinant in
    repaying the current borrowing, it is not possible to determine with
    certainty when the repayment will be complete. Through simulation
    modeling, FEMA has estimated the probability of repaying current
    borrowing over the next five year period. Based on premium income
    alone, FEMA has a 16 to 27 percent probability of completely repaying
    the amount borrowed from the Treasury at some point within the next
    five fiscal years.
        FEMA is submitting a report to Congress which outlines various
    alternative strategies for repaying the borrowing that could increase
    the probability of complete repayment within the next five years to 41
    to 50 percent.
                               substantial damage
        Question. An article appearing in the Baton Rouge Advocate (10/20/
    97) said ``on paper a federal policy known as the `50 percent rule'
    seems to make a lot of sense. In practice, it might as well not even
    exist. The rule is suppose to force people to elevate, move, or
    demolish a house if damages from a flood total more than half its
    market value. But experts on flooding say the rule is widely ignored.''
    This is costing the flood insurance program millions of dollars in
    unnecessary flood claims as structures flood, are rebuilt as they were,
    and flood again. What does FEMA plan to do to ensure implementation of
    the 50-percent rule? How widespread is this problem? Does the 50-
    percent rule need to be amended to address repeat flooding, since many
    houses flood repeatedly with levels too low to trigger the rule?
        Answer. The National Flood Insurance Program (NFIP) claims
    representative (Write Your Own or direct Government business) completes
    a preliminary damage assessment form during the initial visit to the
    damaged structure when there is a claim. That form is submitted to the
    Federal Emergency Management Agency (FEMA) Regional Office, which in
    turn provides the damage assessment form to the local officials to
    alert them to the possibility of a substantially damaged structure when
    they issue the repair permit. During a major catastrophe the NFIP
    reminds all Write Your Own Companies and the NFIP direct of the
    requirement to complete the preliminary damage assessment form.
        Under NFIP regulations, communities have the responsibility to
    enforce their ordinances affecting requirements that substantially
    improved buildings meet Post-FIRM (Flood Insurance Rate Map)
    construction standards. This includes buildings that have been
    substantially damaged as well. In developing the National Flood
    Insurance Reform Act of 1994, it was known that because of the
    additional costs of reconstruction that are imposed on the property
    owner, there is a reluctance on the part of community officials, to
    declare a building to be substantially damaged. To address this, the
    Act authorized the NFIP to provide coverage for compliance with local
    floodplain management ordinances. This has been implemented as
    Increased Cost of Compliance coverage (which is paid by policyholders)
    and provides up to $15,000 toward the cost of rebuilding to Post-FIRM
    standards in response to local ordinance requirements. Such ordinances
    apply to substantially damaged buildings, or where a community has an
    appropriate ordinance, to repetitively damaged buildings, as defined in
    the statute. This new coverage was implemented June 1, 1997 for all new
    policies and renewed policies becoming effective on or after that date.
           chemical stockpile emergency preparedness program (csepp)
        Question. FEMA is requesting $46 million for the CSEPP program.
    Very little detail is provided in the Congressional budget
    justification describing how these funds will be used. Please provide a
    detailed description, including a break-out of the budget request by
    headquarters, regions, states and the local communities and a break-out
    of how these funds will be utilized by state and local governments.
        Answer. For fiscal year 1999, as in prior years, FEMA's Chemical
    Stockpile Emergency Preparedness Program (CSEPP) activities will be
    funded by Army on a reimbursable basis.
        The purpose of CSEPP is to help communities enhance existing
    emergency management systems and achieve the level of preparedness
    required by this hazard. FEMA is requesting $46M in reimbursable
    authority for the following:
      --Salaries, benefits and travel ($3.5M)--Supports FEMA staff
            (Headquarters and six Regions) assigned to the program.
      --Administrative overhead cost ($422,000).
        Technical support for the program includes:
      --Planning ($800,000)--support to the CSEPP community (10 States and
            39 counties) for development of major software; to assess
            emergency response plans for compliance with established CSEPP
            policies and guidance; to implement performance indicator
            modules to evaluate understanding of CSEPP guidance regarding
            emergency medical services, public education and information,
            and post-incident operations; to complete development of CSEPP
            Planner's Companion series addressing requirements in CSEPP
            Planning Guidance; and to provide technical planning assistance
            to States and local jurisdictions.
      --Training ($600,000)--develop and support training for such State
            and county CSEPP training requirements as Risk Communications,
            ACTFAST, Chemical Awareness, Personal Protective Equipment,
            Technical Planning and Evaluation, and use of audio-injectors
            by civilian emergency medical personnel to treat civilians
            exposed to nerve agents, etc.
      --Public Education and Awareness ($425,000)--preparation and
            distribution of CSEPP public awareness materials and documents,
            technical assistance to States and counties, and Joint
            Information Center/System.
      --Automated Data Processing (ADP) ($211,000)--continuation of the
            integration of alert/notification, ADP, and communication
            systems for jurisdictions not yet equipped, and support for
            CSEPP ADP system and Federal Emergency Management Information
            System port maintenance, software license, equipment purchases,
            operating system upgrade and FEMIS client software suites.
      --CSEPP Community Exercises ($1.2M)--Assistance to FEMA and Army
            Exercise Co-Directors to train, conduct, and evaluate
            exercises, and develop the Evaluation Exercise Report, revise
            CSEPP Exercise Program document, and continue to develop
            interactive exercise scenarios that simulate incident and post-
            incident conditions and exercise execution of key tasks.
      --Exercise Direct Support ($256,000)--Funding to conduct eight CSEPP
            federally evaluated exercises.
      --Implement a Program Performance Monitoring System to assure that
            system capabilities are in place in the ten CSEPP States and 39
            counties at the earliest possible date.
        In addition to the above, DOD is requesting $39M that will be
    provided to the 10 CSEPP States through a Cooperative Agreement as
    follows: Alabama--$4.9M; Kentucky--$15M; Utah--$5.6M; Maryland--$1.8M;
    Illinois--$500,000; Indiana--$1.4M; Arkansas--$2.3M; Colorado--$1.8M;
    Oregon--$4M; and Washington--$1.3M. This funding will enhance State and
    county emergency capabilities in the following areas:
      --Functioning Alert and Notification system for Immediate Response
            Zones (IRZ) and Protective Action Zones (PAZ);
      --Functioning Emergency Operations Center (EOC) for each PAZ and IRZ
            county;
      --Integrated communications systems for IRZ, Joint Information Center
            (JIC)/State;
      --Functioning automated data processing system connecting on-post
            EOC/off-post EOC/JIC/State EOC;
      --Training programs which are consistent with FEMA State Training
            Plan;
      --Exercise program consistent with approved exercise policy;
      --Community involvement program for public education and awareness;
      --Personnel, such as CSEPP coordinators, public information/affairs
            officers, planners, ADP specialists to support CSEPP
            activities; and
      --Coordinate plans in conformance with established CSEPP guidance for
            State. IRZ and PAZ counties.
                           mt. weather expansion plan
        Question. What is the status of the Mt. Weather expansion plan? How
    much is proposed for fiscal year 1998 and fiscal year 1999 to address
    the $14.9 million worth of projects delineated in the April 1997 Mt.
    Weather Expansion Plan Report?
        Answers.
        Status.--In fiscal year 1997, FEMA used $1.7 million on projects
    identified in the Mount Weather Expansion Plan. The Agency plans
    additional expenditures of $1.5 million in fiscal year 1998 and $2.1
    million in fiscal year 1999. Most of these expenditures are
    improvements to the existing infrastructure. Details of these projects
    follow:
    Fiscal year 1997
        Expansion of the Conference and Training Center was funded in 1997,
    as detailed in the reprogramming request forwarded to Congress and
    subsequently approved. The contract was let through competitive small
    business set-aside procurement in the amount of $1.25 million. Work has
    begun, and completion is anticipated by September 30, 1998. In addition
    to the building construction, fiscal year 1997 funds in the amount of
    $230,000 were spent to expand parking to serve the training facility.
        $251,200, part of which was reimbursed from tenants, was spent on
    the renovation of a building for office space. The project is scheduled
    for completion May 1, 1998.
    Fiscal year 1998
        Design for the renovation of Building 230 to provide additional
    office space is estimated in fiscal year 1998 at $150,000. Construction
    will be undertaken on this building either at the expense of a new
    tenant or when sufficient monies accrue in the Working Capital Fund
    (WCF).
        A modular building will be purchased to provide 4,500 square feet
    of additional warehouse storage at a cost of about $100,000.
        Infrastructure improvement projects scheduled for fiscal year 1998
    total $1.2 million and include roof repairs ($310,000), Electrical
    Distribution System upgrades ($200,000), modifications and repairs to
    Bldg. 411 ($150,000), energy conservation/lighting upgrades ($100,000),
    fuel tank replacements ($100,000), and other projects of lesser cost.
    Fiscal year 1999
        Design for the renovation of Building 105 is budgeted at $150,000
    for fiscal year 1999. Construction will occur at the expense of a new
    tenant or when sufficient monies accrue in the Working Capital Fund.
        In fiscal year 1999, $150,000 is budgeted to design the renovation
    of a dormitory building.
        Infrastructure improvements included in the fiscal year 1999 WCF
    spending plan total over $1.2 million, and include paint and carpet
    replacement ($362,000), roadway resurfacing ($300,000), roof repairs
    ($166,000), cafeteria facility and equipment upgrades ($150,000), PA
    system upgrade ($130,000), Water Distribution upgrades ($100,000), and
    other projects of lesser cost.
                                     ______

                      Questions Submitted by Senator Craig

                           state and local assistance
        Question. The President's request for FEMA funding eliminates $16
    million from 100 percent funded grant assistance programs used for
    state and local assistance. This vital assistance is replaced with a
    50-50 federal-state cost sharing mechanism. The agency's justification,
    however, notes that these grants are for ``improving the capability of
    state and local emergency management to plan for, respond to, and
    recover from disasters.''
        How will the reduction of 100 percent federally funded grants
    improve state and local preparedness?
        Answer. The reduction in 100 percent funding is related to the
    Agency phasing out Federal requirements funded by State and Local
    Assistance (SLA) grants that previously were of higher priority, but no
    longer warrant 100 percent funding. Instead of these Federal
    requirements, States have more flexibility to design an emergency
    management program that addresses specific risks to their jurisdiction.
        Question. In testimony before the House Appropriations
    Subcommittee, you indicated that only a couple of states would be
    seriously impacted by the reduction in 100 percent funded grant
    assistance. Which states do you anticipate these being?
        Answer. At the time of the hearing only two States, Maryland and
    Texas, had indicated that they would have severe problems with this
    reduction.
        Question. The National Emergency Management Association has
    identified at least 23 states that have indicated that they will be
    severely impacted by this reduction. How do you account for the
    difference?
        Answer. Since the Appropriations Subcommittee hearing, I have
    spoken to several other States that have shared their concerns
    regarding the reduction.
        Question. I am, of course, greatly concerned on this proposal's
    impact on Idaho. As a former State Emergency Manager, what do you
    believe will be the impact of this reduction to a county such as Clark
    County, Idaho, which has a tax base of only 835 people?
        Answer. The impact on any particular local government will vary
    depending on how the State decides to deal with the reduction. Our best
    estimate of the percent decrease in SLA funding for the State of Idaho
    is 12.5 percent. The SLA program is only one source of FEMA assistance
    to State and local governments. We do not believe that the redirection
    will fundamentally damage the capacity of State and local governments
    to meet the needs of disaster victims.
        Question. Is it not the case that this reduction is merely a shift
    of preparedness costs to state and local communities?
        Answer. The reduction in 100 percent funding is related to the
    Agency's phasing out Federal requirements funded by SLA grants that
    previously were of higher priority, but no longer warrant 100 percent
    funding. Instead of these Federal requirements, States have more
    flexibility to design an emergency management program that addresses
    specific risks in their jurisdiction.
        Question. To your knowledge, have state legislatures provided
    appropriate funding to compensate for this change? What of those states
    with biennial budget cycles?
        Answer. It would appear from the results of the National Emergency
    Management Association survey that not all State legislatures have
    provided compensatory funding for their emergency management programs.
    States that heeded the information provided with the 1998 cooperative
    agreement guidance have anticipated the shift away from 100 percent
    Federal funding, and are prepared for this change. States that have
    relied on the 100 percent Federal funding associated with Cold War
    program activities would have a more difficult adjustment to make.
    However, they should also benefit in the near future from improved
    support at the State and local levels and increased certainty about
    roles and goals of their emergency management organizations.
        Question. Wouldn't states and local communities be better prepared
    to accept this new responsibility if it were to be phased in over time?
        Answer. The situation varies from State to State. It appears that
    more than half of the States are prepared for this change. Most
    understand that they must take primary responsibility for developing
    capabilities for State and local preparedness and response for all but
    the most catastrophic disasters.
        Question. In addition, I question the wisdom in diverting this
    money away from emergency preparedness. What other FEMA programs would
    be increased as a result in this change?
        Answer. The reduction in SLA grants reflects one of many
    adjustments made by the Agency, including the elimination of all 1998
    congressional add-ons, to achieve 1999 budget targets for EMPA driven
    by the Balanced Budget Agreement. The request does include an increase
    of $2.1 million to address health and safety deficiencies and Americans
    With Disabilities Act (ADA) requirements at FEMA-owned facilities.
        Question. Would you be willing to fund the 50-50 grant program at
    the same level now used to fund the 100 percent grants? Or, in other
    words, could we not double the number of projects covered through this
    fund if these monies were not cut and the cost sharing mechanism
    implemented?
        Answer. Since 1993, FEMA has absorbed the greater share of budget
    reductions to the Emergency Management Planning and Assistance
    appropriation at the expense of programs other than State and Local
    Assistance, thus holding the States harmless as much as possible. In
    order to fund SLA 50 percent at the current level of SLA 100 percent,
    FEMA would be forced to further erode those other critical programs.
    The availability of additional Federal funds, however, may be a moot
    point, since States may have difficulty in meeting the cost share
    requirements of the 50 percent program.
                    american indian and alaska native policy
        Question. If FEMA were to enter into separate partnership
    agreements with each tribe in a state, would funds currently used for
    state and local assistance programs be reduced from that state to pay
    for the separate agreements with the tribes?
        Answer. At this time, we have no plans to develop Performance
    Partnerships Agreements with each tribe in the states or change
    procedures on how they participate in FEMA's programs. FEMA's Native
    American policy focuses on building relationships with tribes and
    Alaskan native villages to better respond to their emergency management
    needs and problems. We intend to build these relationships in
    cooperation with States and not at their expense.
        Question. How will FEMA determine who is and who is not an American
    Indian for the purpose of providing assistance under the Individual
    Assistance Program?
        Answer. The new policy will not change FEMA's current procedures or
    criteria for determining eligibility under the Individual Assistance
    Program. FEMA programs help all needy citizens and qualified aliens in
    the disaster area who meet eligibility requirements. We do not
    discriminate based on race or ethnic origin.
        Question. What will be the total fiscal impact to states and local
    communities as a result of FEMA entering into separate agreements with
    the tribes that may be located in a state?
        Answer. Since the new policy focuses on building relationships, we
    do not anticipate entering separate Performance Partnership Agreements
    with the tribes that may be located in a State.
            ad hoc panel on a national pre-disaster mitigation plan
        Question. I'm pleased to know that the Partnership for Natural
    Disaster Reduction (PNDR), located at the Idaho National Engineering
    and Environmental Laboratory, in my State, is on your panel helping
    develop (the National Pre-disaster Mitigation) plan. Can you tell me
    how things are progressing and when we might expect to see your plan?
        Answer. Attached is a copy of the plan, based on the recommendation
    of the Ad Hoc Panel, which is also attached. The panel worked
    diligently and kept on schedule through its agenda of study and review.
    They clearly had a very difficult assignment, but they accomplished a
    great deal in a short amount of time. The Plan will be submitted by
    your March 31 due date.
                                     ______

                    Questions Submitted by Senator Mikulski

                                 project impact
        Question. What are some of the initiatives of Project Impact?
        Answer. Project Impact is an initiative designed to help
    communities identify their risks, assign priorities, and take action
    today to reduce disaster losses tomorrow. The principles upon which
    Project Impact is built include:
      --The key to promoting pre-disaster mitigation is in finding ways
            that result in community implementation.
      --More is accomplished through partnerships.
      --Local ownership of the concept promotes a process that becomes part
            of local culture and responds to the needs of individual
            communities.
      --Members of a community are interdependent, so an interdependent
            approach must be implemented.
      --Cultural change in communities can be supported by Federal
            leadership, but should not be dependent on Federal funds.
      --The initiative should enhance community sustainability.
      --Federal funds should leverage mitigation into community decision-
            making and resource allocation.
      --This effort should not become a new Federal program--it should be a
            new way of doing business.
        Seven pilot communities were selected in 1997 to demonstrate the
    development of Project Impact within various communities. By September
    1998, FEMA's goal is to designate at least one Project Impact in every
    State, and to engage at least 500 businesses.
        We believe that the implementation of these principles in Project
    Impact communities will foster ``Best Practice'' initiatives worthy of
    duplication and recognition across the Country. We also believe that,
    over time, the successes of Project Impact will replicate themselves,
    and that incentives to reduce risks will be commonplace. We believe
    that a local demand for mitigation will drive local decision-making.
    Most importantly, we believe that disaster costs, property loss, and
    human suffering will be reduced as a direct result of Project Impact's
    efforts.
        Question. What tangible initiatives have been implemented with
    respect to the Program [Project Impact]?
        Answer. Project Impact was established, in part, to overcome the
    acknowledged barriers to effective mitigation. It looks for ways to
    increase incentives, focus Federal leadership, provide flexibility at
    the local level, build motivation, and apply existing technology and
    research. These types of barriers are being addressed in the seven
    pilot communities. Of the seven, five have already signed formal
    agreements with FEMA and other principal partners. FEMA is actively
    engaged in building partnerships, facilitating the identification of
    priorities and providing technical assistance.
        Private sector partners have joined to support the effort and
    provide incentives. The number of participating partners continues to
    grow. Examples of some of the current partners include: Merchants and
    Marine Bank, Washington Mutual Bank, Home Depot, General Electric,
    SAFECO Insurance, Barnes and Noble, Chevron, Promus Hotel Corporation,
    Bell South, Lowes Home Improvement Centers, and Pacific Bell.
        Numerous Federal agencies (including the Department of Education,
    the Small Business Administration, the Economic Development Agency, the
    Department of Transportation, and the United States Geological Survey),
    voluntary agencies, and community-based organizations are
    participating. In addition, an aggressive outreach and education
    initiative is ongoing.
        Examples of specific activities being undertaken in the pilots
    include:
      --In Deerfield Beach, Florida, funds are being used to put hurricane
            straps on the auditorium and cafeteria of the local high
            school, which serves as a shelter during a disaster; and,
            installing wind shutters on all the high school windows.
      --In Pascagoula, Mississippi, the Merchants & Marine Bank announced
            it would provide below-market rate loans to qualified borrowers
            to take steps to protect their properties.
      --In Seattle, Washington, funding will support a locally-driven home
            retrofit program; landslide and seismic vulnerability mapping
            projects; in addition, the City's schools will receive funding
            to further improve safety through the removal of a variety of
            nonstructural hazards.
      --In several locations, Home Depot is offering product knowledge
            courses to help homeowners and builders better understand
            disaster resistant construction.
        In addition, national-level relationships are being developed with
    private sector organizations, private non-profits, professional
    associations, and Federal agencies. Discussions with Wall Street and
    financial institutions are ongoing to create new incentives for risk
    management to be reflected in financial decisions. States are
    establishing similar initiatives on their own.
        Question. Is this year's budget needed to get the project off the
    ground, or will it be used to fund additional cities and initiatives?
        Answer. The fiscal year 1998 budget is being used for three primary
    purposes. Given that in fiscal year 1997 we received an appropriation
    of $2 million, we are using some funds in fiscal year 1998 to augment
    the seven original pilots. Second, we will be using monies to provide
    grants to another round of communities to be designated, given that we
    are looking at at least one community in each State, fiscal year 1999
    funds will be necessary to finish the communities we designate in this
    calendar year. The third category of expenditures is for developmental
    costs to get the program off the ground. For example, the development
    of training or public education materials and evaluation activities.
        Question. How will this program ``impact'' and benefit people?
        Answer. The Project Impact initiative was developed to challenge
    individuals, businesses and government entities to implement mitigation
    measures before a disaster. Project Impact will benefit people in both
    designated communities, and people in communities who implement the
    principles of Project Impact on their own. Pre-disaster mitigation has
    a systemic benefit. The engagement of the civic community creates
    ancillary benefits to the community whether or not there is a disaster
    in the near future. Pre-disaster mitigation contributes to sustainable
    and economic development today. In the aftermath of a disaster, the
    reduced or eliminated damages to critical facilities, infrastructure,
    businesses and homes due to pre-disaster mitigation provides
    substantial direct and indirect benefits to people throughout the
    community. For example, people benefit from:
      --Reduced home repair costs due to damage prevention,
      --Increased reliability of road systems and lifeline services (e.g.
            water, sewer, and electricity),
      --Stable utility rates because companies do not need to raise rates
            to cover damage costs,
      --Reduced inconvenience of locating alternative child care
            arrangements due to day care or school facility damages, and
      --Reduced damages to businesses that threaten economic stability and
            employment.
        In the Project Impact pilot communities, people are already
    benefiting from a number of initial actions. For example, in Seattle,
    people are able to attend courses on how to perform seismic
    retrofitting for their homes. They are able to borrow from the
    community tool library the tool necessary to perform the retrofitting.
    The tool libraries have received support from Washington Mutual,
    SAFECO, and the Boeing Employees Good Neighbor Fund.
        Question. What is the status of FEMA's attempt to get the program
    authorized?
        Answer. FEMA submitted legislation in the first session of the
    105th Congress to amend the Stafford Act. Included in that legislation
    is specific pre-disaster mitigation authorization. The legislation, S-
    1007, has been referred to the Environment and Public Works Committee.
        Question. Where are communities in the early stage of developing
    partnerships with the private sector?
        Answer. Partnering with the business community is a critical part
    of the Project Impact initiative. Communities need to come together in
    partnership to identify the community's hazards, identify what can be
    done about those hazards, prioritize the actions, and obtain public
    support to take the actions. Business partners can provide the
    resources for the identified actions. Through outreach activities, FEMA
    is encouraging private sector involvement in local mitigation.
        Over 50 businesses have joined Project Impact in the seven pilot
    communities to date. Building partnerships is an ongoing effort;
    therefore, the pilot communities are at different stages of developing
    these partnerships with the private sector. Seattle, for example, has
    identified over 30 businesses and leveraged $6 million; Deerfield
    Beach, Florida, has organized a ``Business Alliance'' committee of
    local business leaders which meets monthly in support of Project Impact
    activities. FEMA's goal is to obtain 500 business partners by September
    1998.
        Question. What is FEMA doing to help communities foster public/
    private partnerships?
        Answer. The purpose of FEMA's Project Impact initiative is to
    challenge the country to undertake actions that protect communities,
    businesses, and individuals by reducing the effects of natural
    disasters. FEMA has undertaken a nationwide awareness campaign to
    demonstrate the benefits of hazard mitigation through a partnership
    approach and an outreach effort to businesses and communities to become
    disaster resistant. Project Impact serves as a catalyst for communities
    to form partnerships and spotlights partnerships to create a network
    for sustained momentum.
        FEMA is encouraging private sector involvement in the seven pilot
    communities through meetings with local Chambers of Commerce and
    businesses. We are literally knocking on doors and inviting the local
    business community to become part of their community's mitigation
    effort. On a national level, relationships are also being developed
    with private sector organizations, especially at the corporate level.
    The Director has met with CEO's of large national companies and hopes
    to have 500 business partners join the Project Impact initiative this
    year. In addition, discussions with Wall Street and financial
    institutions are ongoing to create new incentives for risk management
    to be reflected in financial decisions.
        Question. What is the incentive for the private sector to cooperate
    in this program [Project Impact]?
        FEMA believes that incentives for businesses will be accepted and
    successful if related to their bottom lines. We are working to foster
    an appreciation with the business community that they need to address
    risk reduction for themselves, their employees, and their community.
    Businesses need to prepare for disasters in order to increase the
    likelihood that they will survive and recover from disasters. Companies
    need to protect their own facilities; however, they also need to ensure
    that their employees are protected, so that they do not become disaster
    victims themselves. Employees need to get back to work as quickly as
    possible so that companies can get back to business.
        Businesses should also get involved in their community because they
    have a stake in it. It is important to realize that businesses rely on
    the same services from the community as do individuals, and private
    sector recovery may be dependent on public sector recovery following a
    disaster. Therefore, the private sector has a common interest in
    reducing the risk to local infrastructures, which are necessary for the
    continued operation of businesses. Participation in Project Impact also
    provides the private sector an additional means to obtain recognition
    for their involvement in the community.
        The seven Project Impact pilot communities have been selected to
    demonstrate the economic benefits of pre-disaster mitigation to state
    and local governments, businesses, and individuals. FEMA hopes to have
    500 business partners by September 1998.
        Question. How will you judge the success of the program, barring
    any disasters that may occur during your analysis time period?
        Answer. The success of the Project Impact initiative will be
    demonstrated by the public and private partnership actions taken by the
    community that demonstrate lives and property are at less risk from the
    natural hazards that threaten them.
        FEMA is currently developing several methods in which to measure
    short- and long-term risk reduction in Project Impact communities. One
    effort underway is the development of a systematic methodology to
    document the processes and implementation of the actions that pilot
    communities have identified to lessen their future losses from natural
    disasters. The University of Delaware Disaster Research Center is
    working with FEMA to conduct an evaluation study. The study has four
    specific objectives: (1) to describe the processes through which pilot
    communities developed their plans and objectives under the Project
    Impact initiative; (2) to monitor and document the progress pilot
    communities are making toward achieving their stated goals; (3) to
    identify factors that encourage successful program development and
    implementation in the pilot communities; and (4) to make
    recommendations and point out factors that FEMA should take into
    account in implementing the program on a national scale.
        FEMA will also be looking at specific indicators within each
    Project Impact community that demonstrate mitigation is working and
    true risk reduction is occurring. These indicators include:
      --Comparison of how disasters impact Project Impact communities
            before and after the community implements Project Impact
            actions.
      --Comparison of how disasters impact Project Impact communities
            versus non-Project Impact communities.
      --Research on how people view mitigation in Project Impact
            communities before the activities are taken and in specified
            time increments after the activities have started.
      --Research on how people in non-Project Impact communities view
            mitigation.
      --Research on the behavioral changes in Project Impact communities
            and in non-Project Impact communities. For example, are people
            in a Project Impact community doing more, are they more aware
            of mitigation and what are they doing to reduce their own
            potential damages from disasters.
      --Indicators of the awareness level of hazard and risk among
            community officials and community residents.
      --Indicators that the Disaster Relief Fund expenditures have or will
            be reduced based on mitigation actions taken within Project
            Impact communities.
      --Community adoption of higher codes and standards for any hazard.
      --Development of a mitigation plan or incorporation of mitigation
            provisions into the community's comprehensive or land use
            plans.
        Question. Will you build off the 16 case studies cited in your
    smaller report issued last year?
        Answer. FEMA will soon be publishing a second report on the costs
    and benefits of natural hazard mitigation; however, the focus will be
    different from the first volume prepared last year. This second volume
    will highlight successful mitigation measures undertaken by the private
    sector. Each case study in this second volume will illustrate how
    hazard mitigation measures are cost effective and can help the private
    sector maximize the reliability of service and minimize the costs of
    repairs and lost revenues following disasters.
        A third report, currently in the planning stages, will focus on
    community pre-disaster mitigation ``success stories'' (i.e., effective
    pre-disaster mitigation measures accomplished by local governments). We
    have already started collecting case studies for this project, and hope
    to have this volume completed sometime next fiscal year.
                     fitness for duty/preparedness training
        Question. How will the cut in SLA affect local governments ability
    to be prepared against the serious threat of terrorism and the use of
    weapons of mass destruction?
        Answer. The reduction to State and Local Assistance should not
    impact FEMA's current level of support provided for State and local
    anti-terrorism training and exercising. The part of SLA that is
    specified for use in counter-terrorism projects ($1.2 million) remains
    budgeted for that purpose.
                           institutionalizing reform
        Question. What is the status of the task force on disaster cost
    savings?
        Answer. The task force was established to explore options on
    disaster cost savings and to produce a report to Congress. Its tasks
    were accomplished and the group was dissolved. Implementation of cost
    savings measures and development of legislative proposals were assigned
    to various organizations within FEMA.
        Question. Where are you with re-engineering the factors used to
    judge severity, magnitude, impact and procedures for conducting
    Preliminary Damage Assessment?
        Answer. FEMA has developed a series of 26 Essential Elements of
    Information (EEI's) that are used as factors in determining the
    severity and magnitude of impact of a disaster and the status of
    response operations. These EEI's are incorporated into appropriate
    operational documents and associated training activities. We are
    currently in the process of reviewing these EEI's in coordination with
    the other Federal Departments and Agencies that support us under the
    Federal Response Plan.
        In order to collect appropriate data, FEMA utilizes predictive
    modeling, remote sensing and aerial reconnaissance, rapid needs
    assessment teams, and/or Preliminary Damage Assessment (PDA) teams.
        The rapid needs assessment capability was developed to rapidly
    deploy (within 12 hours of activation) and conduct a rapid assessment
    of the situation to determine potential requirements for Federal
    resources in the event of a catastrophic or near-catastrophic event,
    such as Hurricane Andrew. The PDA teams are designed to be self-
    sufficient for up to 72 hours and are supported by our Mobile Emergency
    Response System (MERS) Detachments. Logistical support packages are
    maintained at Denton, TX, Bothell, WA, and Thomasville, GA. The teams
    are staffed with representatives from the U.S. Army Corps of Engineers,
    the Public Health Service, the American Red Cross and the Environmental
    Protection Agency. An Urban Search and Rescue representative designated
    by FEMA is also part of this capability.
        Question. What other disaster criteria have you established for the
    Agency with respect to what triggers your involvement, how much should
    FEMA pay for and once the emergency is over, what business are you in
    (i.e., rehab, restoration or reengineering)?
        Answer. The primary considerations in making a declaration are
    factors such as severity, magnitude, and the impact of the event.
    Governors must certify that an event is beyond the combined
    capabilities of the State and local governments. In evaluating the
    impact, FEMA considers many factors and considers each request on its
    individual merits. Some of the factors are listed below.
      --Amount and type of damage: number of homes destroyed or with major
            damage;
      --Impact on the infrastructure of affected areas or critical
            facilities;
      --Imminent threats to public health and safety;
      --Impacts to essential government services and functions;
      --Available resources of State and local governments;
      --Dispersion or concentration of damage;
      --Level of insurance coverage in place (for homeowners and public
            facilities);
      --Assistance available from other sources (Federal, State, local
            voluntary organizations;
      --State and local resource commitments from previous, undeclared
            events; and
      --Frequency of disaster events over recent time period.
        FEMA reimburses eligible applicants for eligible damage in
    accordance with 44 CFR Subparts G and H on a 75 percent Federal/25
    percent non-Federal cost share basis. The Stafford Act provides for the
    repair and restoration to pre-disaster condition of facilities damaged
    as a result of the declared incident.
        Question. Has the final rule on limiting the number of appeals from
    three to two been published?
        Answer. The publication of the final rule reducing the levels of
    appeal from three to two is imminent. The proposed rule was published
    on November 24, 1997, and comments were due by January 23, 1998. Since
    that date, FEMA has carefully considered the comments and prepared the
    final rule for publication. It now is being circulated for internal
    coordination prior to publication.
        Question. Did the rule include who would bear the financial burden
    of that appeal?
        Answer. The final rule does not contain the provision requiring
    grantees and subgrantees to separately track and account for all costs
    to prepare and process appeals. There was considerable disparity in the
    recommendations that commenters made regarding appeal costs. In the
    interests of instituting the new appeals procedure as soon as possible,
    FEMA removed the cost provisions from the final rule.
        Question. What additional streamlining have you done to the program
    since last year's hearings?
        Answer. The Northridge Grant Acceleration Program and the
    groundwork for the New Public Assistance Program have been the focus of
    streamlining efforts in the past year. In addition, FEMA has made
    significant progress in streamlining the Hazard Mitigation Grant
    Program in the past year by:
      --Introducing a Managing State Concept for discussion with our State
            partners. Under this policy concept, which we are currently
            pilot testing, States assume virtually full responsibility and
            authority for program implementation, reserving those actions
            required of FEMA by law.
      --Placing Environmental Officers in nine of the ten FEMA Regions,
            seven of which have authority to review all required
            documentation relating to the National Environmental Policy
            Act.
      --Making Hazard Mitigation Grant Program (HMGP) funds available
            state-wide for all new disasters declared after April 7, 1997.
            In addition, States were given the opportunity to amend older
            disasters to allow for a one-time retroactive application of
            state-wide funds. These actions allow States greater
            flexibility in the use of funds by targeting areas with the
            most significant need of mitigation measures.
      --Clarifying existing timelines under the HMGP, which includes a 24-
            month deadline for FEMA to obligate funds for all disaster
            declarations.
      --Allowing States additional flexibility in using unspent 50/50 cost-
            share funds for the purpose of hazard mitigation planning.
      --Publishing a notice in the Federal Register outlining our intent to
            decrease the number of allowable appeals under the HMGP and
            Public Assistance programs. Based on the public comments
            received on this rule, FEMA will reduce appeals from three
            levels to two levels.
      --Awarding State management costs under the 15 percent HMGP ceiling,
            thus reducing program expenditures. Previously, management
            costs were awarded outside of the HMGP ceiling.
        Question. What has been the effectiveness and cost-savings to the
    streamlining that occurred last year?
        Answer. The Northridge Grant Acceleration Program provides a model
    for an improved approach to construction cost estimating but is not
    considered part of the Business Process Re-engineering initiative (now
    known as the New Public Assistance Program). The projected
    administrative cost savings on the $116 million of Northridge final
    settlement cases were over $11.5 million dollars as of March 13, 1998.
    While an evaluation of construction costs savings cannot be completed
    until actual costs of rebuilding can be compared to the settlement
    figures, an early evaluation of customer satisfaction established the
    Grant Acceleration Program as a desirable alternative to the
    traditional Damage Survey Report process. The evaluation of the
    effectiveness and streamlining of the New Public Assistance Program
    await its implementation in fiscal year 1999.
        The primary savings to the HMGP process has been achieved through a
    reduction in the amount of time it takes to identify, review and
    approve projects. This time savings not only provides improved customer
    service to applicants for grant awards, but it also reduces
    administrative and staff-related expenses associated with carrying out
    the HMGP program.
        The impact of this time reduction has been dramatic. At this point
    in time, it takes an average of 1 month for FEMA to complete an
    environmental review compared to 6 months prior to delegating authority
    to the Regions. Similarly, allowing mitigation money to be used state-
    wide has permitted States to address their mitigation priorities prior
    to the occurrence of a disaster, thus shortening the amount of time
    needed for States to identify appropriate projects for funding when one
    occurs. These types of streamlining improvements have produced
    significant economies and cost savings for FEMA, the States, and
    applicants.
        Question. What are the projected cost-savings of any streamlining
    to be done?
        Answer. A recent internal Agency study pointed out that if we
    streamline our Public Assistance (PA) Program and achieve a mere 1
    percent improvement we will save at least $11 million annually. Use of
    quality trained staff will lead to faster recovery for applicants and
    communities. It is estimated that if we close Disaster Field Offices
    (DFO's) within 24 months of the declaration, we will be able to achieve
    from 10-50 percent savings in administrative costs or as much as $8
    million to $40 million a year.
        The lack of consistency in training and operations resulted in an
    excessive recovery period. Better-trained staff will minimize improper
    eligibility determinations, which have impacted administrative costs
    through an increase in Congressional and appeal activity. With
    knowledgeable staff that is working through a well-documented program,
    we will be able to provide improve customer service and reduce
    Congressional inquiries, appeals and negative media attention. Many
    issues that have been raised to Congressional or appeal level were
    caused by either a miscommunication between the applicant, the State
    and the PA staff or by misinterpretation of policy.
        The amount of funding made available under the HMGP is established
    through legislative language in the Stafford Act; therefore, the amount
    of funds expended for HMGP projects will remain the same. However,
    economies and efficiencies achieved through streamlining will permit
    more and better mitigation projects to be approved in less time. For
    instance, it is anticipated that the reduction in appeal levels will
    also reduce the amount of State, local, and FEMA time and associated
    costs incurred preparing and reviewing appeals. Additionally, measures
    being taken to provide States more flexibility in the use of mitigation
    funds give States (as the administrators of the HMGP) greater
    flexibility in the planning process of identifying areas with the
    greatest need for mitigation. This should improve the quality of
    applications, and further reduce both time and cost of administering
    the HMGP process.
        In addition, the inclusion of State management costs under the HMGP
    ceiling will promote the more efficient management of the program by
    the States and result in cost savings of up to 10 percent of disaster
    costs associated with State administration of the program.
                          national dam safety program
        Question. What tangible safety measures have been taken by these
    task forces or boards that would insure the safety of people who live
    near the 55 high hazard dams in Maryland, and high hazard dams in other
    states?
        Answer. The National Dam Safety Program, as authorized by Public
    Law 104-303 is a non-structural hazard mitigation program. Tangible dam
    safety measures are taken by Federal and State dam owners/regulators
    upon their acceptance and implementation of criteria for viable dam
    safety programs which reduce the risks to life and property from dam
    failure. These criteria are established in the Association of State Dam
    Safety Officials' (ASDSO) Model State Dam Safety Program (FEMA 123, Apr
    87). One tangible measure evidenced so far is an increase in the number
    of States eligible for Community Rating System (CRS) credit points
    under the National Flood Insurance Program which uses the criteria.
    States eligible for credit points in 1998 was 38, as opposed to 25 in
    1991. Maryland is included in both the 1991 and the 1998 CRS counts.
    The 1998 CRS list is the bench-mark from which future improvement will
    be measured. All States have the opportunity to meet the criteria by
    2002 and it is FEMA's goal to help them achieve it.
        Question. Have effective emergency warning plans been put in place
    for these and other high hazard dams?
        Answer. States are making progress toward meeting the requirement
    for Emergency Action Plans (EAP), including coordinated warning plans
    for all high and significant hazard potential dams. However more still
    needs to be done. A report from the 1992 National Inventory of Dams
    (NID) update indicated that 17 percent of these high hazard dams had
    EAP's. In response to the 1992 statistic FEMA developed an emergency
    action plan training program for all dam owners which is now being
    delivered by the Association of State Dam Safety Officials (ASDSO) in
    all States, except Alabama and Delaware (these States currently do not
    have viable and funded dam safety programs, and as such, receive no
    FEMA assistance). The 1996 NID report indicated 25 percent now have
    EAP's. The statistic regarding EAP's will surely improve with the next
    NID update report.
        Question. Why was the budget cut from $2.9 million to $1.5 million
    in the budget request, and what will be the impact of this cut?
        Answer. FEMA's 1999 budget request eliminates all 1998 one-time
    congressional add-ons. In the case of dam safety, this resulted in a
    decrease of $2.9 million, offset by an increase of $1.5 million in
    1999.
                    response to biological/chemical attacks
        Question. What is your assessment of how effective the interagency
    linkages are within the Senior Interagency Coordination Group?
        Answer. Since November 1996, FEMA has chaired the Senior
    Interagency Coordination Group (SICG). The SICG functions as an
    interagency forum to identify, discuss and resolve issues involving
    terrorism-related programs of the member agencies. Membership includes
    the Department of Defense, the Department of Energy, the Department of
    Health and Human Services, the Department of Justice, the Environmental
    Protection Agency, the Federal Bureau of Investigation, and FEMA, as
    well as the Department of Agriculture, the Department of
    Transportation, the General Services Administration, and the National
    Communications System. Terrorism-related activities such as the Nunn-
    Lugar-Domenici Domestic Preparedness Program, exercises and other
    training initiatives have been discussed at SICG meetings to ensure
    uniformity and consistency in the delivery of Federal training programs
    to State and local officials. FEMA will continue to work with the other
    departments and agencies to facilitate interagency coordination on
    these important programs and activities.
        Question. What is consequence management and what exactly does that
    entail with respect to biological terrorist incidents?
        Answer. Consequence management includes measures to protect public
    health and safety, restore essential government services, and provide
    emergency relief to governments, businesses, and individuals affected
    by the consequences of terrorism. In the case of a biological terrorist
    incident, consequence management would initially focus on measures to
    deal with health-related aspects of the situation. This would include
    the identification and tracking of victims suffering immediate or
    longer-term consequences from agent exposure, as well as managing the
    large numbers of potentially contaminated victims, including the
    disposition of human remains. A significant consideration for any
    response activity is to protect the responders. Consequence management
    also includes assistance to help the affected area recover from the
    effects of the incident.
        Question. What will FEMA accomplish with the $6.8 million it is
    spending on Terrorism-Related Initiatives in fiscal year 1998?
        Answer. In fiscal year 1998, FEMA received a total of $6.8 million
    for terrorism-related planning, coordination, training and other
    activities. It includes $1 million for Federal consequence management
    planning and coordination, as well as special events planning, enhanced
    interagency planning and continued implementation of the Rapid Response
    Information System (RRIS); $1.8 million to support State and local
    emergency training and exercises, including $1.2 million in grants;
    another $2 million in grants to the fire community for specialized
    training in Weapons of Mass Destruction (WMD) operations; and $2
    million for terrorism-specific upgrades of FEMA facilities, including
    security equipment and enhanced guard support.
        Question. What is your assessment of the current capabilities at a
    Federal, State and local level to respond to biological terrorist
    incidents?
        Answer. As the capability of the local government to deal with the
    immediate effects of an incident is essential to the success of any WMD
    response, enhancing or building and maintaining the local capability
    with trained and adequately equipped responders are key components of a
    viable national terrorism response capability. In 1996, the National
    Governors Association (NGA) surveyed 26 States (22 provided inputs),
    selected because they have large urban areas within their jurisdictions
    that could make them targets of a terrorist incident. A Capability
    Assessment for Readiness (CAR) survey conducted by FEMA involved a
    comprehensive self-assessment (involving over 1,000 characteristics or
    attributes) undertaken by 56 States, territories and insular areas
    regarding their preparedness and response capabilities across the
    spectrum of emergency management functions.
        The two surveys concluded that States have the basic capabilities
    in place to effectively respond to disasters, but may require more
    specialized capabilities for WMD response. A biological threat poses
    the most formidable challenge for most States. Most States indicated
    that they lack proper equipment to detect biological agents and/or lack
    protective equipment to provide properly equipped and trained medical
    response elements to such an incident.
        Findings from FEMA's assessment of government preparedness include
    the need for improved planning and coordination and better Federal
    interface with State and local authorities in planning for and
    developing a mutually supportive terrorism response capability. Also,
    the need was identified to prioritize the use of the transportation
    infrastructure to ensure rapid movement of critical, time-sensitive
    response resources. In responding to an incident, the need was
    identified to deal with a large number of victims impacted by a WMD
    terrorist incident, including the identification and tracking of
    victims suffering immediate or longer-term consequences from exposure
    to NBC materials, as well as the requirement to manage the large
    numbers of potentially contaminated victims and/or the disposition of
    human remains. A significant need also was identified to protect all
    responders and to ensure the availability of specialized equipment and
    coordinated training for WMD response.
        Question. What will be the follow-up at the local level after the
    Domestic Preparedness Program training is complete in the 120 cities
    selected?
        Answer. At least for the 120 cities addressed by the Domestic
    Preparedness Program, part of the rationale for taking a train-the-
    trainer approach was to leave each city with a cadre of instructors.
    FEMA recommends that follow-on training be institutionalized under the
    existing State and local training infrastructure, to include police
    academies, fire academies, and other training facilities, and that
    training eventually reaches beyond the initial 120 cities.
        FEMA's two training arms, the National Fire Academy (NFA) and the
    Emergency Management Institute (EMI), make courses and course materials
    available to States. NFA, in particular, has a number of delivery
    systems. NFA delivers up to nine courses (including its Emergency
    Response to Terrorism curriculum) in each of the 50 States. It has also
    offered train-the-trainers in its Emergency Response to Terrorism
    curriculum for the 50 States and 150 metropolitan area fire services
    that participate in the Training Resource and Date Exchange (TRADE)
    group.
        This is but one example of how the Federal Government can support
    the State and local training infrastructure. Other departments and
    agencies also have training programs for different constituencies. We
    understand there are a number of proposals under consideration within
    the Department of Defense on how to sustain the Domestic Preparedness
    Program training, and we will continue to work with the interagency
    community to develop that strategy.
        Question. What is your assessment of the unmet needs to prepare
    States and cities to respond to a biological attack?
        Answer. Biological agents pose a unique challenge to first
    responders, in that they may be more difficult to initially detect or
    characterize and to determine the extent of the spread of the agent.
    Many first responders lack proper equipment to detect biological agents
    and/or lack protective equipment to provide properly equipped and
    trained medical response elements to such an incident. In addition,
    there is a need for continuing, specialized first responder training
    regarding the use of the appropriate personal protective equipment for
    the various biological agents; management of victim and family
    assistance in a mass casualty event; medical management considerations,
    including the need to inform primary care facilities in and around an
    affected area rapidly to allow hospitals, clinics and other facilities
    to better prepare themselves to deal with large numbers of potentially
    contaminated victims; triage and decontamination procedures using
    available medical resources to include dealing with immediate and long-
    term treatment issues; and multi-agency and multi-jurisdictional
    training and exercising to clarify roles and responsibilities and
    improve interoperability of plans and procedures.
        Question. Will there be the necessary local funding for equipment
    and trained personnel to continue to keep the localities prepared?
        Answer. Some equipment in the form of training sets is being
    provided by the Department of Defense to selected cities as part of the
    Domestic Preparedness Program initiative. In fiscal year 1998, the
    Department of Justice also received some $12 million to provide
    equipment for first responders. The FBI, in conjunction with other
    agencies, is developing criteria for allocation of these funds for
    equipment purchases. The initial funding in fiscal year 1997 to support
    development of the Metropolitan Medical Strike Teams (MMST's) also
    provided some equipment for first responders; however, there have been
    no follow-on appropriations to allow MMST's to maintain their
    operational capabilities and other team overhead costs, such as
    maintenance of member certifications, medical screening for team
    members and other expenses associated with maintenance and logistics
    support for the response capability.
        Question. How are we capitalizing on the unique capabilities of
    other agencies such as the CDC and agency personnel in the Federal
    government response planning (community)?
        Answer. The Department of Health and Human Services (DHHS), through
    its MMST system concept, is encouraging the development of local
    concept of operations plans. The development of such plans is an
    integral requirement of the contract that was signed with the 25 major
    cities developing MMST's. An Interagency Coordination Group composed of
    FEMA, FBI, EPA, VA, DOD, DOE, and DHHS conducted multiple meetings in
    developing the requirements of these contracts. This Group will
    continue to review the pharmaceutical and equipment requirements in
    addition to the plan development. A major requirement of the plan is to
    address the integration of Federal resources with those of the local
    community, once Federal assistance arrives. These local plans will be
    integrated with the overall FBI CONPLAN for Federal terrorism response
    operations now under development.
        Although DHHS has considerable resources within, it would rely upon
    several other Federal agencies for key support assets in providing a
    Federal medical emergency response to a city. These would include the
    following:
      --DHHS would work closely with the FBI, acting as the lead Federal
            agency in a terrorist attack. This would occur both during the
            crisis and consequence management phases of the incident.
      --FEMA would coordinate the Federal consequence management response,
            with the Federal health and medical response led by DHHS under
            Emergency Support Function # 8 of the Federal Response Plan
            (FRP).
      --The Department of Defense (DOD) would be a central Federal agency
            in dealing with rapid response. DOD would provide specific
            technical assistance and deployment of personnel, as required.
            The Chemical Biological Defense Command (CBDCOM) would provide
            response in a chemical attack, and the U.S. Army Medical
            Research Institute for Infectious Diseases (USAMRIID) and the
            Naval Medical Research Institute (NAMRI) would do the same for
            a biological attack. If extraction and decontamination
            resources are required, the Marine Corps CBIRF can be employed,
            as can many other units located throughout the United States.
            In addition, DOD would support the National Disaster Medical
            System (NDMS) response component with patient evacuation and
            the transportation of DHHS responders, the definitive care
            component of NDMS, and augmentation of supplies of appropriate
            pharmaceuticals and antidotes.
      --The Department of Veterans Affairs (VA) would support DHHS in
            providing a major portion of the definitive care component of
            NDMS and the primary maintenance and provision of appropriate
            pharmaceuticals and antidotes for both chemical and biological
            attacks.
        Question. What is being done to insure that the public heath
    officials and facilities at the local and State (level) are trained and
    properly equipped to identify and respond (to) biological agents?
        Answer. An effective medical response to a Weapon of Mass
    Destruction (WMD) incident in the United States requires the
    appropriate preparation and development of capabilities of all levels
    of government and their effective coordination and integration in
    response to a threatened or actual release of a WMD agent.
        The first level of response is at the local level, particularly
    Emergency Medical Service (EMS) responders. The local plans and
    capabilities are critical, and enhancement efforts in partnership with
    the Federal government need to be continued. A multi-department effort,
    enhanced by Nunn-Lugar-Domenici initiatives, is improving the
    capabilities of first responders throughout the United States in
    dealing with a WMD incident resulting in mass casualties.
        The second level of response is at the State level. This can
    include assets of the National Guard with capabilities to deal with
    some WMD effects.
        The third level of response is at the Federal level. FEMA has the
    lead role for consequence management in the event of a WMD incident.
    Under the Federal Response Plan, Emergency Support Function (ESF) # 8
    has the responsibility for coordinating Federal medical resources to
    support local health systems in providing the initial and definitive
    care to victims of an attack. There are several initiatives directed at
    enhancing local capabilities using the National Disaster Medical System
    (NDMS). In 1997, four national medical response teams (NMRT's) were
    trained and equipped as a part of NDMS to be able to provide
    specialized services in the incident community, including
    decontamination, triage and initial care. Their capabilities can also
    include technical advice to local hospitals or decontamination and care
    external to local hospitals in the event those services are required.
        Other initiatives have been identified to deal with the care of
    victims after the initial response to include enhancing surveillance
    and laboratory systems at the Centers for Disease Control and
    Prevention and the Food and Drug Administration; improving interfaces
    with nationwide poison control centers; and enabling the Agency for
    Toxic Substances and Disease Registry to develop and maintain a
    registry of exposure and develop/maintain on-line data bases. Other
    activities are focusing on maintaining a stockpile of specialized
    antidotes, vaccines, and pharmaceuticals that are not usually produced
    or stockpiled in order to treat individuals exposed to chemical or
    biological WMD agents; and addressing overall logistical support
    requirements.
        Question. How involved is the CDC in working with local and State
    officials to provide training to public health officials in the
    identification of biological agents?
        Answer. Although there are no direct training courses provided to
    public health official in the identification of biological agents by
    Centers for Disease Control and Prevention (CDC), the Center is a
    participant in the Department of Health and Human Service's (DHHS)
    review and coordination of the biological and medical training aspects
    of the Nunn-Lugar-Domenici Domestic Preparedness Program. Additionally,
    the CDC is involved on a daily basis with public health officials
    throughout the country in response to their queries on matters such as
    these.
        Should a terrorist incident involving biological agents occur, the
    CDC would fulfill a key role within DHHS in providing extensive
    technical expertise and assistance to Federal, State and local
    officials as part of the Federal government's overall response efforts.
    In these circumstances the DHHS Office of Emergency Preparedness (OEP)
    has lead responsibility to coordinate health and medical related
    activities.
        Several other operating divisions within the OEP are available to
    provide medical support to local and State officials in the event of a
    terrorist incident involving WMD, including the Agency for Toxic
    Substances and Disease Registry (ATSDR), the Food and Drug
    Administration (FDA), the Health Resources and Services Administration
    (HRSA), the National Institutes of Health (NIH) and the Substance Abuse
    and Mental Health Services Administration (SAMHSA). These operating
    divisions can provide the technical assistance as required during the
    crisis and consequence management phases of a WMD incident.
        Question. What public and media relations efforts will be
    implemented in the event of an incident to mitigate widespread panic?
        Answer. An interagency public affairs group, led by FEMA and with
    representation from other key Federal response agencies has been
    meeting over the past several months to develop appropriate mechanisms
    to coordinate release of immediate emergency information to the public
    and the media during a terrorist incident involving Weapons of Mass
    Destruction (WMD). The collective efforts of this group will result in
    development of a guide for use by Federal public affairs officials that
    is intended to accomplish the following:
      --Provide for the timely, accurate, and coordinated release of
            emergency information to the public and the media that will
            focus on saving lives, protecting property, and mitigating any
            public panic or chaos during potential or real WMD terrorist
            incident.
      --Avoid compromising law enforcement efforts that are critical to the
            capture and prosecution of the perpetrators of any such WMD
            incident.
        Key elements of this Federal interagency guide for public and media
    relations' efforts in response to a domestic terrorism incident
    include:
      --Immediate and continuous involvement by public affairs officials
            from Federal crisis and consequence management agencies, in
            Washington DC, and at the scene of the incident. The focal
            point for cross-leveling and coordinating the release of
            emergency information among the agencies will initially be
            established within the operational command center of the lead
            Federal agency.
      --Delivery to the public and the media of real-time expert technical
            safety and handling information on the suspected WMD agents or
            weapons.
      --Delineation of procedures for the establishment of a Joint
            Information Center (JIC) at or near the incident site to
            support the lead Federal agency's activity on-scene.
        The Emergency Information Guide is expected to be completed in the
    near future.
                        allegany county/western maryland
        Question. What lessons were learned by FEMA in its work with the
    Western Maryland Flood Mitigation Task Force that could be used for
    other communities across the country?
        Answer. A significant factor in the selection of Allegany County,
    Maryland as a Project Impact Pilot Community is directly related to the
    success of the Maryland Governor's Flood Mitigation Task Force for
    Western Maryland in coordinating recovery and mitigation efforts of
    Federal, State and local governments as well as the private sector.
        In the aftermath of two 1996 Presidential disaster declarations
    (January flooding created by rapid snowmelt conditions and,
    subsequently, Hurricane Fran), applicants found the multitude of
    sources and types of available disaster assistance overwhelming and
    confusing. In response to their concerns, the Task Force was developed
    in order to provide a comprehensive forum in which all State agencies
    met collaboratively to:
      --Exchange views and identify areas of mutual responsibility and
            duties.
      --Optimize limited disaster recovery resources.
      --Decide on the best agency to handle each aspect of the disaster
            recovery effort.
        The successes of the Task Force efforts were evident in several
    respects: the disaster recovery process was significantly clarified and
    simplified for disaster victims; a timely and cost-effective response
    and recovery process was achieved; and mitigation efforts were
    incorporated in the disaster recovery process.
        Allegany County's selection as a Project Impact Pilot Community
    will assist the County in maintaining the momentum of the initial Task
    Force successes and initiatives. Through the development and successes
    of this public/private partnership Task Force, a primary lesson learned
    is that there needs to be an immediate coordination of all elements
    involved in the recovery process under a strong leader. The State of
    Maryland will be incorporating the concepts learned from this endeavor
    in any future response to large-scale disasters within the state.
        These Task Force concepts and methods can be applied to other
    communities across the country to effect a timely and cost-effective
    recovery effort. In fact, the President convened successful Federal
    recovery task forces following 1997 Presidential disaster declarations
    in North Dakota and Minnesota as well as the 1998 New England ice
    storms.
        Question. Can the process of public/private partnerships that has
    been used in the Allegany County Project Impact effort be used as a
    ``best practices'' model?
        Answer. We believe that any public/private partnership that is
    viable is the ``best practice'' for that community. One of the goals of
    Project Impact is to encourage and affirm positive behavior. As the
    initiative matures and more lessons are learned, we will be looking for
    positive behaviors to highlight not only in Allegany County but in
    other Project Impact communities as well.
        Question. What is FEMA planning to do to further aid the Allegany
    County efforts?
        Answer. We are fortunate in Allegany County that we can build on a
    process that was initiated by the Western Maryland Mitigation Task
    Force. We are working to facilitate the evolution of that process into
    a long-term, locally driven public/private partnership.
        One of the tenets of Project Impact is that mitigation is a local
    issue, and best addressed by a local partnership that involves
    government, business, and private citizens. Thus our involvement will
    be dictated by agreements and decisions made by that partnership. As a
    partner, we are offering technical assistance in a variety of areas
    such as hazard identification, risk assessment, and business
    contingency planning. We are coordinating with other Federal agencies
    active in the area. FEMA is also providing a grant for a mitigation
    project that can be showcased as a demonstration of long term
    mitigation activity. We view this partnership as an evolving
    relationship and anticipate that additional opportunities for our
    involvement will become apparent over time.
                                     ______

                      Questions Submitted by Senator Boxer

                                   mudslides
        Question. Landslides continue to be a real concern for California,
    can you give me your response to the President's proposed FEMA policy
    change toward landslides?
        Answer. There has been no policy change toward landslides; however,
    we have developed a simplified summary of the landslide policy that is
    being used in California. Because of the landslide and related problems
    that characterize the current disaster (FEMA-1203-DR-CA), FEMA and the
    California Office of Emergency Services (OES) are working together to
    provide the maximum amount of assistance and funding available by law.
    Pro-active actions being taken include:
      --The simplified (but not modified) summary of the FEMA landslide
            policy is being disseminated at applicant briefings. The
            present landslide policy has remained essentially unchanged
            since it was initially promulgated in 1984, but as with all
            policies, it is periodically reviewed to ensure it is clear and
            applicable. FEMA recognizes that, at times, the policy may have
            been subject to restrictive interpretation, and its intent and
            meaning may not have been clear to the applicants.
      --We have formed a Landslide Working Group of trained geo-technical
            specialists to provide timely assistance to FEMA/OES/applicant
            inspection teams in initial site stability determination. In
            cases of differing opinion between FEMA and the applicant, FEMA
            will provide funding for an independent analysis.
      --These geo-technical specialists also are available to assist in the
            determination of whether or not an immediate threat exists to
            health, safety or improved property, and provide information
            necessary to ensure immediate funding.
      --We are utilizing to the fullest extent the technical resources of
            the United States Geological Survey (USGS), which has the most
            knowledge of landslide phenomena in California.
      --We are using initial estimates to provide immediate funding for
            emergency work to assist those applicants who have suffered
            significant financial impacts.
        I can assure you that FEMA is providing landslide-related disaster
    assistance throughout California to the fullest extent possible by law.
    For example, FEMA recognized the need for and immediately approved
    funding for Sonoma County to engage the services of a geo-technical
    firm to monitor slide activity in Rio Nido for safety reasons.
    Immediately thereafter, FEMA mission assigned the USGS to install
    monitoring equipment and train contract geo-technical specialists to
    assist the County in the monitoring activities.
        Question. Is there a possibility that landslide insurance can be
    made available for individual homeowners under a national insurance
    program?
        Answer. The possibility relies in large part on the exploration of
    complex and difficult public policy questions. For example, the issue
    related to landslide insurance for homeowners, as with other natural
    hazard insurance, is not only the availability, but also the
    affordability of it. In a policy context, the affordability question
    becomes a question of subsidy--that is, in order to make available
    insurance that is also affordable, is the taxpayer willing to subsidize
    actuarially expected loss? This is especially true for existing homes.
    Spreading the pool of risk purchase might allow some subsidy, in the
    form of artificially increased insurance premium rates in areas of
    lower risk, but it is very difficult to accomplish the purchase of
    natural hazards risk in low hazard areas on a voluntary basis.
    Background Information on Landslide Policy
        The FEMA landslide policy was initially written in 1984, and was
    reviewed and reissued in 1995. The Stafford Act allows FEMA to provide
    funding for repair and restoration of facilities damaged by a declared
    disaster; however, it recognizes that FEMA cannot fund repair and
    restoration of a damaged facility on a site known to be unstable. If a
    site is stable, then FEMA provides funding in accordance with the
    Stafford Act and implementing regulations. If FEMA determines a site to
    be unstable, and the instability was caused solely by the disaster, the
    cost to repair or restore the facility, and the ground necessary to
    adequately support the facility (including cost-effective stabilization
    measures) is eligible for FEMA funding. Should the instability result
    from an identifiable, pre-existing condition, it is the responsibility
    of the applicant to stabilize the site. Once this has been
    accomplished, funding for repair of the facility is eligible. FEMA
    cannot be expected to provide Federal funding to repair facilities on
    sites that are known to be unstable; that is not an appropriate use of
    Federal funds. The goal of the Agency is that this policy, like all
    others, will be applied uniformly and consistently throughout the
    country.
        The Stafford Act limits FEMA funding of permanent repair to certain
    eligible facilities. Neither the Stafford Act nor implementing
    regulations define hillsides and natural slopes as public facilities.
    Thus the permanent repair of landslides, which is not integral to the
    restoration of an eligible facility, is not eligible for FEMA Public
    Assistance. This applies regardless of whether or not there is a pre-
    existing condition. In those situations where an immediate threat
    exists, FEMA will fund cost-effective protective measures, regardless
    of the existence of a pre-existing condition. However, it is necessary
    for FEMA to determine whether slope instability is pre-existing before
    restoring a facility, because FEMA's implementing regulations require
    an eligible item of work to be as a result of a major disaster event.
                                 project impact
        Question. Out of the $5 million, FEMA has supplied Oakland with a
    technical services and support grant of $679,000. The city itself has
    committed $169,750 and has passed a $50 million general obligation bond
    measure to purchase fire fighting equipment and an alert warning system
    for the public.
        Have you seen any impact during this year's storms from the Project
    Impact program in Oakland?
        Answer. Oakland's Project Impact initiative was formally started at
    the Memorandum of Agreement (MOA) Signing Ceremony on January 23, 1998.
    Since the Signing Ceremony, the City government, community groups, the
    private sector, and other partners have been working to implement the
    Project Impact MOA. For example, a meeting between local financial
    institutions and the Small Business Administration will convene in
    April to form a loan committee, which will offer mitigation loans and
    grants to homeowners and small businesses. Applications will be due in
    the spring and the first loans or grants will be awarded in the summer.
        In addition, two existing City programs offering loans and grants
    for home maintenance and security bar retrofits will be consolidated
    into the Project Impact program. The ``Christmas in April'' program
    will be repairing and retrofitting 10 homes against earthquakes, with
    the assistance of volunteers from all over the City. ``Spring Break''
    activities on April 6-10 and April 13-17 will have student volunteers
    conducting non-structural, multi-hazard evaluation and mitigation in 5
    housing projects, totaling approximately 385 residences. They will also
    provide preparedness information to residents and collect vital
    tracking information on the residents (mostly low income, elderly, and/
    disabled).
        The $50 million general obligation bond measure, approved by voters
    in 1992, was for capital improvements and equipment for enhanced
    emergency mitigation, preparedness, and response. The bond monies were
    used to: purchase fire fighting equipment and an alert and warning
    system for the public; retrofit fire stations; provide handicap
    accessibility for the City's temporary shelter sites; construct a new
    dedicated emergency operations center and Police and Fire
    communications centers; and develop a computerized emergency management
    system.
        Several of these improvements were used in fighting the storms
    caused by El Nino, including the following:
      --A radio system (530 AM dial) has been used to give warnings on
            advancing storms and where and how to obtain sandbags;
      --Radios given to amateur radio groups were extra ``eyes and ears,''
            reporting on downed power lines, fallen trees blocking roads,
            and landslides;
      --A radio system (800 MHz) for the schools was used for communication
            during emergencies;
      --A ``Maintain the Drains'' program cleared out storm drains so that
            flooded waters could flow freely and not be blocked, causing
            more flooding;
      --Pumps bought for the Fire Service were used to pump water out of
            flooded homes; and
      --A partially installed computer system, with GIS mapping capability,
            was used to pinpoint incident sites including landslides,
            debris clearance sites, etc., which were used by Federal,
            state, and local personnel on damage survey reports.
        Through Project Impact and because of its emphasis on
    ``partnership,'' Oakland's private sector and community groups are
    reaching a new level of participation beyond what has been accomplished
    with the initiatives funded by the $50 million bond or our grant.
    According to the Director of Emergency Services for the City of
    Oakland, the activities and potentials generated by Project Impact have
    been a significant factor in several businesses deciding to stay in the
    community. We expect to be able to document additional risk reduction
    success stories in Oakland as the Project Impact initiative matures.
                                 sea wall issue
        Question. Is there a change in FEMA policy towards the construction
    of the sea walls?
        Answer. There apparently is some confusion about the project for
    which FEMA is providing assistance in the City of Pacifica. Along the
    shore in front of the City, there was an existing publicly owned rip-
    rap revetment constructed for the purpose of protecting property by
    dissipating the energy of the sea waves. El Nino storms caused very
    high and strong wave action that destroyed portions of that revetment.
    The strong wave actions then began eroding sand and lower rock layers
    of the cliffs upon which a portion of the City is constructed. This led
    to the collapse of the upper portion of the cliffs, resulting in
    extensive damage to private property. FEMA deployed two geo-technical
    specialists to the area, and their report indicated there was a high
    probability of continuing erosion, therefore, endangering additional
    private property, as well as public infrastructure. In accordance with
    the provisions of the Stafford Act, FEMA provided funding for emergency
    repairs to the previously existing revetment. FEMA is not constructing
    a sea wall, but rather providing emergency protective measures to
    reduce an immediate threat. There is no change in our policy toward the
    construction of sea walls. Although this revetment is not actually a
    ``sea wall,'' sea walls would be eligible for repair just as is any
    other item of public infrastructure which was damaged as a result of a
    declared major disaster.
                 CORPORATION FOR NATIONAL AND COMMUNITY SERVICE

    STATEMENT OF HON. HARRIS WOFFORD, CHIEF EXECUTIVE
                OFFICER

                        statement of christopher s. bond

        Senator Bond. The committee will come to order.
        Senator Mikulski has other commitments which make her
    unable to join us for this segment. But she will have questions
    for the record as will our other colleagues.
        I now welcome our former colleague, Senator Harris Wofford,
    the Chief Executive Officer of the Corporation for National and
    Community Service and those accompanying him this morning.
        Senator Wofford will be testifying on the President's
    fiscal year 1999 budget request of $499.8 million--we might as
    well go ahead and call it $500 million--for the Corporation for
    National and Community Service, an increase of $74 million over
    the fiscal year 1998 level of $425.5 million.
        I particularly am interested in understanding the current
    status of the Corporation's financial management of its
    programs as well as understanding the current status of the
    corporation's programs, and the new initiatives, such as
    America Reads.
        With that, we are fortunate to have our light system in
    place. It has returned, finally, from recess.
        With that, Senator Wofford, if you would, please proceed.

                          statement of harris wofford

        Mr. Wofford. Thank you, Mr. Chairman. I think I can finish
    before the 5 minute light.
        Senator Bond. All right. If you will submit your statement,
    we will take your full testimony for the record. Of course, it
    will be made available to all committee members.
        We welcome your comments.
        Mr. Wofford. Thank you.
        My written statement goes into detail about our progress on
    many fronts, including the growth and accomplishments of
    national service, our work in disaster response, the success of
    our education awards only initiative, our plans to increase our
    contribution to children's literacy, known as America Reads,
    and our collaboration with Habitat for Humanity and other
    leading nonprofit and faith-based organizations, as well as our
    successful efforts to cut costs and carry out the important
    agreement with Senator Grassley.
        Thanks to your support, national service has never been
    more effective in helping to solve problems in America's
    communities.
        However, my oral testimony today will focus on our
    management and auditability, a primary concern for this
    committee, for the Corporation, and for me.
        The immediate challenge is to produce auditable financial
    records. Our objective is an unqualified opinion on our fiscal
    year 1998 financial statements. We are determined to reach that
    objective.
        We have corrected a great majority of the specific problems
    identified by prior auditors. We have also made many other
    improvements to strengthen overall management of the
    Corporation. But we still have work to do.

                  plan to produce auditable financial records

        To complete the job, we have enlisted the active assistance
    of the top management team at the Office of Management and
    Budget. Together, we have drafted a plan and a timetable. Our
    action plan covers five broad areas.
        First, improving record keeping of the National Service
    Trust is crucial. We have already consolidated the staff and
    centralized the functions of the trust within the Office of the
    Chief Financial Officer. Now the most important step is to
    install a new digital imaging system, to enter new enrollments
    and to clear up discrepancies related to old records. This
    system will be online this fiscal year.
        Second, in cash reconciliation, we have made major changes
    to assure the accuracy of our financial records. We have made
    software improvements and established an automated link between
    our financial system and the external systems that handle the
    obligations and expenses of grantees.
        By August of this year, we will be reconciling cash to each
    of our two appropriations on a timely, monthly basis and
    clearing identified items in a timely manner.
        Third, in the critical area of grants management, we have
    significantly improved the way we track and monitor grant
    funds. We have increased controls over grant obligations and
    implemented new procedures for accrual of expenses.
        By April, we will have in place procedures to review
    grantees' records of AmeriCorps members' service hours. We will
    incorporate these procedures into the next cycle of program
    visits beginning later this spring. We are also establishing
    new practices to strengthen our record keeping regarding grant
    receivables and payables, which will allow us to better track
    funds owed the Corporation following audits.
        Fourth, in the area of budget and funds control, we have
    instituted a procedure to protect against overobligation of
    grant funds. No grant is issued until it is physically entered
    into the general ledger by the accounting staff. We are working
    under the limitations of our current information management
    system. We will permanently solve this problem when we install
    a new financial management system in fiscal year 1999.
        Fifth, as other financial controls, we are issuing new
    policies with respect to a range of functions, including
    procurement, payroll, and enhanced oversight of budget
    commitments.
        Mr. Chairman, we are going over this plan of action that we
    have developed with the help of our OMB colleagues. We are
    going over it very carefully with OMB, which will be an active
    partner with us in its implementation, and we will be doing so
    with our inspector general.
        We will submit a detailed and realistic plan to you by
    March 18 and will report to you on our progress on every part
    of that plan every 60 days thereafter.

                           requests of the committee

        To carry out this plan in a timely manner, we also need
    your help. We need full funding of our request for
    administrative funds. Once you have had the opportunity to
    review the plan, we would like to work with you to obtain
    reprogramming flexibility to address critical needs of the
    Corporation, especially the management issues I have discussed
    today.
        Solving these management problems is essential to the
    effectiveness of our programs, whether building Habitat homes,
    tutoring children to read, running afterschool programs, or
    assisting victims of disasters. AmeriCorps members and the
    people they serve depend on our success in achieving and
    maintaining sound management of the Corporation.
        With our continued focus and your continued support, I am
    confident we will reach the level of excellence that we all
    seek.
        Thank you, Mr. Chairman.
        [Statement follows:]

                      Prepared Statement of Harris Wofford

        Mr. Chairman and members of the Subcommittee, I appreciate the
    opportunity to appear before you to review the achievements of national
    service over the last year, and to respond to your questions about our
    programs and proposed budget.
        The total fiscal year 1999 budget request from the Subcommittee for
    programs authorized under the National and Community Service Trust Act
    is $499.3 million, an increase of $73.8 million over the fiscal year
    1998 appropriated level of $425.5 million. The amount requested will
    support traditional national service programs as well as those that are
    part of the America Reads initiative to insure that every child can
    read well and independently by the third grade.
        These funds will provide for approximately 48,000 AmeriCorps
    members through grant programs and the AmeriCorps Challenge
    Scholarships--our education award only program--as well as
    approximately 1,100 AmeriCorps members through the National Civilian
    Community Corps (NCCC) program. Participants in the AmeriCorps*VISTA
    program, funded through the Subcommittee on Labor, HHS, Education, and
    Related Agencies, will bring the total to approximately 56,000
    AmeriCorps members.
        In addition, we are seeking an appropriation of $3 million from
    this Subcommittee for the Office of the Inspector General (OIG).
                                    overview
        My written statement for the record today covers three sets of
    issues.
        The first section, Auditability--our number one priority--addresses
    what we have done to work towards achieving auditability of our
    financial statements and our plan of action for improving management
    controls.
        The second section, A Review of National Service 1997-1998,
    discusses the new service initiatives: America Reads; the AmeriCorps
    ``Education Award Only'' program; the National Service Scholarship
    Program (for High Schools); The Houses that Congress Built plan; The
    Martin Luther King Day of Service; and the State and Local Follow-up to
    the Presidents' Summit for America's Future. It also includes updates
    on the major national service programs, including AmeriCorps and Learn
    and Serve America, and AmeriCorps Program Demographics.
        The third section discusses the Corporation's compliance with the
    Government Performance and Results Act and the proposed Reauthorization
    of the National Service Programs. Finally, it discusses four further
    challenges on which the Corporation requests the Subcommittee's
    assistance: Full Funding of Program Administration; the Flexibility to
    Transfer Funds Between Activities; the Support for the Fifth
    AmeriCorps*NCCC campus; and the Need to Lift the Cap on AmeriCorps
    National Direct Grants.
                                i. auditability
        Last year, I indicated that we expected to have 97 of the 99 items
    cited in the Corporation's 1996 auditability study completed and
    appropriately addressed by the time the Inspector General conducted her
    review during the spring and early summer of 1997. That auditability
    review showed that the Corporation had fully addressed 72 items.
    However, we fell short of the goal I stated in last year's hearings.
    The auditability review found 21 material weaknesses and reportable
    conditions that had not been fully cleared. Since that report, we have
    successfully addressed 10 of these 21, have made significant and
    sustained progress on seven others, and have begun to address the
    remaining four. In the review, both the Office of the Inspector General
    and Arthur Andersen stated that the Corporation had demonstrated a
    commitment to correct the deficiencies and weaknesses.
        Our efforts on these auditability issues and our activities to
    establish strong financial management focus on five areas: (1) the
    maintenance of the growing number of paper records related to
    enrollments in the National Service Trust; (2) the timely
    reconciliation of cash; (3) improvement of controls over grants
    management; (4) improvement of budget and funds control; and (5)
    improvement of general financial control. We have had much success in
    each area. With important assistance from the Office of Management and
    Budget (OMB), we have developed a specific action plan with a timeline
    to remedy the remaining weaknesses identified in the July, 1997 review
    and to provide the basis for obtaining an unqualified opinion on the
    Corporation's Financial Statements for fiscal year 1998. We will be
    reviewing it with OMB and the Inspector General over the next week and
    expect to submit it to the Subcommittee by March 18, 1998.
        The first area is the maintenance of the growing number of paper
    records related to enrollments in the National Service Trust. We will
    use digital imaging technology, which we expect to have in place in the
    current fiscal year, to enter new enrollments and aid in the resolution
    of any historical problems related to older records. This use of
    imaging technology will ensure the accuracy of AmeriCorps members'
    records for the future and facilitate the prompt correction of past
    errors.
        The second area of major effort is the timely reconciliation of
    cash. In our plan, remaining auditability items related to cash
    reconciliation will be successfully addressed by the end of August of
    this year. Interagency charges represent a special challenge. The
    timely posting of interagency charges is being addressed by OMB as part
    of a government-wide solution to the problem of an antiquated system
    for such charges. We will be among the first agencies to take advantage
    of new capabilities when OMB and the Department of the Treasury bring
    on-line the new capacity to identify sub-elements of interagency
    transfers.
        In the third area, grants management, we are improving the accuracy
    of Trust records by enhancing our oversight program. By April, we will
    have procedures in place to assess grantee record keeping systems for
    AmeriCorps members' service hours and we will incorporate these
    procedures into the next cycle of program site visits. In addition, we
    are establishing practices to strengthen our record-keeping regarding
    grant receivables and payables, such as better recording and tracking
    of funds owed the Corporation following audits.
        With regard to the fourth area, budget and funds control, we will
    purchase and implement a new financial management system that will
    provide the capability to record commitments and obligations, thereby
    substantially increasing the effectiveness of controls. Meanwhile, we
    have adopted new procedures that protect against the over-obligation of
    grant funds.
        Improvement of other financial controls is the fifth element in our
    plan. This includes, among other things, strengthening procedures for
    ensuring the accuracy of VISTA stipend payments and improving financial
    reporting.
        While we continue to address these items, we have also made other
    important changes. Enhancements to our accounting and Trust systems
    have improved system security and data. We have issued policies and
    procedures for various financial management activities. New job
    descriptions have been written. Job duties have been segregated across
    our major financial functions. The staff supporting the operational
    activities of the National Service Trust have been consolidated into a
    single organization to improve management control.
                   ii. a review of national service 1997-1998
                            new service initiatives
    America Reads
        For fiscal year 1998, this Subcommittee appropriated $25 million to
    the Corporation to conduct activities designed to ensure that every
    school child can read well and independently by the end of third grade.
    These activities come under the ``America Reads'' program and are
    funded within the AmeriCorps*State program.
        These funds go through the Governor-appointed State Commissions on
    National and Community Service for allocation to local school-based or
    community-based literacy programs utilizing AmeriCorps members. We
    decided to give States the flexibility of two application dates
    recognizing that they are at different stages in developing these
    ``America Reads'' initiatives. We have received the first fourteen
    proposals for this new funding, and will receive additional proposals
    in May. Between AmeriCorps*State and AmeriCorps*VISTA, we anticipate
    funding over 3,000 new AmeriCorps members who will begin their work
    this summer and fall as organizers, leaders and participants in these
    local literacy programs.
        Among the priorities for this new funding are proposals that expand
    successful demonstration programs that involve national service in
    improving children's literacy, respond to commitments by key state
    officials such as the Governor and Chief State School Officer, and use
    AmeriCorps members to mobilize volunteer reading tutors and partners.
        Even as we distribute this new money, national service is already
    at work in children's literacy. There are 83 programs funded through
    this Committee that utilize AmeriCorps members to improve child and
    family literacy. Elementary and secondary schools, as well as colleges
    and universities, are heavily involved with assistance from our Learn
    and Serve America programs. Further, 915 colleges and universities have
    pledged to use a portion of their Federal Work-Study funds to enable
    college students to tutor children and work in family literacy
    programs. Today, tens of thousands of college students are working in
    schools, nonprofit organizations, and child care centers across the
    country to make America Reads a reality.
        Let me highlight a few of these national service programs. In
    California, the Chancellor's Office for the California Community
    Colleges and fifteen local community colleges developed a program
    entitled ``Building Individual and Community Self-Sufficiency Through
    Service,'' in which over 600 AmeriCorps*State members, with 16
    AmeriCorps*VISTA's, are providing services to about 5,000 pre-school
    and K-3 children with special reading needs, including those of limited
    English proficiency. Many of the AmeriCorps*State members are former
    AFDC recipients, and they are enrolled in college courses studying
    early childhood education and literacy.
        In Maryland, the Notre Dame Mission Volunteer Program, founded by
    the Sisters of Notre Dame, is using AmeriCorps members to tutor low-
    income children, operate after-school programs, and teach English as a
    Second Language to immigrant parents.
        In West Virginia, the Southern West Virginia Community and
    Technical College uses AmeriCorps members to tutor children, ages 3 to
    8 in schools and Head Start centers, tutor parents in their homes to
    prepare them to take the high school equivalency exam, and teach
    parents how to conduct reading activities with their children. Programs
    operate through the school year and in the summer.
        The Houston READ Commission, a nonprofit created in 1988 by the
    City of Houston, administers the Literacy AmeriCorps program in which
    members focus on increasing children's literacy skills. They provide
    English as a Second Language courses, basic skills, pre-GED and GED
    classes, homework assistance to school-age children, and family and
    parent literacy programs. From 1996 to 1997, 67 Houston Literacy
    AmeriCorps members provided individual reading and school-readiness
    instruction to 560 pre-school and school-aged children and engaged
    1,300 families in the Read Write NOW project through which participants
    devote time to read with their children on a regular basis. As part of
    the America Reads Initiative, the Literacy AmeriCorps members in
    Houston also served as tutors for 1,650 adults, helping learners to
    improve their basic skills thus increasing their ability to help their
    children. Since September 1997, the AmeriCorps members in Houston, as
    well as in the program's sister sites of Seattle and Palm Beach County
    (Florida), galvanized over 450 volunteers, including parents, as
    America Reads learning partners who provided direct literacy services
    to children.
        In a soon-to-be-published book entitled ``Social Programs That
    Work,'' Professor George Farkas of the University of Texas describes
    Reading One-to-One, a program that has used college students,
    AmeriCorps members, and community residents to tutor more than 6,000
    students in more than 70 schools across more than ten school districts.
    Professor Farkas' study showed gains for this program of 0.4 to 0.7
    grade equivalents above what students would have attained without
    tutoring, a significant improvement that will help assure that these
    children become literate. Educational experts report that these are
    truly significant accomplishments for those students who would
    otherwise be lost in the system.
        By this diverse experience in assisting teachers, parents, and
    communities in their efforts to achieve literacy among our nation's
    children, national service is well equipped for the challenge of
    America Reads. National service supports the infrastructure necessary
    to provide literacy programs, including: coordinating and managing
    volunteer tutoring programs, tutoring in after-school, summer, Head
    Start and child care programs, assuring that tutors are trained by
    professional providers, managing parental involvement and family
    literacy programs, supporting book drives and other programs that are
    intended to make sure children develop a passion for reading, and
    helping to leverage community resources to support literacy.
    AmeriCorps ``Education Award Only'' Program
        The AmeriCorps ``Education Award Only'' approach expands
    opportunities for young people to serve as AmeriCorps members, brings
    new communities and new program sponsors as our partners, and further
    increases the amount of non-federal resources supporting service
    programs. In this initiative, organizations apply to State Commissions
    or to the Corporation and demonstrate their capacity to recruit, train
    and supervise individuals serving in community-based programs and
    provide the support for these AmeriCorps members with little additional
    Corporation assistance. The members who successfully serve in such
    programs are eligible for an AmeriCorps education award. Senator
    Grassley has strongly urged this approach. At last April's Presidents'
    Summit on America's Future in Philadelphia, President Clinton
    challenged faith-based organizations, nonprofits, and colleges and
    universities to support this initiative.
        We have already approved more than 100 new ``Education Award Only''
    projects, including 60 which have not previously been part of
    AmeriCorps. Once they are fully operational, these programs will
    support more than 15,000 new AmeriCorps members. Sponsors include the
    Boys and Girls Clubs of America, which are placing 900 AmeriCorps
    members in as many as 125 Clubs to serve younger Club members; the
    National Council of Churches with the Council for Religious Volunteer
    Agencies, which are placing several thousand members to meet community
    needs through a wide range of national and local faith-based
    organizations; the National Council for Urban Economic Development,
    which has placed 50 members in several cities to develop crime and
    violence prevention activities, provide assistance for victims of crime
    and their families, and assist law enforcement with community policing
    programs; and LA Vets, which is placing approximately 200 members in up
    to 30 communities across the country to assist homeless veterans return
    to independent living.
        We will accept proposals this year as well. As a result, we
    anticipate further reducing the cost-per-AmeriCorps member to the
    Corporation, and expanding the opportunities for traditional nonprofit
    organizations to join forces with AmeriCorps.
    The National Service Scholarship Program (for High Schools)
        Last year, I testified about our plans for the National Service
    Scholarship Program, which recognizes outstanding service by our
    nation's high school juniors and seniors. In this program, students
    doing outstanding service are selected to receive a scholarship of
    $1,000 for college costs, of which $500 comes from the National Service
    Trust and at least $500 comes from local scholarship sponsors. For
    fiscal year 1998, the Corporation was specifically allocated $5 million
    of the Trust appropriation for National Service Scholarships, enabling
    up to 10,000 high schools to make these awards.
        The start-up year of the program was a remarkable success, with
    more than 1,700 high schools providing these scholarships to students
    recognized by their principals and communities. Matching scholarships
    were provided by a host of community foundations, local businesses, and
    religious and civic organizations, including the American Legion,
    Chambers of Commerce, Elks Lodges, the Junior League, Kiwanis Clubs,
    Lions Clubs, the Miss America Organization, Rotary Clubs, the Seventh
    Day Adventists, the Daughters of the American Revolution, and Veterans
    of Foreign Wars.
        One of these 1,700 scholarship winners was Christopher Shields,
    from Saint Stephen's Episcopal School in Bradenton, Florida. He has
    volunteered for ten years at the American Red Cross Manatee County
    Chapter, where he has served in four national disasters, running
    messages, managing phone operations, distributing food to shelters, and
    assisting with night shift duties. During tornadoes in the Tampa area,
    he conducted damage assessment. Christopher also helped coach a
    community soccer team and volunteered at the local Head Start program,
    teaching arts and crafts to children. Christopher's scholarship is
    helping him to attend the Ringling School of Art and Design in
    Sarasota, Florida.
        We are working to expand our partnerships to help encourage the
    additional matching resources required to expand the program. In
    Houston, for example, local financial institutions have agreed to
    provide matching scholarships for all high schools in the area.
        Our fiscal year 1999 budget proposal includes $7,500,000 for the
    National Service Scholarship Program to support scholarships in 15,000
    schools.
        Under an agreement with the Corporation, the National Service
    Scholarship Program is administered by the Citizens' Scholarship
    Foundation of America, a private 501(c)(3) foundation located in
    Minnesota. The Foundation has a long history of working with corporate
    America to encourage and reward community service by youth.
    The Houses that Congress Built
        Habitat for Humanity has enlisted our national service programs as
    key partners in this effort to build a home with and for a
    disadvantaged family in each Congressional District. Currently, 413
    AmeriCorps members are serving with Habitat affiliates in 128 cities
    (161 Congressional Districts) in 30 States, the District of Columbia,
    and Puerto Rico. In addition to direct construction work, these
    AmeriCorps members prepare sites for home-building and help recruit,
    train, and supervise non-stipended volunteers, to maximize Habitat's
    resources and expand its productivity.
        These AmeriCorps members serving with Habitat are supported through
    all of the traditional AmeriCorps funding streams, including an
    AmeriCorps*National grant made directly to Habitat, four
    AmeriCorps*State grants, and AmeriCorps*VISTA placements. In addition,
    90 participants in the AmeriCorps*NCCC program have served with local
    Habitat affiliates so far this year, joining the 220 who did so in the
    first three years of the program. Twelve AmeriCorps*NCCC members are
    now serving a six-week tour with Habitat in Lynchburg, Virginia,
    organizing spring break work for hundreds of college volunteers in a
    Habitat blitzbuild. The NCCC plans to be in at least five other
    communities in coming months.
        The national service network is proud to be Habitat's partner in
    this Congressional initiative and in Habitat's year-round mission of
    bringing affordable housing to all Americans.
    The Martin Luther King Day of Service
        Pursuant to the 1994 Act of Congress, the Corporation works in
    partnership with the Martin Luther King Center for Non-Violent Social
    Change to make the national holiday in honor of Martin Luther King, Jr.
    a ``Day On, Not a Day Off'' in which Americans, across the lines that
    divide us, join in service to their communities. In this, the third
    year of promoting this observance of Dr. King's birthday in a way that
    reflects his life and teachings, we had a breakthrough in focusing
    national attention on this day as a day of service. Our other national
    partners included the United Way of America, the Points of Light
    Foundation and Do Something--a youth service organization. With
    national media attention in almost every major media market and almost
    300 local projects reported in 48 states, the District of Columbia,
    Puerto Rico and the Virgin Islands, we gained significant momentum
    toward our goal and legislative responsibility to promote service in
    honor of Dr. King.
    Follow-up to the Presidents' Summit For America's Future
        The Presidents' Summit For America's Future held last April in
    Philadelphia was an opportunity for the public sector to join with the
    private sector and the nonprofit sector to focus attention on the need
    for a new level of concerted citizen action to turn the tide for
    millions of young people. The goal of the Summit and of America's
    Promise, the post-Summit campaign led by General Colin Powell, is to
    mobilize millions of citizens and thousands of organizations--including
    government, corporations, foundations, faith-based and community
    service organizations--to help children who lack the conditions for
    success in life.
        At the Summit, the Presidents signed a declaration setting five
    goals--five fundamental resources for a young person's success:
      --an ongoing relationship with a caring adult--as a mentor, tutor or
            coach;
      --safe places with structured activities to learn and grow during
            non-school hours;
      --a healthy start and a healthy future;
      --an effective education providing a marketable skill, including the
            ability to read well; and
      --an opportunity to serve, not just be served.
        National service is already playing an active role in achieving
    each of these goals. The fifth goal--service by young people--is at the
    heart of our mission. Goal Five seeks a large-scale expansion of youth
    service and service-learning opportunities. The Corporation is helping
    to shape and promote Goal Five in collaboration with a growing alliance
    of organizations committed to that effort, including the nation's great
    civic and youth service organizations such as the Y.M.C.A, Boys and
    Girls Clubs, the Lions Clubs, and Big Brothers Big Sisters of America;
    philanthropic organizations such as the W.K. Kellogg Foundation and the
    James Irvine Foundation; corporations with an interest in youth such as
    Viacom's MTV Networks; and faith-based organizations such as the
    Council of Religious Volunteer Agencies.
        Since April, scores of States and communities have held their own
    follow-up summits to gather local partners and secure local commitments
    to pursue the summit goals. The national service network is actively
    assisting America's Promise in planning and carrying out these follow-
    up summits along with our original Summit partners--the Points of Light
    Foundation's Volunteer Centers and the United Way of America. State
    Commissions, Corporation State Offices, national service sponsors, and
    national service participants have worked with Governors, Mayors,
    corporate leaders, and nonprofit organizations to develop their own
    plans of action.
        Consistent with the activities of the Summit, on January 1, 1998,
    President Clinton and former President Bush reintroduced the Daily
    Points of Light. Initially awarded during the Bush Administration, the
    Daily Points of Light are designed to honor volunteers and volunteer
    organizations that demonstrate unique and innovative approaches to
    community volunteering and citizen action, with a strong emphasis on
    service focused on the goals for children and young people set by the
    Presidents' Summit for America's Future. The Daily Points of Light
    program is co-sponsored by the Points of Light Foundation, the
    Corporation for National Service, and the Knights of Columbus. The
    Knights of Columbus Supreme Council provides full funding for the
    awards.
                   updates on major national service programs
    AmeriCorps
        AmeriCorps members continue to ``get things done'' (the mantra of
    national service) in hundreds of communities--large and small--in every
    state. It is interesting to note that more than 1 in 10 are serving
    their communities in programs sponsored by faith-based organizations.
        The following data have been reported by just over half the
    programs. In the last year, AmeriCorps members have:
      --Recruited about 66,000 volunteers for tutoring or other educational
            purposes.
      --Tutored almost 97,000 students and mentored or counseled another
            100,000.
      --Conducted 50,000 home visits related to follow-up on educational
            activities such as tutoring and counseling.
      --Worked on parenting skills with over 24,000 parents or families.
      --Responded to almost 9,000 emergencies (fires, floods, tornadoes,
            search and rescue).
      --Rehabilitated, renovated, restored or built nearly 100,000 units of
            housing and community buildings.
      --Planted tens of millions of trees.
      --Cleaned or restored thousands of miles of river banks and beaches.
      --Assisted 15,000 pregnant women to receive prenatal care.
      --Immunized over 20,000 children and adults.
      --Conducted over 4,000 community safety patrols.
        The American National Red Cross operates an AmeriCorps National
    Rapid Response Corps in Los Angeles and five other cities. AmeriCorps
    members provide emergency assistance to victims and communities,
    emergency food, shelter and clothing to disaster victims, and increase
    preparedness among children and youth in underserved areas. The Rapid
    Response Corps currently has teams from every project site deployed to
    assist in disaster relief. Recently, 40 members have assisted the Red
    Cross with the Coastal California floods, the Northern California
    disaster relief effort, and in Florida after a tornado touched down.
        In addition to the Rapid Response Corps, AmeriCorps members serving
    in local programs often are asked to help lead recovery efforts when a
    disaster strikes the community. For instance, AmeriCorps members
    serving with the Colorado Youth Conservation and Service Corps
    responded to the Spring Creek Flood which struck Fort Collins, Colorado
    on July 28, 1997. The flash flood took the lives of five residents and
    caused extraordinary damage to the community. The AmeriCorps members
    helped secure the flood corridor, clear debris from the area, sandbag
    homes that were still taking in water from flood runoff, and operate
    the local disaster relief center.
        The Blue Hills AmeriCorps program engages 21 AmeriCorps members in
    a partnership with the Kansas City, Missouri Police Department to help
    close drug houses, reduce crime by reporting drug activity, establish
    safety corridors, and train youth and adults in conflict resolution.
    This year, Blue Hills AmeriCorps members recruited and trained 504
    volunteers to serve as guards at 62 school bus stops. Over the last
    three years, Blue Hills AmeriCorps has closed down more than 50 drug
    houses, some of which have been taken over by the city and are being
    rehabilitated as affordable single-family housing for low income
    families. The 28 AmeriCorps members sponsored by the American Youth
    Foundation's St. Louis Partners for Service Education tutor and assist
    teachers in developing projects related to literacy, the environment,
    first aid, and substance abuse prevention. The AmeriCorps members have
    recruited more than 340 parents and community volunteers to assist in
    classrooms and other educational support activities.
        The more than 200 AmeriCorps members of the United Youth Corps of
    Maryland serve in three distinct youth corps. Members serving with the
    Maryland Conservation Corps maintain and restore 15 state forests,
    parks, and wildlife management areas, while members with Civic Works,
    an urban youth corps, rehabilitate abandoned houses and construct
    community parks and gardens in low-income Baltimore neighborhoods.
    AmeriCorps members serving with Community Year tutor students with
    special needs and serve as teachers' aids. In addition, the AmeriCorps
    members develop an after-school program in which 160 middle school
    students perform community service and participate in environmental
    education activities.
        In the RurAL Cap Alaska program, 25 AmeriCorps members have been
    recruited from 15 of the state's most rural villages. These members
    collaborate with tribal councils to identify critical needs related to
    the tundra environment. Members mobilize the community to improve solid
    waste disposal, initiate recycling projects, and conduct environmental
    education in Head Start and elementary school programs.
        Forty-two Idaho Trio AmeriCorps members are improving the academic
    performance of 2,309 Head Start, K-12 and college students. The
    majority of these students face challenges including physical
    disabilities, disruptive home life, and poor English skills. Teachers
    benefit from AmeriCorps members providing in-class support by giving
    one on one and small group assistance to many students.
        The Montana Conservation Corps supports 72 AmeriCorps members who
    are constructing and maintaining 250 miles of trail and 36 parks. The
    AmeriCorps members are also mentoring 450 youth whom they have engaged
    in 210 service projects, and are improving the homes of 41 low income
    senior citizens.
        The Beyond Food program operated by the Congressional Hunger Center
    is fighting hunger and under-nutrition in Vermont, Mississippi,
    Wisconsin, and the District of Columbia. In just six months, Beyond
    Food provided more than 400 tons of food to low-income families, senior
    citizens, and the homeless. Throughout Vermont, 41 AmeriCorps members
    have recovered 7,100 pounds of food through food recovery and gleaning
    activities. The AmeriCorps members also provided emergency food
    assistance to those in need at local distribution sites by collecting,
    sorting, preparing and distributing over 374,550 pounds of food. The
    AmeriCorps members also served over 249,700 meals to those in need.
        The National Association of Community Health Centers, a nonprofit
    organization that provides professional support services for over 800
    community health centers, administers the Community Health Corps
    AmeriCorps program in which AmeriCorps members link individuals in
    Aurora, Colorado, Eutaw, Alabama, San Francisco, California, and six
    other cities with health centers through referral, education, and
    follow-up programs. During the past two years, the ten AmeriCorps
    members in Aurora have provided case management and referrals to 4,900
    health center patients, reminded 780 parents about the importance of
    having their children immunized, taught 360 patients education about
    appropriate emergency room usage, and helped 4,800 patients find
    housing, food, legal aid and other health services. The members also
    provided translation services for at least 500 Spanish speaking
    patients. Local partners include the City of Aurora, the Boys and Girls
    Clubs of Denver, the Reach Out and Read Program, the Aurora Rotary
    Club, the local school district, and the Colorado OB/GYN Society.
        Through the California Conservation Corps in Klamath, California,
    the AmeriCorps Backcountry Trails Program involves 80 young adults. The
    AmeriCorps members have enhanced 1,000 miles of wilderness trail,
    rebuilt sections of the Pacific Crest Trail in the spectacular
    Evolution Basin in Kings Canyon National Park, repaired 67 miles of
    storm-damaged trail in Yosemite National Park, repaired 15 erosion
    channels on trails leading into the Klamath National Forest Marble
    Mountain Wilderness, and installed a set of stone steps across a
    hazardous rock section in the Stanislaus National Forest's Carson-
    Iceberg Wilderness.
        The New Jersey Community Development Corporation assigns AmeriCorps
    members to a number of sites to provide direct care to vulnerable
    individuals. Three members serve full time at the Mid-Bergen Mental
    Health Center in Paramus supporting the needs of 60 men and women with
    severe mental illness and helping them to live independently in the
    community. Additionally, five members serve people with developmental
    disabilities at two residences in Patterson.
        Through outreach in 99 counties across Iowa, the 20 AmeriCorps
    members supported by the Iowa Coalition Against Domestic Violence work
    to promote and make services accessible to battered women and their
    children. During its four years of operation, AmeriCorps members have
    made contact with 20,000 victims of domestic abuse. In the 1996-97
    program year, the AmeriCorps members helped approximately 500 women and
    4,000 children receive care through 29 domestic violence agencies or
    projects. Similarly, AmeriCorps members serving with the West Virginia
    Coalition Against Domestic Violence addressed the safety, shelter, and
    basic food, clothing and resource referral needs of over 2,500 victims
    of domestic violence across the state. Members provide life skills
    training and mentoring to assist adults in moving out of violent
    relationships. In the first quarter of fiscal year 1998, more than 200
    volunteers participated with AmeriCorps members, providing assistance
    from helping shelter residents find housing to leading a reading hour
    for children living in shelters.
        In the rural west Alabama counties of Greene and Sumter, where more
    than 50 percent of the children are reported to live in poverty, 25
    AmeriCorps members in the Rural AmeriCorps Student Project supported by
    West Alabama Health Services tutor and mentor 400 students in grades K-
    6. In the first two grading periods of the 1997-98 school year, 52
    percent of the students served showed improvement in their grades,
    attendance, and attitude toward school. In addition, the 20 members of
    AmeriCorps Instructional Support Team in Butler County, Alabama provide
    tutoring and other academic enrichment services to 300 rural students
    in grades K-3 who are at risk of school failure. Four of the six
    schools in this system are on academic caution, and the State
    Department of Education ranks Butler County in the lowest cluster of
    school systems. To date in the 1997-98 school year, there has been an
    improvement in attendance among 17 percent of the students served; at
    least one letter grade of improvement in an academic subjects among 62
    percent of the children served; and improvements in behavior/conduct
    grades among 37 percent of the students served.
    Learn and Serve America
        Another way to ``get things done'' is through the Learn and Serve
    America program--which builds an ethic of service among young people
    and students at all levels by making service an integral part of their
    education and life experiences.
        The Learn and Serve America fiscal year 1999 appropriation request
    reflects an increase of $7 million over the fiscal year 1998 budget.
    The additional funds are targeted for the America Reads Challenge.
    Learn and Serve America will increase the number of participants and
    programs engaged in America Reads service-learning activities at the
    elementary, secondary and postsecondary levels by approximately 16
    percent.
        Last year, Learn and Serve programs made a difference in K-12
    schools and institutions of higher education across the country. For
    example, the Miami-Dade Community College has created the Center for
    Community Involvement and Civic Literacy which links service-learning
    efforts, America Reads, and the community service mandate of Federal
    Work Study. Over 300 Miami-Dade students are America Reads tutors
    throughout Miami. Also, students in computer science classes lend their
    expertise to elementary school teachers to help them gain computer
    proficiency, students taking a women's leadership class are undertaking
    projects ranging from helping teen mothers to assisting soon-to-be
    paroled female prisoners, and students learning about the environment
    present the ``Enviro-Cops'' program to local schools.
    AmeriCorps Program Demographics
        AmeriCorps members reflect the diversity of the communities in
    which they serve. In the 1996-97 program year, approximately one in two
    AmeriCorps members was white, slightly less than one in three was
    African American, and one in six was Hispanic. Approximately three
    percent of these AmeriCorps members were of Native American, Asian, or
    Pacific Islander heritage.
        Forty-four percent of AmeriCorps members supported through
    AmeriCorps*State and National grants in the 1996-97 program year had
    already earned a bachelor's degree, spent some time in graduate school,
    or earned a graduate degree. AmeriCorps members continue to come from
    the broad Middle Class. Forty percent of these AmeriCorps members came
    from households with an annual income of less than $30,000, 64 percent
    came from households with an annual income of less than $50,000, and a
    total of 77 percent came from households with an annual income of less
    than $70,000. Additional demographic information about AmeriCorps
    members is included in Charts 1-4 (attached).
                             iii. other key issues
    The Government Performance and Results Act
        The Corporation is complying with the requirement of the Government
    Performance and Results Act (GPRA). We have met, and are meeting, all
    of the requirements of GPRA. Our strategic plan was submitted on time
    and in full compliance with the Act. We have distributed copies of the
    plan widely, throughout the national service community, and it is
    available on our Internet website at www.nationalservice.org. Our
    fiscal 1999 performance plan was sent to the Congress on February 20
    and soon it will be available through the Internet.
        The strategic plan and the performance plan lay out in clear terms
    our vision and goals, and the practical steps we will follow to get
    there.
        In addition, standards of program quality will be set for every
    area of national service. We will be creating indexes that can be used
    to rate objectively the quality of our programs. These indexes will
    combine data from many sources, including customer satisfaction and
    community impact ratings, into an overall assessment of quality. Every
    program area will be subject to what we call community impact ratings.
    In a national survey, we will be asking key community representatives,
    who are expected to have first-hand knowledge of national service
    programs, to rate the impact and quality of the services provided by
    our programs.
        Every program area sponsored by the Corporation will have some form
    of customer satisfaction survey. We intend to know and report how well
    national service participants are addressing the unmet needs of the
    American people.
        To implement the plan and measure our performance against its
    goals, we have in place, or are in the process of establishing, the
    systems needed to get the job done. We are on schedule to implement
    fully the data collection and analysis plans needed so that we can
    report to the Congress and the public in March of 2000 how well we have
    done in meeting our goals.
    Reauthorization
        After two years of work with national service sponsors, partners
    and participants, as well as Governors, Mayors, and other local elected
    officials, the Corporation for National Service's reauthorization
    proposal is ready for transmittal by the President to the Congress. The
    bill, entitled the ``National and Community Service Amendments Act of
    1998,'' will be transmitted very soon and introduced with bipartisan
    co-sponsorship. The legislation proposes significant steps to improve
    national service, based on the lessons learned over the last several
    years and the careful analysis the programs have received from within
    and outside of the Corporation. Specifically, the proposed legislation:
      --Strengthens partnerships with traditional volunteer organizations;
      --Codifies agreements with Congress and others to reduce costs and
            streamline national service;
      --Provides states additional flexibility to administer national
            service programs; and
      --Expands opportunities for Americans to serve.
        I want to emphasize that the Administration proposal is a starting
    point for--not the end of--discussions on what a reauthorization bill
    should include. I look forward to working with the Members of the
    Subcommittee on this important matter.
                        additional management challenges
        The Corporation faces additional management challenges, directly
    related to auditability. If we are to achieve full auditability and
    improve our financial management, we must address these as well. The
    Corporation requests the Subcommittee's assistance in addressing the
    following four issues which are discussed in more detail below: Full
    funding of Program Administration, the flexibility to transfer funds
    between activities, the fifth AmeriCorps*NCCC campus, and the cap on
    AmeriCorps National Direct grants.
    Full Funding of Program Administration
        Mr. Chairman, the Corporation faces important challenges in
    achieving the most effective management for an extraordinarily
    decentralized system. We have detailed above the actions we have taken
    and the milestones we have set for ourselves in these matters.
        Because by statute 40 cents of every administrative dollar goes
    directly to the Governor-appointed State Commissions, the Corporation
    realized only a $1.2 million increase in Program Administration for
    fiscal year 1998. From that, the Corporation must continue to pay
    statutory pay increases and meet increasing workloads. For example,
    with funds appropriated in 1996, the Corporation enrolled approximately
    23,000 AmeriCorps members in the National Service Trust. With funds
    appropriated in 1998, the Corporation will enroll approximately 48,000
    members in the Trust. Each enrollment can represent up to 15 individual
    transactions for a qualified AmeriCorps member. Members who earn
    education awards must continue to receive service from the Trust
    throughout the seven years in which they have to use their awards.
    While productivity improvements have been made in improving that
    service, we need the full amount requested in the President's budget.
    Flexibility to Transfer Funds Between Activities
        The section of the VA, HUD, and Independent Agencies Appropriations
    Bill covering national service is written as a series of caps which add
    up to the total appropriated amount. Both the Congress and the Office
    of Management and Budget (OMB) have determined that the structure of
    the bill precludes transfers from one line item to another. Thus, we
    are precluded by law from moving funds from one area to another to
    address critical needs. For example, we need the flexibility to deploy
    significant resources on a one-time basis to clear up a backlog of
    trust documentation problems, develop a Management Information System
    (MIS), and close out old grants. We are asking for additional
    flexibility in this regard. I hope you will help us with this problem
    this year.
    The Fifth AmeriCorps*NCCC Campus
        The National Civilian Community Corps (NCCC) is a full-time
    residential national service program that provides a 24-hour a day
    ready response to national or natural disasters--and a range of other
    services. Corps members--age 18-24--receive extensive training in areas
    such a leadership development, CPR, first aid, family assistance,
    damage assessment, carpentry/building skills, public safety, mobilizing
    volunteers, tutoring, and trail building. All service projects
    conducted by AmeriCorps*NCCC members are planned and implemented in
    partnership with local and national organizations.
        Lieutenant General Andrew P. Chambers (Retired) joined the
    Corporation for National Service last May as National Director of
    AmeriCorps*NCCC.
        Last year Corps members assisted families and communities
    devastated by fires in California and South Carolina; floods,
    hurricanes, and tornadoes in South Carolina, Georgia, Puerto Rico,
    Massachusetts, California, Arkansas, West Virginia, Ohio, Baltimore,
    and North Dakota; and snow and ice in Nebraska. Corps members are
    presently deployed to Northern California, Delaware, and Arkansas to
    provide disaster relief to communities affected by floods. In fiscal
    year 1997, AmeriCorps*NCCC extended the term of service for 24 corps
    members to provide year round availability in the event of a disaster.
        In fiscal year 1997, AmeriCorps*NCCC members performed over 400
    service projects in local communities in 46 states. AmeriCorps*NCCC
    increased the emphasis on developing national partnerships with
    organizations that have local affiliates who address compelling needs
    such as Habitat for Humanity (including the Houses the Congress built
    initiative), Boys & Girls Clubs, and Y.M.C.A.
        In the past year, the NCCC established a new campus in the Capital
    Region, with 100 members based on the former site of DC Village SW in
    Washington, DC. The Capital Region campus serves the District of
    Columbia, Virginia, West Virginia, Pennsylvania, and Ohio. Other
    regions are the Western Region, based in San Diego, California, the
    Central Region based in Denver, Colorado, the Southeast Region based in
    Charleston, South Carolina, and the Northeast Region based at the VA
    Medical Center in Perry Point, Maryland.
        AmeriCorps*NCCC has functioned with flat funding of $18,000,000 for
    the past three years. To achieve the expansion of a new campus in the
    District of Columbia in fiscal year 1998, it was necessary to make
    extensive cutbacks throughout the program including terminating staff.
    The proposed $21,000,000 will enable AmeriCorps*NCCC to continue to
    operate five campuses, including one in the Capital Region.
    The Cap on AmeriCorps National Direct Grants
        Under the Corporation's authorizing statute, roughly one-third of
    the AmeriCorps grants funds are allocated for National Direct
    programs--including the Enterprise Foundation, the Arc of the United
    States, Habitat for Humanity, Jumpstart for Children, I Have A Dream
    Foundation, the American National Red Cross, and City Year. For fiscal
    year 1998, the Conference Committee imposed a cap of $40 million; an
    amount some $36 million below the level anticipated by the authorizing
    statute. Because of this cap, national nonprofits were unable to
    utilize the resources of over 2,600 potential AmeriCorps members to
    address local community needs for fiscal year 1998. (National Direct
    grantees sponsor more than 12,700 AmeriCorps members who last year
    recruited 72,332 non-stipended volunteers who served 784,826 hours.)
    AmeriCorps National Direct grantees are not even able to keep up with
    inflation, much less see any growth in promising new or proven older
    programs. We hope that this Subcommittee--and the Conference
    Committee--will eliminate the cap on National Direct for fiscal year
    1999.
        I look forward to working with you to make national service a
    program in which we can all take pride.

      Chart 1.--Race/Ethnicity of AmeriCorps*State/National Members: 1996

                                                                     Percent
    White.............................................................    48
    African-American..................................................    28
    Hispanic..........................................................    16
    Asian.............................................................     3
    NatAm.............................................................     2
    Other.............................................................     4

       CHART 2--GENDER OF AMERICORPS*NCCC AND STATE/NATIONAL MEMBERS: 1996
                                    [Program]
    ------------------------------------------------------------------------
                                                               Male   Female
    ------------------------------------------------------------------------
    NCCC....................................................      35      65
    State/National..........................................      32      68
    ------------------------------------------------------------------------

    Chart 3.--Educational Attainment by AmeriCorps*State/National Members:
                                      1996

                           [Highest degree achieved]

    Less than high school.............................................     9
    High school diploma...............................................    19
    AA degree/same college............................................    25
    Bachelor's degree/some graduate school............................    25
    Graduate school...................................................    19

     Family Household Income of AmeriCorps*State/National Members: 1996 \1\

                                 [Income range]

    $5,000 or less....................................................     6
    $5,001 to $10,000.................................................     7
    $10,001 to $20,000................................................    13
    $20,001 to $30,000................................................    14
    $30,001 to $40,000................................................    14
    $40,001 to $50,000................................................    10
    $50,001 to $60,000................................................     9
    $60,001 to $70,000................................................     5
    Over $70,000......................................................    23

    \1\ Members 30 years or younger.
    ---------------------------------------------------------------------------

                       progress in achieving auditability

        Senator Bond. Thank you very much, Senator Wofford. I
    appreciate your addressing the efficiencies in the financial
    systems and management controls. That has been a plaque on the
    whole operation. It has been a significant impediment to the
    credibility of our efforts and it makes it far more difficult
    for us to support funding and obtain broad-scale support for
    it.
        I congratulate you on the progress that has been made. In
    summary, I understand that, of the 99 findings identified by
    Arthur Anderson, 72 were resolved by October 1 of last year. I
    understand from your testimony that you have now addressed 10
    of the 21 remaining material weaknesses. I congratulate you on
    that.
        What steps are left and when will those deficiencies be
    corrected?
        Mr. Wofford. Senator Bond, the plan that we will be
    presenting to you on March 18 will track every one of the
    remaining material weaknesses and important steps for us to
    take, including the steps related to the trust. It will be a
    timetable that will show when each of them can be achieved.
        I look forward to working with you and your staff when that
    plan has been presented to you. I outlined some of the dates in
    my oral testimony just now.
        Senator Bond. Fine. I appreciate that. I think it is very
    important that the inspector general be included in that. Has
    the National Service inspector general been participating in
    the development of the plan?
        Mr. Wofford. She will be very much involved as soon as OMB
    is ready for us to give it to her, which should be in just a
    very few days. That is why we are setting March 18.
        Senator Bond. Well, we will look to her and to the General
    Accounting Office to give us a review of how the plan is
    working. It is vitally important. I cannot emphasize too much
    that we have to be able to tell our colleagues and the American
    people that the financial controls are in place, that we know
    how the money is being spent, and that it is being spent in
    compliance with the authorizing legislation and appropriation.
        So I appreciate that very much.
        Mr. Wofford. I fully agree with you. We are not going to
    let you down.

                       evaluation and effective practices

        Senator Bond. Senator Wofford, the Corporation's 1999
    budget justification has a broad mission statement: To address
    the Nation's education, human and public safety, and
    environmental needs to achieve direct and demonstrable results
    and foster civic responsibility, strengthen the ties that bind
    us together as a people, and provide educational opportunity
    for those who make a substantial commitment to service.
        How do you measure and verify the goals to meet those
    requirements?
        Mr. Wofford. We have this very year added investment and
    emphasis on doing just that by the formation of a Department of
    Evaluation and Effective Practices with an outstanding leader,
    the former executive director of the Florida State Commission,
    who has proven his record in achieving high quality programs at
    the State level.
        We have a comprehensive set of evaluations that have been
    submitted and are ready for your review. I would like to submit
    for the record the list of perhaps 50 studies here that we have
    provided you on occasion. I would like you to review that list.
        [The information follows:]

                          COMPLETED PROGRAM EVALUATIONS
    ------------------------------------------------------------------------
                  Title                   Contractor             Date
    ------------------------------------------------------------------------
    Foster Grandparent Program        Westat............  December 1997.
     Evaluation.
    Measuring AmeriCorps*VISTA's      Westat............  December 1997.
     Impacts on the Communities and
     Organizations It Serves.
    Description of Current            Macro.............  November 1997.
     Corporation Leaders Programs,
     Options for Corporation Leaders
     Programs, and Recommendations
     for a Unified Leaders Program.
    Study of Race, Class, and         Macro.............  November 1997.
     Ethnicity--Final Report.
    Practical Applications:           Macro.............  November 1997.
     Strategies for Supporting a
     Diverse Corps.
    1997 Customer Satisfaction        Macro.............  November 1997.
     Survey.
    Description and Evaluation of     Macro.............  October 1997.
     the Summer Reads Initiative.
    The Sustainability of             PeopleWorks.......  August 1, 1997.
     AmeriCorps*VISTA Programs and
     Activities.
    AmeriCorps*State/National         Aguirre...........  June 12, 1997.
     Programs Impact Evaluation:
     First Year Report.
    National Evaluation of Learn and  Abt/Brandeis......  April 1997.
     Serve America School and
     Community-Based Programs--
     Interim Report and Appendices.
    Evaluation Report Year Three      Macro.............  April 1997.
     AmeriCorps Leaders Program
     (ACLP).
    1996 AmeriCorps*VISTA             Westat............  April 1997.
     Accomplishments Summary of
     Findings.
    Retired and Senior Volunteer      Westat............  March 1997.
     Program RSVP Final Report.
    Findings from the 1996 Survey of  Westat............  February 28, 1997.
     AmeriCorps Members.
    Review of Cluster Team Leader/    Westat............  December 1996.
     Field Management Team System.
    AmeriCorps*NCCC: Analysis of      Westat............  December 1996.
     Responses to the Class Two Exit
     Survey--Final Report.
    Executive Summary--AmeriCorps     Macro.............  October 1996.
     Team for the Games Host
     Organization.
    Evaluation Report Year Two        Macro.............  September 1996.
     AmeriCorps Leaders Program
     (ACLP).
    A Practical Guide to Continuous   Macro.............  July 1996.
     Improvement.
    Impacts of Service: Final Report  Abt...............  June 11, 1996.
     on the Evaluation of American
     Conservation and Youth Service
     Corps Draft.
    Evaluation of Learn and Serve     RAND..............  May 1996.
     America, Higher Education:
     First Year Report, Volumes I
     and II (Technical Appendices).
    Final Report: Impacts of the      Abt...............  February 6, 1996.
     Higher Education Innovative
     Projects (Subtitle B2).
    Defense Conversion Assistance     Abt...............  January 5, 1996.
     Program (DCAP) Memorandum on
     Community Impacts and
     Participant Outcomes--Draft.
    AmeriCorps Leaders Program Year   Linda Camino, Ph.D  January 2, 1996.
     One Evaluation: Areas to
     Strengthen and Recommendations.
    Final Report: National            Abt/Brandeis        December 21, 1995.
     Evaluation of Serve-America       University.
     (Subtitle B1).
    Serving America: Program Design   Abt/Brandeis        December 21, 1995.
     and Implementation Lessons from   University.
     the Serve-America Program
     (Draft).
    AmeriCorps*VISTA 1994             Westat............  December 1995.
     Accomplishments Survey.
    Support for Local Organizations   Westat............  December 1995.
     and Their Communities--Report
     from the AmeriCorps*VISTA 1994
     accomplishments Survey.
    Overview: National Evaluation of  Abt/Brandeis        October 20, 1995.
     Serve-America (Subtitle B1).      University.
    An Evaluation of the Corporation  Linda A. Camino,    September 19,
     for National Service's            Ph.D.               1995.
     Earthquake Relief Projects in
     Los Angeles, California.
    Lessons from the Field: Program   Westat............  September 1995.
     Start-Up 1994-1995.
    Final Report: National Service    Abt...............  July 17, 1995.
     Demonstration Programs
     (Subtitle D).
    Demographics of AmeriCorps        Macro.............  July 1995.
     Members and the Areas Where
     They Serve.
    Catalogue of Program Objectives   Macro.............  June 1, 1995.
     AmeriCorps Programs (Fiscal
     Year 1995).
    Final Report: Impacts of Service- Abt...............  April 20, 1995.
     America (Subtitle B1) Draft.
    Educational Impacts of Summer     Abt...............  April 13, 1995.
     1993 Washington Service Teams
     (Draft).
    Effect of Living Allowances and   Westat............  April 7, 1995.
     Educational Awards on
     AmeriCorps Members' Ability to
     Serve and on Fostering Socio-
     Economic Diversity (Draft Final
     Report).
    Defense Conversion Assistance     Abt...............  January 31, 1995.
     Program Report on the First
     Year of Implementation.
    Defense Conversion Assistance     Abt...............  October 19, 1994.
     Program Report on the First
     Year of Implementation.
    Defense Conversion Proposed       Abt...............  July 28, 1994.
     Phase 2 Evaluation Design.
    Interim Draft Report: Lessons     Abt...............  July 22, 1994.
     Learned from the Experience of
     Subtitle D Programs.
    Interim Report: Lessons Learned   Abt...............  July 22, 1994.
     from the Experience of Subtitle
     D Programs.
    Evaluation of National and        Abt...............  March 4, 1994.
     Community Service Programs
     Lessons from the Experiences of
     Two Corps Providing Disaster
     Relief.
    Serving America The First Year    Abt...............  March 1994.
     of Programs Funded by the
     Commission on National and
     Community Service.
    Final Report--Evaluation of the   Abt...............  October 25, 1993.
     Summer of Service Program.
    Case Studies of Selected Summer   Abt...............  Summer 1993.
     Youth Corps Programs Report 1
     of 2.
    Evaluation of National and        Abt...............  March 15, 1993.
     Community Service Programs
     First Annual Report--Program
     Profiles Draft.
    ------------------------------------------------------------------------

                              further evaluations

        Mr. Wofford. We now have in our performance plan for the
    Government Performance and Results Act a set of new commitments
    for indepth evaluation. We are proud of the progress we have
    made. And yet, I agree with you that in a decentralized system
    such as this, which with our new education awards is even more
    decentralized, the Education Only Awards that Senator Grassley
    encouraged that we have had such a great growth in this year--
    some 14,000 positions in that category--developing a system
    that can help this decentralized system keep to the high
    standards that the State commissions and nonprofit
    organizations are committed to is a very high priority for the
    Corporation.

                            correction to the record

        Senator Bond. I think it is vitally important that we have
    objective standards and criteria by which we can measure
    success. We have heard some claims of success based on
    anecdote, which is nice but I do not find it an adequate
    measure of performance and achievement.
        Let me just cite you one example. The fiscal year 1999
    budget justification for National Service identifies a program
    called Summerbridge. The budget claims, ``AmeriCorps members
    provided support to 3,544 students and improved student testing
    scores in mathematics, language, arts, science, and literature
    at all sites, 16 cities, by 63 percent to 97 percent.''
        Now that sounds wonderful, especially as a 1-year
    achievement. But I really don't know what it means.
        Does that mean that school testing scores are so low that
    you can improve scores essentially by 100 percent? Is the
    school system that bad that you can make a 63-percent increase
    by a volunteer effort?
        What is going on there?
        Mr. Wofford. Mr. Chairman, that statement in that budget
    submission document is a mistake. It is a result of the
    Summerbridge report having been written in a way that was
    misunderstood by us.
        We have checked back with Summerbridge. The 60-percent plus
    is the impact on the individuals that were in the program. It
    is a misstatement.
        Summerbridge itself is a program that has had various
    outside evaluations of its work over the years. It is
    considered a very outstanding program, and they are very
    embarrassed, and we are embarrassed, that that was misstated in
    the record.
        Senator Bond. Well, I was going to say that that was
    certainly an accomplishment and could it be increased. That
    does bring into question some of the standards.
        What did they mean by 60 percent? What did that 63 percent
    mean?
        Mr. Wofford. I think I am going to ask to correct it for
    the record.
        Senator Bond. Why don't we do that for the record because
    it is quite confusing.
        Mr. Wofford. There are two things, what they meant
    originally and what was said.
        [The information follows:]

                        Summerbridge National AmeriCorps

        The information provided for the Corporation for National Service's
    Fiscal Year 1999 Budget Estimate for Activities Authorized by the
    National and Community Service Trust Act was based on the end-of-term
    progress report submitted by the Summerbridge National AmeriCorps for
    the 1995-96 program year.
        The 1995-96 end-of-term progress report states that the AmeriCorps
    members in the program:
      --provided tutorial support to 827 students;
      --provided teaching support to 1,261 students;
      --prepared eighth grade students at all sites for high school
            entrance;
      --mentored 696 students and actively managed 760 individual student
            cases;
      --conducted 83 home visits to provide parents with feedback and to
            discuss their child's successes and challenges;
      --recruited 547 high school and college-aged tutors to work with
            middle school students during school-year programs; and
      --generated 654 volunteers that contributed 66,090 hours of service.
        The Budget Estimate stated that AmeriCorps members ``improved
    student testing scores in mathematics, language arts, science, and
    literature at all sites by 63 percent to 97 percent.'' Further review
    indicates that part of this information was communicated incorrectly.
        Summerbridge National reports that its AmeriCorps Teaching Program
    Sites ``realized dramatic academic results among their student
    populations.'' Some of the highlighted indicate:
      --66 percent of students at Lehigh Valley Summerbridge improved their
            scores in mathematics and 63 percent improved their scores in
            language arts.
      --90 percent of students at Making Waves Summerbridge improved their
            scores on language arts skill tests, which focus on parts of
            speech, grammar, reading comprehension, and paragraph writing.
      --71 percent of students at Making Waves Summerbridge improved their
            scores on math skills tests, which focus on fractions,
            decimals, percents, word problems, and algebra.
      --86.5 percent of students at Making Waves Summerbridge indicated
            significant improvements in writing and 78.3 percent indicated
            significant improvements in literature skills.
      --Student attendance at Summerbridge Sacramento improve to 97 percent
            and 100 percent of the students reported academic gains in the
            areas of algebra, fractions, and general organization.

                    monitoring of national service programs

        Mr. Wofford. I would like just to add, Mr. Chairman, that
    some of the facts have come from the progress reports that
    projects submit. But most of the facts that are in the
    document--that is, in my written testimony--are drawn from our
    outside evaluators, not from the projects themselves.
        Mr. Aguirre, President Ford's Commissioner of Education,
    and his outfit personally have done the largest evaluation.
        Senator Bond. That kinds of leads me to the next question
    that I was going to ask. How do you ensure that the AmeriCorps
    programs are conforming to the agreed program requirements,
    matching requirements and participation requirements?
        Do you have your own audit staff? Do you rely on outside
    evaluators? How do you make sure when money goes to a program
    that everything that is supposed to happen does happen?
        Mr. Wofford. We do this in several ways.
        In the first place, the larger projects are required to
    have their own audits.
        Second, two-thirds of the AmeriCorps grants go through and
    are selected either in whole or initially by the Governor-
    appointed State commissions. They, under the act, are the first
    line of supervising and evaluating and monitoring of the
    projects in those States.
        We have done a lot to help those State commissions develop
    the capacity to do that and we provide very active assistance.
        We have our own program officers who do site visits. We are
    trying to increase the range of those site visits.
        Some of our procedures on auditability are related to the
    intensifying of the efforts that will go on when we make our
    own site visits. The inspector general has a system of auditing
    these and intends in the future to spend more time auditing the
    programs in the field. She already has a long record of audits
    that are very important to us.
        Mr. Chairman, Chief Operating Officer Louis Caldera was
    just reminding me that the grant reporting system from the
    projects is a vital part of this. We are strengthening and
    tightening that in responding to the auditability issues, too.
        Senator Bond. Tell me, what happens when the Corporation
    finds a program that fails to meet the requirements? What do
    you do?
        Mr. Wofford. These are competitive grants. They come up for
    renewal. There are a number of grants that have not been
    renewed for reasons of performance.

                              programs not renewed

        Senator Bond. How many have been defunded or barred from
    future participation?
        Mr. Wofford. The facts I was just given are related to how
    many. I think it is pertinent to know that in the original
    selection process, for example, for the State competitive
    grants, 316 applications were received and 163 were funded.
    That includes a lot of renewal applications.
        Mr. Wofford. The first place that I can give you the
    response is in how many of the applications that come up to us
    are not accepted. But the first line of that competitive system
    for most grants, the overwhelming majority, are the State
    commissions. They do not submit to us their proposals until
    they have in a competitive process decided that these are the
    best.
        I will have to let you know for the record the precise
    answer to your question.
        [The information follows:]

        The data from the most recent grant review (fiscal year 1997) is as
    follows for State competitive programs that were recompeting for
    funding, as well as the Tribal and National Direct proposals. State
    formula programs are not included since they are not required to
    provide this information.
        Decisions made by the Corporation:
      --AmeriCorps State competitive: 121 recompeting applications
            received, 12 or 10 percent failed in competition
      --AmeriCorps National Direct: 27 recompeting applications received; 2
            or 7 percent failed in competition
      --AmeriCorps Tribal programs: 5 recompeting applications received; 1
            or 20 percent failed in competition.
        Decisions made by State Commissions or sub-grantee:
      --AmeriCorps State competitive: 12 recompeting programs were not
            forwarded or did not reapply
      --AmeriCorps National Direct : 3 recompeting programs did not reapply
      --AmeriCorps Tribal programs: 1 did not reapply
        Aggregating the data yields the following results:
      --AmeriCorps State competitive: 24 or 18 percent of recompeting
            programs were not funded
      --AmeriCorps National Direct : 5 or 17 percent of eligible
            recompeting programs were not funded
      --AmeriCorps Tribal programs: 2 or 33 percent of eligible recompeting
            programs were not funded
        Programs, even if defunded, are not legally barred from future
    participation. Clearly, their past performance would be considered in
    reviewing any new application. It is, however, extremely rare that
    programs, once they no longer receive funding from AmeriCorps, re-
    apply.

                              devolution to states

        Senator Bond. Now that is important. But I am interested in
    the followup, the auditing, the monitoring. What is the role of
    the States in monitoring to make sure that the program is doing
    what it is supposed to be doing? I am a great believer in local
    control of programs. But I also have seen in my own State quite
    a few responsible local officials who are now residents of the
    corrections system because they chose not to exercise
    responsible stewardship over their funds. This is not to say
    that that ever happens in the National Service Corporation. But
    there needs to be a way to make sure that those are caught.
        What are the roles of the States?
        Mr. Wofford. The bipartisan State commissions are appointed
    by the Governors and are responsible to the Governors. They now
    have for the whole formula grant system the full authority to
    make those formula grants.
        They report them, they submit them, we review them. If
    their processes--those of the State commissions--meet standards
    of proper peer review, if the commission is operating under the
    standards set by Congress on the nature of the commission, we
    have devolved that authority over the grants--the formula
    grants--to them.
        We will, therefore, pay even more emphasis to whether those
    commissions are strong and are able to operate effectively.
    They have the primary monitoring responsibilities.
        We have the help of the inspector general. When the
    inspector general finds that something has gone wrong, we are
    not going to be immune from seeing that there are going to be
    some prosecutions if there are any examples such as you
    described.
        Senator Bond. I think as the program gets straightened out
    and we get more controls in place, is it possible to rely more
    on the State commissions? Are they, in fact, capable of
    administering the program and assuring that the program
    requirements are met?
        Mr. Wofford. The Chief Operating Officer, Louis Caldera,
    and I are particularly looking at whether we need to invest
    more in assistance to the State commissions than we have yet
    done.
        Senator Bond. I would think that devolving more
    responsibility if the States show they are willing and able to
    handle that responsibility would make some sense because they
    would be in a better position to control it. So we will look
    forward to an ongoing discussion following what is happening in
    those areas where you are able to devolve that to the States
    and which responsibilities can effectively be administered at
    the State level.
        Mr. Wofford. Mr. Chairman, I strongly support that policy.
    It has been a major emphasis of ours in the last 2 years and
    may be so even more in the future.

                           america reads and literacy

        Senator Bond. Literacy is a very, very important priority
    of mine. I have been involved in many different types of
    literacy activities.
        Last year, we funded America Reads at $25 million,
    specifically identifying America Reads. But it seems to me that
    tutoring and mentoring has always been considered a part of
    national service. The President's budget for fiscal year 1999
    asks for $93.33 million.
        What is the basic model or construct? What are you going to
    be doing with these specific America Reads volunteers? What is
    their job?
        Mr. Wofford. Mr. Chairman, I know there is discussion and
    debate on what the role of the Education Department should be
    in promoting children's literacy and the goal of all children
    reading by the end of grade 3. I know that is a commitment to
    Federal participation and that is a major commitment in the
    budget agreement.
        Our participation in children's literacy began at the very
    start of the Corporation. One of the statutory purposes given
    by Congress is education, using AmeriCorps members to assist
    education and early childhood education, after school programs,
    Saturday programs, summer programs. Tutoring reading,
    mathematics and other vital subjects was a priority of the
    Corporation before there was anything called America Reads.
        So we have some 83 programs around the country today that
    are in children's literacy. We have an attachment for the
    record of one literacy program for each State, though we have
    more than one. I would ask one of my colleagues to send it up
    to you. We will put it in the record.
        Senator Bond. Great.
        [The information follows:]

        Examples of the Corporation for National Service America Reads
                                 Activities \1\

                                    alabama
        Alabama Association of RSVP Directors, 217 Pearson Street, Troy, AL
    36081, Telephone: (334) 566-6158, Contact: Jennifer Lindsay.
    ---------------------------------------------------------------------------
        \1\ One project per State is highlighted in this document.

    Number of Retired and Senior Volunteer Program (RSVP) Volunteers..    10

        Program Summary.--RSVP volunteers have recruited more than 434
    community volunteers to work in 107 Title I schools in first through
    third grade classrooms, helping more than 1,093 students learn to read.
    The volunteers have partnered with Rolling Readers, Learn and Serve
    America projects, and community coalitions. The community volunteers
    include RSVP volunteers, federal work-study students, Learn and Serve
    America students, and the general public. Some local banks have agreed
    to give employees time off to volunteer in schools. This program has
    recruited volunteers through TV appearances, ads in a free local ad
    paper, flyers and recruitment parties, bookstores, church bulletins and
    tenant meetings.
                                     alaska
        Nine Star Enterprises Inc., AmAK Literacy Project, 125 West 5th
    Avenue, Anchorage, AK, Telephone: (907) 279-7827, Contact: David
    Alexander.

    Number of full-time AmeriCorps members............................    10

        Program Summary.--This literacy program provides literacy training
    to children in kindergarten through third grade as well as their
    parents and families. The members serve in Anchorage and small towns
    with several community-based organizations.
                                    arizona
        Southeastern Arizona Human Resources Council, RSVP of Willcox, PO
    Box 399, Willcox, AZ 85643, Telephone: (520) 384-0665, Fax: (520) 384-
    0038, Contact: Gloria Cota.

    Number of Retired and Senior Volunteer Program (RSVP) volunteers..    15

        Program Summary.--This tutoring program uses bilingual volunteers
    and addresses the needs of many farmworkers and their children. They
    held an open house at Willcox Elementary School and had an RSVP booth
    to recruit for tutoring and reading help. In addition to working with
    the elementary school children, the RSVP volunteers also work with Head
    Start children.
                                    arkansas
        Southeast Foster Grandparent Program, 1022 Scogin Drive,
    Monticello, AR 71655, Telephone: (870) 367-6848, Contact: Shirley
    Martin.

    Number of Foster Grandparents (FGP)...............................    16

        Program Summary.--Four elementary schools in southeast Arkansas
    began participating in an America Reads initiative utilizing Foster
    Grandparents as tutors the fall of 1997. Teachers from each of the four
    schools referred children whose total reading scores were in the bottom
    of the lowest 25 percent on the Stanford 9, a national norm-based test.
    The sixty-four lowest-scoring children were assigned to 16 Foster
    Grandparents. All Foster Grandparents have been trained in caregiving,
    reading and helping children to stay on task. According to teacher
    evaluations collected in January 1998, all students are reading with
    more confidence after just a few months with a Foster Grandparent, and
    77 percent of the teachers reported that the children were making
    excellent progress.
                                   california
        Building Individual and Community Self-Sufficiency Through Service,
    1107 9th Street, Sacramento, CA 95814, Telephone: (916) 323-0453, Fax:
    (916) 327-8232, Contact: Edward Connolly.

    Number of part-time AmeriCorps members............................   616

        Program Summary.--The Chancellor's Office for the California
    Community Colleges and fifteen local community colleges developed this
    program, recruiting 616 AmeriCorps members and also 16 AmeriCorps*VISTA
    members. The AmeriCorps members receive Temporary Assistance to Needy
    Families (formerly AFDC recipients) and are enrolled in college early
    childhood education and literacy classes. Members provide 15 hours per
    week of literacy services to children from pre-school through third
    grade. A total of 4,960 low-income and limited English speaking
    children who are reading and writing below their age/grade appropriate
    levels will be served. Members serve seven to nine kids for two to
    three hours each day, five days each week using a standardized literacy
    training curriculum.
                                    colorado
        Colorado Commission on National and Community Service, Community
    Action on Reading and Education Network (CARENET), Commerce City, CO
    80022, Telephone: (303) 853-3242, Fax: (303) 289-4097, Contact: Ron
    Cabrera.

    Number of full-time AmeriCorps members............................    20
    Number of part-time AmeriCorps members............................     4

        Program Summary.--Members serve as literacy instructors and tutors
    for children in first, second, third, sixth and ninth grade. Members
    have also launched a family literacy program, and have provided
    instruction and tutoring to out-of-school youth. The goals of the
    program are to improve test scores in literacy and academic achievement
    skills for 350 children; to improve test scores of the children's
    parents in parenting and literacy skills; and to improve literacy,
    employment and lifelong learning skills of out-of-school youth and
    adults. This program provides team-based services in an urban
    community.
                                  connecticut
        Connecticut Commission on National and Community Service
    Leadership, Education and Athletics in Partnership (L.E.A.P), 254
    College Street, New Haven, CT 06510, Telephone: (203) 773-0770, Fax:
    (203) 773-1695, Contact: Henry Fernandez.

    Number of part-time AmeriCorps members............................   230

        Program Summary.--AmeriCorps members tutor and mentor 900 inner-
    city children ages 7 through 14 in after-school programs. During the
    summer months members live in the housing developments where the
    children reside and provide structured activities throughout the day.
    The intensive tutoring and mentoring provided by the members is
    designed to result in improved reading skills, increased self-esteem,
    and better social behavior of the participating school-aged children.
    In addition, members have organized 300 community service activities
    for the children and their families and neighbors during the program
    year.
                                    delaware
        RSVP of Kent County, Modern Maturity Center, 1121 Forrest Avenue,
    Dover, DE 19904, Telephone: (302) 734-1200, Contact: Dwight Hackett.

    Number of Retired and Senior Volunteer Program (RSVP) volunteers..    20

        Program Summary.--RSVP volunteers joined other community volunteers
    in tutoring thirty-two students in first, second and third grade who
    were reading below grade level. Volunteers were trained by the YMCA
    Resource Center, which also provided a grant for the program.
    Volunteers were then matched with specific students, and individual
    work plans were established. The RSVP volunteers provided the students
    with thirty minutes of one-to-one tutoring four times a week over a
    seven month period.
                              district of columbia
        DC Reads, Communities in Schools of Washington, D.C., 820 First
    Street, NE, Suite 480, Washington, D.C., 20002, Telephone: (202) 289-
    4314, Fax: (202) 289-7325, Contact: Alan Chambers.

    Number of AmeriCorps*VISTA members................................    33
    Number of RSVP volunteers.........................................    85
    Number of Foster Grandparents (FGP)...............................    35

        Program Summary.--DC Reads will increase literacy among children
    and families throughout Washington, DC. Through the involvement of DC
    Public Schools, six local colleges and universities, businesses, and
    other public and private organizations, DC Reads is supporting the
    national goal to ensure that all children can read well and
    independently by the end of the third grade. This year, the following
    activities are being implemented in 16 schools identified as DC Reads
    sites: ``Book Partners:'' First-graders are paired with the community
    volunteers and federal work-study students for an hour-long session
    held two to three times each week. Two AmeriCorps*VISTA members re
    serving with Communities in Schools in each of the 16 sites to recruit
    and coordinate volunteers and manage communication among parents,
    teachers, tutors, and students. In addition, Foster Grandparents and
    RSVP volunteers serve as tutors. ``Saturday Academy:'' Second and third
    graders participate in a Saturday tutoring program to increase students
    reading proficiency.
                                    florida
        Mid-Florida Community Services, 1127 N. Boulevard East, Leesburg,
    FL 34748, Telephone: (352) 589-4545, Contact: John Fuller.

    Number of National Senior Service Corps volunteers receiving a
        stipend.......................................................    12
    Number of other senior volunteers.................................     6

        Program Summary.--Mid-Florida Community Services of Leesburg, an
    RSVP Program, will apply its experience in reading achievements for
    young children to the ``Seniors for Schools'' Initiative. ``Seniors for
    Schools'' will operate as a ``reading coach'' model, with senior
    volunteer tutors who primarily work one-on-one with children for
    fifteen to twenty hours each week. Four schools will participate, and
    an estimated 150 children, identified by teachers as reading one or
    more grade levels behind, will receive needed assistance with reading.
    Teachers and the senior volunteers will work in close partnership to
    plan activities and goals for the children. A coalition involving other
    community groups and the Partners for Success AmeriCorps project will
    provide technical assistance.
                                    georgia
        Georgia Commission on National and Community Service, Hands On
    Atlanta AmeriCorps, 931 Monroe Drive, Suite 208, Atlanta, GA 30308,
    Telephone: (404) 872-2252, ext. 19, Fax: (404) 872-2251, Contact:
    Michelle Nunn.

    Number of full-time AmeriCorps members............................   131
    Number of part-time AmeriCorps members............................    40

        Program Summary.--AmeriCorps members provide tutoring, service-
    learning, mentoring, and life skills programming for students in
    seventeen Atlanta elementary, middle, and high schools to increase the
    academic and general school success of nearly 6,000 students. Five
    initiatives, TEACH, READ, SERVE, LEAD, and CITIZEN SUMMER, will be
    implemented. These programs include one-to-one and small group tutorial
    assistance; management and coordination of volunteer reading mentors;
    integration of service-learning into curricula; development of projects
    to engage students in direct service to the community; leadership
    development training; and engaging high school students as tutors in
    elementary school programs. Members serve in teams of four to ten in
    schools where a majority of students are eligible for free or reduced
    lunch and where student scores on standardized tests are below the
    fiftieth percentile.
                                     hawaii
        Hawaii Reads, University of Hawaii--Manoa, 2600 Campus Road,
    Honolulu, HI 96822, Telephone: (808) 956-4641, Fax: (808) 541-3603,
    Contact person: Atina Pascua.

    Number of Learn and Serve America students........................    36
    Number of Retired and Senior Volunteer Program (RSVP) volunteers..    28

        Program Summary.--Learn and Serve America students were recruited
    specifically for the America Reads initiative to provide tutoring to
    110 low-achieving students in kindergarten through fifth grade to
    improve reading comprehension by two levels. The volunteers will
    provide 2,200 hours of service throughout the school year. This project
    began October 1, 1997.
        The RSVP volunteers will work with eighty-four second grade
    students for one hour per week. They will provide one-on-one
    individualized tutoring to students identified as needing assistance
    with reading comprehension and critical thinking skills. RSVP
    volunteers will provide 3,000 hours of service during the school year.
                                     idaho
        Idaho Commission for National and Community Service, Idaho TRIO
    AmeriCorps (ITAC) Program, 500 8th Avenue, Lewiston, ID 83501,
    Telephone: (208) 799-2084, Fax: (208) 799-2058, Contact: Jeannie
    Harvey.

    Number of full-time AmeriCorps members............................    16
    Number of part-time AmeriCorps members............................    14

        Program Summary.--AmeriCorps members provide tutoring and mentoring
    to at-risk students from Head Start through high school in order to
    increase students' reading levels, assist students with their homework,
    and help individuals obtain GED's. Small teams consisting of one to
    four members, are placed in four regions of the state. These areas are
    nearly all isolated, rural communities. In addition, they will provide
    career information and educational needs assessments, and develop job
    shadowing opportunities for high school students.
                                    illinois
        IL Department on Aging, Illinois Reads, 421 East Capitol Ave., #
    100 Springfield, IL 62701-1789, Telephone: (217) 785-3355, Fax: (217)
    785-5880, Contact: Mary Selinski.

    Number of AmeriCorps*VISTA members................................     6

        Program Summary.--The Illinois R.E.A.D.S. (Retirees Educating and
    Assisting in the Development of Students) is an intergenerational
    initiative that has been operating in Illinois since 1991. R.E.A.D.S.'
    mission is to find Seniors willing to tutor young people and to place
    them with young children with specific reading needs. This project has
    a governor's level of six volunteers and a potential of growing to ten.
    This state-wide project, also collaborates closely with the twenty-
    three RSVP projects in Illinois.
                                    indiana
        Indiana Governor's Commission on Community Service and
    Volunteerism, Indiana Reading Corps, 620 Union Drive, Room 618,
    Indianapolis, IN 46202, Telephone: (317) 274-8285, Fax: (317) 274-8744,
    Contact: Pamela McKeough.

    Number of full-time AmeriCorps members............................    11
    Number of part-time AmeriCorps members............................    20
    Number of part-time Education Award Only members..................    36

        Program Summary.--The Indiana Reading Corps builds on local efforts
    to create literacy programs for children in kindergarten through sixth
    grade both during the school day and after school. Members serve as
    literacy tutors, create and improve children's literacy programs and
    recruit and train community volunteers. The full-time members will be
    single placements at eleven colleges and universities, and the part-
    time members will serve in teams at three universities. This program
    serves both rural and urban youth.
                                     kansas
        Wichita/Sedgwick County Communities in Schools, Inc., 412-418 South
    Main, Suite 50, Wichita, KS 67202, Telephone: (316) 833-5110, Contact:
    Vicky Roper.

    Number of AmeriCorps*VISTA members................................     4

        Program Summary.--AmeriCorps*VISTA members are implementing a
    literacy project for seventy-five families. Adults and children are
    tutored, while parents are taught how to reinforce reading and math
    skills at home. Members are also developing a summer school program to
    serve thirty-five additional families. Members are working to
    collaborate with four other organizations to provide effective school-
    based programs. Currently, 100 parents and their children are being
    served at four sites by sixty recruited volunteers. One site has added
    a family literacy component to their program. The classes are also
    serving a new immigrant population that has not been reached in the
    past.
                                    kentucky
        Kentucky Commission on Community Volunteerism and Service,
    AmeriCorps Student Service Consortium, Eastern Kentucky University,
    College of Education, 423 Bert Combs Building, Richmond, KY 40475,
    Telephone: (606) 622-6543, Fax: (606) 622-6526, Contact: Nancy Thames.

    Number of full-time AmeriCorps members............................    41

        Program Summary.--AmeriCorps members in the Student Service
    Consortium facilitate, coordinate, and implement America Reads
    literacy/tutoring programs and service-learning programs in
    kindergarten through the postsecondary level. Reads member coordinators
    train parent and community volunteer tutors, establish and implement
    curricular and extra-curricular reading clubs, strengthen at-home
    reading activities, and establish after-school, weekend, and summer
    tutoring programs. Member coordinators also prepare students for
    service-learning, facilitate service-learning projects, and lead
    students in project reflection. Members serve individually or in pairs
    at one of the Consortium's twenty-two school districts, three
    institutions of higher education, or three community service
    organizations.
                                   louisiana
        Youth Volunteer Corps of America, YVCA AmeriCorps, 6310 Lamar
    Avenue, Suite 125, Overland, KS 66202, Telephone (913) 432-9822, Fax:
    (913) 432-3313, Contact: Veronica Knight.

    Number of full-time AmeriCorps members............................    42
    Number of part-time AmeriCorps members............................    48

        Program Summary.--Youth Volunteer Corps of America (YVCA) creates
    and increases volunteer opportunities to enrich America's youth,
    addresses community needs, and develops a lifetime commitment to
    service. There are currently Youth Volunteer Corps programs in over 50
    communities in the United States. AmeriCorps members act as service-
    learning coordinators, recruiting and training school-age youth to
    recognize and address community problems, and provide tutoring,
    mentoring, and reading support. Members also recruit, lead, and
    supervise volunteers in youth-generated service projects while
    encouraging each volunteer to commit to a lifetime of service.
        Other operating sites: Arizona, Florida, Michigan, Missouri and
    Washington.
                                     maine
        Maine Campus Compact Rural Service-Learning Initiative, 215 College
    Street, Lewiston, ME 04240, Telephone: (207) 786-8217, Fax: (207) 786-
    6170, Contact: Liz McCabe Park.
        Program Summary.--The Maine Campus Compact will support twelve
    projects through its consortium and the partnership with the NH Campus
    Compact and provide training and technical assistance activities to
    create models of excellence in rural service-learning and deepen
    institutionalization efforts on campuses in Maine and NH. Projects will
    encourage the development of rural, project based service-learning
    dealing with youth oriented issues, community defined projects, or
    projects that address innovation in transportation. Over half of the
    projects are focused on America Reads activities. Training and
    technical assistance efforts involve: professional development for
    faculty and staff as well as students and community partners.
                                    maryland
        Maryland Governor's Commission on Service, Enhancing Neighborhood
    Action By Local Empowerment (ENABLE), 511 West Lombard Street, 5th
    Floor, Baltimore, MD 21201, Telephone: (410) 706-3559, Fax: (410) 706-
    6630, Contact: Sheila Curry.

    Number of full-time AmeriCorps members............................    33
    Number of part-time AmeriCorps members............................   128

        Program Summary.--AmeriCorps members conduct health assessments and
    monitor clinical symptoms for persons with chronic illnesses, and
    provide the HIPPY (Home Instruction Program for Preschool Youngsters)
    and other pre-school readiness programs. In addition, members provide
    after-school literacy tutoring for 500 second and third grade students.
    Members serve in teams organized around the four separate initiatives:
    Community Health, Early Childhood Development, Reading Edge, and
    Healthy Environment.
                                 massachusetts
        MAGIC ME/Boston, Inc., 21 Temple Place, Boston, MA 02111,
    Telephone: (617) 423-6633, Contact: Melissa Gartenberg.

    Number of National Senior Service Corps volunteers receiving a
        stipend.......................................................     6
    Number of other senior volunteers.................................    36

        Program Summary.--MAGIC ME/Boston, Inc. implemented its ``Seniors
    for Schools'' Initiative as the ``Leaps in Literacy Program'' and
    derives its achievement model from the successful SLICE Corps in
    Kentucky. Five elementary schools are targeted as operating sites, with
    an estimated 464 kindergarten through third grade children involved.
    MAGIC ME is applying its successful intergenerational ``reading coach''
    model to ``Seniors for Schools.'' The volunteers will work in the
    classroom, and follow a regular schedule. This enables the reading
    coaches to receive ongoing encouragement and suggestions directly from
    the teachers, who will work in partnership with the volunteers. The
    senior volunteers will collaborate with other Corporation projects in
    the Boston area, primarily Brockton City Pride AmeriCorps and the
    Mayflower RSVP. The intensive service volunteers are serving as
    ``reading coaches,'' an approach that supplements classroom teaching
    through one-on-one reading and discussion of children's literature.
    Currently, the program serves 71 children.
                                    michigan
        Michigan Community Service Commission, Detroit's Academic Success
    Project, 1212 Griswold, Detroit, MI 48226, Telephone: (313) 226-9433,
    Fax: (313) 226-9490, Contact: Octavia Vaughn-Wilson.

    Number of full-time AmeriCorps members............................    25

        Program Summary.--AmeriCorps members provide in-school and after-
    school tutoring to low-achieving students in five elementary schools in
    empowerment zones. Students will increase their reading comprehension
    and academic achievement. The members will also develop community-wide
    service-learning projects to promote civic responsibility.
                                   minnesota
        Senior Resources, Inc., 2021 E. Hennepin, Suite 130, Minneapolis,
    MN 55413-2723, Telephone: (612) 617-7807, Contact: Tanya Prindle.

    Number of National Senior Service Corps volunteers................    80
    Number of AmeriCorps*VISTA........................................     4

        Program Summary.--Senior Resources, Inc. of Minneapolis, will
    implement ``Seniors for Schools'' in four elementary schools. A total
    of eighty senior volunteers--forty intensive--will work as teams to
    help 300 children increase their reading achievement. Senior Resources,
    Inc. hopes to further develop an integrated program that relies on the
    skills of the senior volunteers, partnerships with public schools, and
    participation by the community, including more parents. Four Ameri-
    Corps*VISTA members will serve as the school coordinators for each of
    the operating sites and will track measurable outcomes, develop
    resources, recruit and train volunteers, and involve interested
    community members in the initiative. Anticipated outcomes for the
    children include improved reading skills as a direct result of the
    volunteer effort; improved appreciation of older persons as caring,
    valuable tutors and coaches; and improved academic performance in core
    areas as identified by teachers.
                                  mississippi
        Mississippi Commission for Volunteer Service, Campus Link, 3825
    Ridgewood Road, Jackson, MS 39211, Telephone: (601) 982-6489, Fax:
    (601) 982-6790, Contact: Thomas Layzell.

    Number of full-time AmeriCorps members............................    40

        Program Summary.--AmeriCorps members tutor 500 under-achieving
    elementary school students in order to increase their reading
    comprehension levels, increase the students' self-esteem, and increase
    the students'self-motivated reading. Members serve in pairs on ten
    university campuses throughout Mississippi through existing or newly
    established Campus Service Centers. Volunteerism is a key component of
    this program--500 volunteers contribute 50,000 hours of tutoring
    through this program.
                                    missouri
        YMCA of Greater Kansas City, 3100 Broadway, Suite 93, Kansas City,
    MO 64111, Telephone: (816) 561-9622, Contact: Kimberly Jordan.

    Number of National Senior Service Corps...........................    26

        Program Summary.--YMCA of Greater Kansas City received one of the
    Corporation's first demonstration grants to operate its AmeriCorps
    program, ``Bridges Across the Heartland.'' YMCA is capitalizing on its
    success by interjecting ``Seniors for Schools'' into the overall
    initiative as a unique component. A total of fifty senior volunteers
    will be recruited; thirty of the recruits will serve as the ``central
    corps'' and work intensively in two schools for at least fifteen hours
    each week. An anticipated 276 children will receive extra tutoring and
    assistance due to the direct service of the volunteers. The senior
    volunteers will work with AmeriCorps members in specific ``classroom-
    focused'' activities as intergenerational partners. An individual
    tutoring model will be the foundation, which will be supplemented by
    small group work with the children, reading circles, read aloud time,
    and practice sessions. Specific volunteers will work with assigned
    children and teachers over each school year, thus creating an ongoing
    presence and relationship to help reinforce the children's learning.
    Teachers and senior volunteers will work collaboratively to develop
    reading plans for each child. Senior volunteers will also work in the
    community to engage more parents in school conferences and reading time
    with their children. Currently a total of 80 children are being served.
                                    montana
        Montana Community Services Advisory Council, Missoula Aging
    Services, Inc., 227 West Front Street, Missoula, MT 59802, Telephone:
    (406) 728-7682, Fax: (406) 728-7687, Contact: James Harris.

    Number of full-time AmeriCorps members............................    10

        Program Summary.--AmeriCorps members develop school-based service
    learning and tutoring programs and recruit community volunteers to
    sustain them. Members serve in a mixture of urban and rural school
    districts.
                                    nebraska
        Eastern Nebraska Foster Grandparent Program, 100 Centennial Mall
    North, Room 156, Lincoln, NE 68508, Telephone: (402) 437-5493, Fax:
    (402) 437-5495.

    Number of Foster Grandparents (FGP)...............................    18

        Program Summary.--Eighteen of the seventy Foster Grandparents of
    the Eastern Nebraska Office on Aging serve children in nine schools of
    the Omaha and Fremont Public School system. Over 300 children per week
    benefit from the knowledge, patience, and understanding the Foster
    Grandparents give in an effort to maximize the learning potential of
    each individual child. Foster Grandparents work one-on-one with
    children in the schools to provide the extra attention needed to learn
    the fundamentals of reading, writing, and math.
                                     nevada
        Community Chest, The Pinon Service Project Coalition, PO Drawer
    980, 991 South ``C'' Street, Virginia City, NV 89440, Telephone: (702)
    847-9311, Contact: Deborah Loesch-Griffin.
        Program Summary.--The Pinon Service Project Coalition will recruit
    twelve part time and two full time corps members from the University of
    Nevada-Reno's College of Education and College of Human and Community
    Sciences to serve as service-learning coordinators in one of eight
    kindergarten through twelfth grade partner schools and/or in community
    based organizations or in one of four UNR colleges or departments to
    work with faculty. Corps members will work with student volunteers in
    the development and implementation of direct service projects involving
    youth services, educational programs and after school latchkey
    programs. Whenever possible, service-learning coordinators will be
    placed at existing School to Work and Learn and Serve sites, resulting
    in an integrative educational reform strategy that provides
    opportunities for students to learn in their communities by serving and
    working while applying their classroom-based academic learning.
                                 new hampshire
        New Hampshire National & Community Service Executive Board, New
    Hampshire Reads, 2 Industrial Park Drive, Concord, NH 03301, Telephone:
    (603) 225-3295, Contact: Brian Hoffman.

    Number of full-time AmeriCorps members............................    35

        Program Summary.--This program is a coalition of service providers
    that meet the needs of young children. AmeriCorps members will work
    with coalition agencies to recruit volunteers to provide literacy
    services and tutoring for children from infancy through third grade.
    AmeriCorps members will also run a camp to help at-risk children
    maintain their academic achievement levels during the summer, when
    skills tend to ``drop off'' during school vacation. Members are placed
    with agencies across the state and will facilitate the improvement of
    school readiness and reading skills of 2,700 children and their
    families.
                                   new jersey
        New Jersey Commission on National & Community Service, A+ for Kids
    Mercer County Reads Project, 2 Village Blvd., 2nd Floor Forrestal
    Village, Princeton, NJ 08540, Telephone: (609) 951-0332, Fax: (609)
    951-0644, Contact: Joyce Kersey.

    Number of full-time AmeriCorps members............................    20

        Program Summary.--Mercer County Reads participates in the America
    Reads initiative by having twenty AmeriCorps members provide literacy
    tutoring to 190 students at the district's most troubled school. They
    also offer after-school homework assistance and run a summer reading
    lab. Members also focus on tutoring and mentoring service for children
    and parents in transitional housing, with an emphasis on employable
    skills for parents.
                                   new mexico
        Santa Fe Boys & Girls Club, P.O. Box 2403, Santa Fe, NM 87504,
    Telephone: (505) 983-6632. Contact: Chris Cavazos.

    Number of AmeriCorps*VISTA members................................     2

        Program Summary.--The AmeriCorps*VISTA members with the Santa Fe
    Boys & Girls Club have been tremendously successful in developing the
    educational infrastructure of the public housing community. The
    members, in collaboration with the Santa Fe Community College
    AmeriCorps program, have recruited five volunteers to deliver
    educational services on a daily basis to the 250 Club members. The
    educational services include tutoring and peer reading. The
    AmeriCorps*VISTA members have also organized a read-a-thon, which will
    reward children with gift certificates from local restaurants upon the
    completion of reading and writing descriptions of approximately 20
    books. Currently a member is developing a family literacy program and
    organizing community college adult basic education classes to be held
    at the Boys & Girls Club. Santa Fe AmeriCorps*VISTA members are working
    to strengthen the educational infrastructure of low-income communities
    so all people will have the opportunity to develop their capacity.
                                    new york
        Jumpstart AmeriCorps Program, 93 Summer Street, Boston, MA 02110,
    Telephone: (617) 542-5867, Fax: (617) 542-2557, Contact: Dianne
    Morales.

    Number of part-time AmeriCorps members............................   120
    Number of federal work study students.............................    99

        Program Summary.--Jumpstart is a nonprofit geared to school
    readiness activities for children and their families, while providing
    young people (who are mostly college students) with a training program
    that results in early childhood certification. Jumpstart engages young
    people in service to their communities by preparing pre-school age
    children to enter school.
        Members are paired with a preschool-age child, engaging the child
    and his or her family in school readiness activities, particularly
    around early childhood literacy. Members garner community interest and
    support through an annual ``Children Across the City'' day, where
    parents, their children, and other community members are introduced to
    a variety of learning activities for preschool age children.
                                 north carolina
        Student Coalition for Action in Literacy Education (SCALE),
    National Clearinghouse, 140\1/2\ E. Franklin Street, Chapel Hill, NC
    27599, Telephone: (919) 962-1542, Fax: (919) 962-6020, Contact: Ed
    Chaney.
        Program Summary.--SCALE is a National Clearinghouse for campus
    volunteer and service-learning literacy programs, and America Reads
    work study programs receive training and support from SCALE staff.
    SCALE provides regional training, individual site visits, and a
    national conference. SCALE also supports networking opportunities
    through training, conference, newsletters, and Internet technologies.
    SCALE also provides campuses with written materials, phone support, and
    resource referrals. SCALE is providing national leadership in the
    development of high-quality federal work study America Reads programs.
                                  north dakota
        South/North Dakota Reads, Corporation for National Service, South/
    North Dakota State Office, 225 South Pierre Street, Room 225, Pierre,
    South Dakota 57501, Telephone: (605) 224-5996, Fax: (605) 224-9201,
    Contact: John Pohlman.

    Number of Retired and Senior Volunteer Program (RSVP) volunteers..    64

        Program Summary.--In Bismarck, twenty-five RSVP volunteers are
    involved with the Pairing Adults with Students (PAW's) program, which
    works with twenty-five students in first through third grade.
    Volunteers mentor and provide help with homework assignments that
    include reading.
                                      ohio
        RSVP of Greater Cleveland, Inc., 2611 Church Avenue, Cleveland, OH
    44113, Telephone: (216) 566-9192, Contact: Joy Banish.

    1Number of National Senior Service Corps..........................    18

        Program Summary.--The Retired and Senior Volunteer Program of
    Greater Cleveland, Inc. is collaborating with four other national
    service partners to implement ``Seniors for Schools'' in for elementary
    schools. A total of fifty-two senior volunteers will participate, with
    thirty-two providing intensive service of more than fifteen hours
    weekly. Twenty additional senior volunteers will work in after-school
    programs or parental involvement efforts. A total of 200 children will
    benefit from the services of the senior volunteers. The high poverty
    rates in the communities targeted by ``Seniors for Schools'' have
    severe implications for reading resources available in the community,
    and the initiative will also increase the number of kindergarten
    through grade three books available in lending libraries by 200 books
    during the 24-month grant period. Working collaboratively with
    teachers, a learning specialist, and team members, the senior
    volunteers will primarily provide one-on-one tutoring to the children.
    This initiative will also develop systems to increase parental and
    community involvement. Currently, 380 children are being reached.
                                    oklahoma
        Oklahoma Department of Libraries, 200 NE 18th Street, Oklahoma
    City, OK 73105, Telephone: (405) 521-2502, Contact: Robert Clark.

    Number of AmeriCorps*VISTA members................................    11

        Program Summary.--The Oklahoma Department of Libraries, a statewide
    AmeriCorp*VISTA literacy project, has successfully raised $75,000 in
    financial contributions and has received approximately 50,000 books by
    mobilizing community volunteers to organize 10K races, book bank
    drives, PSA's through local media, and letter writing campaigns. The
    books were donated to rural public libraries throughout the state of
    Oklahoma. In Tulsa, the AmeriCorp*VISTA members successfully
    implemented a campaign with the help of Southwestern Bell telephone
    company. Community volunteers picked up book donations and dropped them
    off at a local bookstore. Southwestern Bell then picked up the books
    and delivered them to community centers. In partnership with the
    Oklahoma Educational Television Authority, two members are coordinating
    the First Book project. The project promotes literacy and a love of
    reading by getting books into the hands of children. By targeting those
    living at or below the poverty level, members hope to reach children
    who may not own any books. Two thousand books were distributed during
    the first three months of the project.
                                     oregon
        Metropolitan Family Services, 2200 NE 24th Street, Portland, OR
    97212, Telephone: (503) 331-5924, Contact: Shirley McCormack.

    Number of National Senior Service Corps volunteers................    11
    Number of AmeriCorps*VISTA members................................     2

        Program Summary.--Metropolitan Family Services of Portland has
    sponsored a Foster Grandparent Program site since 1965. In 1995, the
    agency received an Experience Corps Demonstration grant, to use senior
    volunteers as resources to children in schools operating
    intergenerational projects, and successfully recruiting and retaining
    seniors to provide significant services. Through the ``Seniors for
    Schools'' Initiative, 300 kindergarten through third grade children in
    three Portland elementary schools are receiving extensive assistance in
    reading and literacy. An intensive corps of seniors are trained in
    ``Success for All,'' a comprehensive reading program to help at-risk
    children read at or above grade level. Senior volunteer tutors work
    one-on-one with selected students on a regular basis. The Learn and
    Serve America project of Portland State University provides a series of
    training sessions that utilize the talents of the university students,
    while two AmeriCorps*VISTA members serve as liaisons, coordinators, and
    capacity-builders. AmeriCorps*VISTA may also take on special projects
    to increase resources for the initiative, involve the community, and
    form strategic partnerships to sustain the project. The Northwest
    Service Academy provides an AmeriCorps member who will also work in the
    program.
                                  pennsylvania
        Pennsylvania Literacy Corps, Henry Avenue and School House Lane,
    Philadelphia, PA 19144, Telephone: (215) 951-0343, Fax: (215) 951-0345,
    Contact: Harry Silcox.
        Program Summary.--Service learning participants receive credit for
    English by tutoring second through fifth graders at neighboring
    elementary schools--one-on-one for three days each week. Over the 32-
    week course, 92,000 hours of service are performed for the community.
    The High School Literacy Corps is centered around the practice of peer/
    peer tutoring of elementary students by high school students three days
    per week. A High School Literacy Corps is composed of thirty students
    assigned to one teacher in an English classroom. Students are also
    required to complete one service project under the supervision of the
    teacher. Experienced program coordinators are hired to oversee and
    coordinate the program in each state. In all, the coordinator will work
    with twenty-three teachers and 760 tutors. The tutors will tutor 3,200
    elementary children to improve reading skills. Each school receives
    specialized literacy materials, training of teachers, grants, and
    intensive training. In Pennsylvania, the concept of a literacy corps
    within a school has been developed in ten sites and is hoping to expand
    to an expected fifty elementary schools.
                                  rhode island
        Community College of Rhode Island (CCRI), 1762 Louisquisset Pike,
    Lincoln, RI 02865, Telephone: (401) 333-7159 or (401) 333-7043,
    Contact: Dean Becky Yount.

    Number of AmeriCorps*VISTA members................................     2

        Program Summary.--Two AmeriCorps*VISTA members were placed with the
    Community College of Rhode Island which has campuses in Warwick,
    Lincoln, and Providence as well as satellite campuses. The members will
    develop an America Reads program for all campuses as well as a service-
    learning program at the Providence campus. Initial school districts to
    be targeted include Providence, West Warwick, Woonsocket, East
    Providence, and Warwick. These efforts will also be coordinated with
    the expanded federal work study program. At least 60 students in
    kindergarten through third grade will receive tutoring and mentoring;
    at least five CCRI faculty will implement America Reads activities as
    part of the service-learning component of their courses; and a
    volunteer fair will be held, involving at least 10 agencies seeking
    volunteers in which at least 50 students will participate.
                                 south carolina
        South Carolina Commission on National & Community Service, Lander
    University & Upper Savannah Consortium for Child & Family Advancement,
    303 Willson Street, Greenwood, SC 29649, Telephone: (864) 388-8110,
    Fax: (864) 388-8812, Contact: Kellye Vittone.

    Number of full-time AmeriCorps members............................    20
    Number of part-time AmeriCorps members............................    20

        Program Summary.--AmeriCorps members tutor and mentor over 200
    students ages 4 to 14 who are at high risk of school failure due to
    academic, self-esteem, and attitude challenges. Members also tutor 300
    students ages 6 to 14 to help them achieve state standards in reading,
    math, and written language skills. An additional forty students ages 4
    and 5 who are not ready to learn are tutored to achieve appropriate age
    level skills. Members also recruit additional volunteers, engage
    students in service-learning activities, and encourage and support
    parents and community members to utilize university resources. Members
    serve in one of eleven sites.
                                  south dakota
        South/North Dakota Reads, Corporation for National Service, South/
    North Dakota State Office, 225 South Pierre Street, Room 225, Pierre,
    South Dakota 57501, Telephone: (605) 224-5996, Fax: (605) 224-9201,
    Contact: John Pohlman.

    Number of Retired and Senior Volunteer Program (RSVP) members.....    64

        Program Summary.--In Webster, eleven RSVP members are placed in
    five schools helping students get up to their appropriate grade level
    in reading. In Sturgis, eight RSVP members are placed in Sturgis
    Elementary School addressing the reading difficulties of students using
    the EDMARK reading/phonics program. In Pierre, twenty RSVP members are
    placed in elementary schools, Head Start centers and latchkey programs.
    This past summer, the Reading Buddy Program matched RSVP volunteers
    with children in grades one to three, who helped them with their
    reading once a week.
                                   tennessee
        Tennessee Commission on National & Community Service, Nashville
    READ, Inc., 421 Great Circle Road, Suite 104, Nashville, TN 37228,
    Telephone: (615) 255-4982, Fax: (615) 255-4783, Contact: Carol Thigpin.

    Number of full-time AmeriCorps members............................    20

        Program Summary.--AmeriCorps members tutor 240 reluctant readers in
    grades one to three to increase reading comprehension; teach parents of
    1,800 children how to assist their children in reading; and create book
    instructional aids for 1,800 parents to use at home. Members serve at
    one of twenty sites in Nashville. A total of 120 volunteers are
    utilized in service activities.
                                     texas
        Houston READ Commission, 5330 Griggs Road, # 75, Houston, TX 77021,
    Telephone: (713) 228-1801, Contact: Jeanette Manazero.

    Number of full-time AmeriCorps members............................    60
    Number of AmeriCorps*VISTA members................................     9

        Program Summary.--The Houston READ Commission and the Houston
    Community College have partnered to allow federal work-study students
    to work as reading tutors for children at community-based and
    elementary school programs in their support of America Reads. The
    effort supports 60 full-time AmeriCorps members at 34 different sites,
    as well as federal work study students and VISTA's in partnerships with
    schools, recreation departments, congregations, libraries, and Girl
    Scout groups to match learners with reading partners using the
    Department of Education's READ*WRITE*NOW program materials. The
    AmeriCorps*VISTA members are recruiting, training, and tracking
    participants to ensure sustainability and to measure progress.
                                      utah
        Salt Lake County Government Center, Edison Elementary School, 2001
    S. State Street, Suite 32100, Salt Lake City, UT 84190-2710, Telephone:
    (801) 481-4846, Contact: Marsha Kellogg.

    Number of federal work-study students.............................    10
    Number of AmeriCorps members......................................     5

        Program Summary.--Edison School is an inner-city school in which 97
    percent of the students are at poverty level, nineteen languages are
    spoken, and twenty-two cultures are represented. Students at Edison
    typically fall behind a half grade level each year. Through the efforts
    of AmeriCorps members, Senior Corps volunteers, and other community
    volunteers trained in the Reading One to One Program, students receive
    up to 100 tutoring sessions per year.
                                    vermont
        Literacy in the Kingdom, 1 Vail Hill, Lyndon State College,
    Lyndonville, VT 05851, Telephone: (802) 626-6357, Fax: (802) 626-9770,
    Contact: Anne Brown.

    Number of reduced part-time AmeriCorps members....................    20

        Program Summary.--Twenty AmeriCorps members and numerous community
    volunteers are working in ten schools, libraries, and agencies to
    increase the literacy of children in the Northeast Kingdom of Vermont
    in kindergarten through third grade. The program is sponsored by Lyndon
    State College and is modeled after the New Zealand design of ``PM
    Readers.'' The first goal of the program is to help children in
    Kindergarten through the third grade attain an ability to read and
    write at or above grade level. The second goal--which targets welfare
    recipients and under-employed and unemployed citizens--is to enhance
    adult literacy and problem solving skills.
                                    virginia
        Virginia Polytechnic Institute and State University, 202 Major
    Williams (0168), Blacksburg, VA 24061, Telephone: (540) 231-6947, Fax:
    (540) 231-6367, Contact: Michele James-Deramo.
        Program Summary.--While continuing to place students at local non-
    profit agencies, schools, and organizations to meet identified
    community needs, the Service-Learning Center at Virginia Tech this year
    will foster faculty and student leadership through Faculty Innovation
    Grants, a Service Scholars program and a publication of faculty essays
    on the integration of technology and service-learning instruction. The
    Center's mentoring program will reach 300 youth in kindergarten through
    eighth grade using interactive technologies with the goal of improving
    the students' basic skill areas such as reading and writing.
                                   washington
        Washington Commission on National and Community Service, Washington
    Reading Corps, 515 15th Avenue, SE, Mail Stop 43134, Olympia, WA 98504-
    3134, Telephone: (360) 902-0663, Contact: Bill Basl.
        Program Summary.--Governor Locke has proposed a Washington Reading
    Corps that will mobilize 25,000 volunteers who will provide reading
    tutoring for 82,000 students under the direction of 5,500 teachers.
    Governor Locke has provided $23.8 million from the state budget for
    this effort. Tutoring will be provided before and after school, on
    Saturdays, and during the summer with each student receiving a minimum
    of 80 hours of instruction. Tutor and teacher training will be provided
    by the Superintendent of Public Instructions and the Educational
    Service Districts. Statewide plans to include AmeriCorps*VISTA,
    AmeriCorps*State and National, and the National Senior Service Corps in
    the America Reads effort have been developed and are in the process of
    being implemented.
                                 west virginia
        West Virginia Commission for National and Community Service, Energy
    Express AmeriCorps, West Virginia University Extension Service, 702
    Knapp Hall, P.O. Box 6031, Morgantown, WV 26506-6031, Telephone: (304)
    293-2694, Fax: (304) 293-7599, Contact: Ruthellen Phillips, Ed. D.

    Number of part-time AmeriCorps Members............................   326

        Program Summary.--Through an innovative summer program in fifty-
    five sites across the state, over 300 AmeriCorps members promote summer
    reading and writing skills & nutritional well-being for 3,000 low-
    income/rural school-age children, lead student community service
    projects, and ensure that all children obtain two nutritional meals a
    day throughout the summer months. Members also involve parents and
    community members as summer volunteers. In 1996, 71 percent of all
    children served increased in reading comprehension and more than 14,000
    volunteer hours were contributed statewide.
                                   wisconsin
        University of Wisconsin-River Falls, RDI Building, 410 South 3rd
    Street, River Falls, WI 54022, Telephone: (715) 425-0608, Fax: (715)
    425-4479, Contact: Florence Monsour.
        Program Summary.--This consortium of six campuses in the University
    of Wisconsin system will advance service-learning across the state by
    partnering with a two year college and a kindergarten through twelfth
    grade school district. The program goal is to assist the partner
    institutions in developing service-learning programs which are
    accessible to all students and are jointly supported by Academic
    Affairs, Student Affairs, and Student Government. Each institution will
    submit a plan for implementing service-learning into teacher education
    and selected portions of their curriculum, and incorporating student
    affairs and student government into the service-learning efforts on
    their campus. During the first year, the project will provide training
    to teacher education faculty, additional faculty, student affairs staff
    and student government on how to implement service-learning and
    integrate it into the curriculum. During the second year, training will
    broaden to include partner two year institutions, and kindergarten
    through twelfth grade school districts will be added in year three.
    Many of the projects initiated and addresses will focus on literacy
    skills.
                                    wyoming
        NOWCAP Foster Grandparent Program, 319 South 6th Street,
    Thermopolis, WY, 82003, Contact: Ilene Johnson.

    Number of Foster Grandparents (FGP)...............................    12

        Program Summary.--Students in the Lander Public Schools have shown
    a major improvement in reading from the 1995-96 to the 1996-97 school
    year. This is in part due to the work of the twelve Foster Grandparents
    working with children in an innovative approach called Pegasus, a
    reading and language arts program in which grandparents help children
    in a one-on-one approach. Sixty first graders were tutored by twelve
    Foster Grandparents serving twenty hours per week for nine months.
                                  puerto rico
        Consejo de Salud de la Comunidad de la Playa de Ponce, Inc., Foster
    Grandparent Program, P.O.Box 254, Ponce, Puerto Rico 00731, Contact
    Person: Ana A. Martinez.

    Number of Foster Grandparents (FGP)...............................     3

        Program Summary.--In Ponce, more than 90 percent of those enrolled
    in public schools are at or below poverty level. Twenty-seven first
    through third grade students in Andres Grillasca Salas Elementary
    School were tutored by three Foster Grandparents in basic reading. The
    Foster Grandparents provided twenty minutes daily with their assigned
    student, for a total of nine students each.

           examples of national service programs addressing literacy

        Mr. Wofford. I would say, from my own point of view, the
    various programs in children's education and literacy are the
    proudest parts, ranking right now next to the disaster relief,
    alongside of the disaster relief work of AmeriCorps members.
        Two-thirds of our AmeriCorps assignments, approximately,
    are in the broad field of education, and before the Presidents'
    Summit in Philadelphia, the Corporation set the goal of
    effective education and literacy for every child. Before
    President Clinton proclaimed the idea of America Reads, our
    Board had concluded that this should be a priority of the
    Corporation.
        Senator Bond. Do these AmeriCorps volunteers spend their
    time reading to children in the afternoons? What is their
    function? What is it that they do?
        Mr. Wofford. I have to convey to you the array of different
    approaches because we do not organize these. These are
    competitive grants based on applications from local literacy
    programs.
        The grants go to those literacy programs. They might be a
    university literacy program working with the school system. In
    some cases, it is a school system that applies. They have a
    great diversity in what they do.
        Senator Nunn's daughter runs Hands On Atlanta, which has an
    outstanding record of more than 100 AmeriCorps members who run
    what has been awarded the highest recognitions around Atlanta
    for intense afterschool tutoring programs.
        In some places, there is direct teaching. The Alliance for
    Catholic Education, run by Notre Dame in cooperation with the
    United States Catholic Conference, and the University of
    Portland have some 120 teachers, outstanding college graduates,
    who commit themselves to teach for 2 years on AmeriCorps terms
    of about $8,000 a year in living allowance in the hardest
    pressed Catholic schools of 9 Southern States.
        They actually teach. They are not all in elementary
    schools, but the teachers in elementary schools, after training
    at Notre Dame and as part of earning a Master's in teaching,
    are doing direct, intense teaching of reading in hard-pressed
    minority-serving schools.
        Senator Bond. While that is very important, it would seem
    to me that we will never be able to get enough AmeriCorps
    volunteers to read to all the children that need to be read to,
    that need to be tutored. I would expect that a program like
    this would utilize volunteers to organize much broader
    activities and to do community outreach.
        I have spent a good bit of time traveling around my State
    to various school districts to read to children not for the
    purpose of my teaching a child to read but to emphasize to
    every adult in the community, whether it is a parent, a
    grandparent, an aunt, an uncle, a neighbor, or a day care
    provider, the importance of it. There just are not enough
    AmeriCorps volunteers to go around.
        It would seem to me that utilization of these resources in
    an effort to expand community reading programs bringing in more
    participants from the community would have a much broader
    impact than attempting to use an AmeriCorps volunteer one on
    one.
        It may be very good for the particular child or children
    who get the help, but we don't have that many AmeriCorps
    volunteers.
        Mr. Wofford. Mr. Chairman, you stated the strategy and the
    purpose of the extra funds given last year and this year being
    requested for assistance to children's literacy through
    AmeriCorps.
        All of the VISTA increase in the other committee is in the
    form of AmeriCorps*VISTA members who almost entirely do the
    organizing of programs, the recruiting of unpaid volunteers,
    exactly what you said. The Philadelphia Reads was launched
    yesterday by Mayor Rendell with an outstanding literacy leader
    of the Nation who is going to be running it. Her key people are
    two AmeriCorps*VISTA members. So all of the increase in VISTA
    is in that form.
        Most of the assignments that AmeriCorps members will have
    is the organizing of the volunteer tutors as the top priority.
    They may be work study or other college volunteer tutors. They
    may be volunteers from corporations. But the AmeriCorps members
    will be a cadre of leaders and organizers. It is the volunteer
    generator model that we are committed to in all parts of
    AmeriCorps, but especially in the reading initiative.
        Senator Bond. That makes the most sense to me.

              reducing costs and the education-award-only program

        I have one last question for you. The appropriations bill
    last year required the Corporation to reduce the total Federal
    costs per participant in all programs. What affirmative steps
    have you taken to reduce the Federal cost per participant in
    the program?
        Mr. Wofford. We also had the agreement of a 1\1/2\ years,
    going on 2 years ago, with Senator Grassley that we will bring
    down the average budgeted cost per AmeriCorps member from what
    was $18,000 approximately to $15,000 per member by fiscal year
    1999.
        We are completely on track on that, Mr. Chairman. We are at
    about $16,000 per member this year. We have achieved that by,
    first, setting for our own National Direct grants a cap that
    brings it down to that level. That includes, Mr. Chairman, the
    nearly $5,000 educational award in the $15,000, and the $10,000
    covers the approximately $8,000 living allowance.
        So it is a very lean system. It is getting very close to
    the VISTA model and the Peace Corps model of just supplying the
    people power and not additional, substantial additional
    support, except to startup programs.
        We also have made a major breakthrough this year toward
    cost reduction by running with the ball that Senator Grassley
    threw to us of the model of not providing the living allowances
    from the Corporation or the Federal Government at all, but to
    leave the support of the AmeriCorps members to organizations
    that can sustain it and organize it. The Corporation
    contributes the education award of about $5,000. We started
    this on a larger scale shortly after Senator Grassley and I
    agreed to run with it. We had a pilot program which he knew
    about in urging us to move on that model. It had reached maybe
    the level of 1,500 in that form.
        The President at the Presidents' Summit in Philadelphia
    challenged faith-based organizations and nonprofits, great
    nonprofits, to respond. We have now 14,000 of the AmeriCorps
    members who are going to be in that model, going on 15,000.
        So if you see Senator Grassley before I do, you should tell
    him how grateful we are that he urged us on to what I think is
    one of the most promising tracks, the religious organizations.
    About 1,000 or more of these AmeriCorps positions are with the
    Methodists, and 1,000 with the Catholics, and so on. All told,
    more than 5,000 Education-Award-Only AmeriCorps members serve
    with faith-based organizations.
        Senator Bond. I would ask you to submit that for the
    record, we can dispense with the listing.
        Mr. Wofford. Yes; I would like to do so very much.
        [The information follows:]

        National Council of the Churches of Christ in the United States

    1997-98 Placement of AmeriCorps members
        The National Council of Churches anticipates that the following
    member communions and related faith-based community outreach programs
    will utilize the following numbers:

    United Methodist.................................................. 1,100
    Catholic Church................................................... 1,000
    Mennonite Church..................................................   450
    Church of the Brethren............................................   275
    Black Denominations (e.g., African Methodist Episcopal Church).... 1,000
    United Church of Christ...........................................   270
    Other smaller communions and faith-based communions............... 1,325

        Smaller communions and faith-based communions include:

    American Baptist Churches
    Lutheran Church
    Reformed Church of America
    Presbyterian Church (USA)
    Episcopal Church
    Christian Church (Disciples)
    Quakers (Society of Friends)

        Note: All information is based on National Council of Churches'
    projections of placing 5,420 AmeriCorps members through their faith-
    based member communions.
        The National Council of Churches does enroll from all its member
    communions and continues to encourage all their involvement in the
    program. Those communions are:

    Member Communions of the National Council of Churches
    African Methodist Episcopal Church
    African Methodist Episcopal Zion Church
    American Baptist Churches in the USA
    The Antiochian Orthodox Christian Archdiocese of North America
    Armenian Church of America
    Christian Church (Disciples of Christ)
    Christian Methodist Episcopal Church
    Church of the Brethren
    Coptic Orthodox Church in North America
    The Episcopal Church
    Evangelical Lutheran Church in America
    Friends United Meeting
    Greek Orthodox Archdiocese of America
    Hungarian Reformed Church in America
    International Council of Community Churches
    Korean Presbyterian Church in America (General Assembly of the)
    Mar Thoma Syrian Church of India
    Moravian Church in America
    National Baptist Convention of America, Inc.
    National Baptist Convention, USA, Inc.
    National Missionary Baptist Convention of America
    Orthodox Church in America
    Patriarchal Parishes of the Russian Orthodox Church in the USA
    Philadelphia Yearly Meeting of the Religious Society of Friends
    Polish National Catholic Church of America
    Presbyterian Church (USA)
    Progressive National Baptist Convention, Inc.
    Reformed Church in America
    Serbian Orthodox Church in the USA and Canada
    The Swedenborgian Church
    Syrian Orthodox Church of Antioch
    Ukrainian Orthodox Church of America
    United Church of Christ
    The United Methodist Church

                      questions for the inspector general

        Senator Bond. I appreciate your answers. I would like now
    to invite Ms. Luise Jordan to come forward to answer a few
    questions now as the inspector general.
        Welcome, Ms. Jordan. I thought I would ask you to comment
    since we have been talking about the reforms that are
    necessary. I understand the Corporation has made additional
    progress toward balancing its books and straightening them out.
        I would like to know your analysis of the Corporation's
    current status with regard to financial management and what
    steps still need to be addressed.
        Ms. Jordan. In 5 minutes or less?
        Senator Bond. We will give you the opportunity to submit
    the full answer for the record. But I would appreciate just for
    the purpose of this discussion your summation of the areas
    where you think, overall, the progress has occurred. Has the
    progress been good? If not, what is lacking? What needs to be
    done.
        Ms. Jordan. The progress has been slow. I am not so sure
    that I would characterize it as always good. Progress has been
    made, but often I believe progress has been the result of
    external forces. There is a commitment that has been ongoing
    for the last 3 or 4 months to improve not only financial
    management but the management of the Corporation overall.
        As far as the new plan is concerned, auditability is a good
    goal and a clean opinion is an admirable goal. But I would not
    advocate that alone. I would advocate good financial management
    overall; and, as a result of good financial management,
    auditability and clean opinions on the Corporation's financial
    statements would automatically come.
        Overall management in other areas--in my semiannual report,
    I have talked about the need for better oversight of the
    grants, I have talked about the need for better audit followup,
    and I still believe that these are other issues the Corporation
    needs to address. They are addressing them. But the progress
    has been slow.
        Senator Bond. We will want your continued assessment. We
    have a process here that I hope will provide progress that is
    no longer slow and that is more frequently good.
        So this is a challenge to Senator Wofford and his staff,
    and we need your continuing oversight to give us an idea on how
    effective the reforms and the plan is.
        Mr. Wofford. We need her assessment and help as she has
    been giving it actively. We will be working very closely with
    the inspector general.
        We will get it done, Mr. Chairman.
        Senator Bond. We will count on you doing that.
        I think that the rest of the questions can be handled by
    submission. On behalf of all of my colleagues--there are many
    other things going on today--I will tell you that we will leave
    the record open to allow them to submit questions.
        Obviously, there are certain things that we asked today
    that may require a fuller explanation and we would welcome that
    from you, Senator Wofford, and from you, Ms. Jordan.

                              subcommittee recess

        Thank you very much.
        The hearing is recessed.
        Mr. Wofford. Thank you, Mr. Chairman.
        [Whereupon, at 11:53 a.m., Thursday, March 5, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

     DEPARTMENT OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
            INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1999

                                  ----------

                            THURSDAY, MARCH 12, 1998

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 9:36 a.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Christopher S. Bond (chairman)
    presiding.
        Present: Senators Bond, Burns, Craig, Mikulski, and
    Lautenberg.

                  DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

    STATEMENT OF ANDREW CUOMO, SECRETARY

                    OPENING Statement OF CHRISTOPHER S. BOND

        Senator Bond. The Senate VA, HUD and Independent Agencies
    Appropriations Subcommittee hearing will come to order.
        My good friend and ranking member, Senator Mikulski, has
    fallen victim to the heavy Washington traffic this morning and
    suggested that we get started.
        I want to welcome Secretary Cuomo and our other guests for
    being with us this morning. Secretary Cuomo will be testifying
    on the President's fiscal year budget request for the
    Department of Housing and Urban Development, followed by Under
    Secretary John Hawke, Department of the Treasury, and Ms. Ellen
    Lazar, Director of the Community Development Financial
    Institutions Fund, who will be testifying on the fiscal year
    1999 budget for the Community Development Financial
    Institutions program.

                           president's budget request

        The President's budget request for HUD proposes a budget of
    $25 billion for HUD which is an increase of some $900 million
    over the fiscal year 1998 appropriation of $24.1 billion. As
    always, these budget numbers tell only part of the story.
    Despite a number of questionable assumptions in the President's
    budget request, this subcommittee is confronted with the very
    difficult task of complying with the discretionary budget caps
    established in last year's budget agreement which provide for
    no real growth in nondefense discretionary spending.
        In particular, this subcommittee will need to meet the
    increased EPA costs, including calls for increased funding for
    Superfund cleanup, to meet escalating costs for the
    international space station, to fund fully veterans medical and
    benefit needs, to fund adequately elderly and disabled housing,
    which is never provided adequately for in the President's
    budget, and to provide the funding necessary to pay for both
    the expanding costs of FEMA disaster relief, as well as the
    exploding costs associated with the renewal of expiring section
    8 contracts.

                         2020 management reform program

        First, Mr. Secretary, I want to compliment you on the
    progress that you are making in implementing HUD's 2020
    management reform plan which is designed to rebuild public
    trust in the Department through management and program reform,
    in conjunction with downsizing the Department from 13,000 staff
    in 1992 to 7,500 staff in 2002.
        We have discussed the need to maintain adequate staffing to
    ensure there is quality in the delivery of HUD program services
    during this transition, and I know you share my concerns that
    the success of each program must remain the primary concern and
    focus of the Department as you continue to implement the
    administration's staff downsizing requirements.
        I see a number of our friends from the Department of
    Housing and Urban Development here. I would like you all to
    stand up and be recognized. Would everybody from HUD stand up?
    How many have we got here? Well, thank you all very much for
    being here. Obviously, we have not downsized too much.
    [Laughter.]
        But I want to express to all of you through the Secretary
    our appreciation for the heavy workload that you are carrying
    and for the difficult tasks ahead. With downsizing comes added
    responsibility on the men and women of HUD. Please know that
    while we are looking very carefully at your work, we do
    appreciate your hard work and we look forward to working with
    you to achieve the goals that we all share.
        There is much to be done. HUD is responsible for over 240
    programs and activities, including such important programs as
    the public housing program, the section 8 program, the
    Community Development Block Grant program, the HOME program,
    the McKinney Homeless Assistance programs, the section 202 and
    811 programs, and the FHA mortgage insurance programs.
        Some liken HUD to the tragic sinking of the Titanic. Only
    here we have the ship of HUD with a cargo of important housing
    and community development programs that is steaming toward a
    better world. Instead of making port, this ship of HUD is torn
    apart by structural weaknesses and deficiencies in HUD's
    housing and community development programs, as well as an
    overload of activities and programs. The question for you, Mr.
    Secretary, is whether you as captain of the ship of HUD can
    correct the damage and change the course in time to save the
    ship.
        We do not know yet, but I am reminded, however, that HUD
    has had many captains and course corrections over the last few
    years and there are still problems with the ship. Further, I am
    reminded that HUD continues to be designated by GAO as a high-
    risk area vulnerable to waste, fraud, abuse, and mismanagement,
    and both the HUD inspector general, whom we are delighted to
    have with us, and the National Academy of Public Administration
    have identified substantial concerns with HUD's ability to
    administer its programs and meet its statutory requirements.
    These concerns must be resolved.

                         largest financial institution

        As a matter of fiscal responsibility, HUD is one of the
    Nation's largest financial institutions with sizable
    commitments, obligations, and exposure. HUD is responsible for
    managing more than $400 billion worth of insured mortgages,
    $485 billion in outstanding mortgage-backed securities, and
    some $180 billion in prior year's budget authority for which it
    has future financial commitments.
        Moreover, there are a number of obvious program and
    management deficiencies that currently threaten HUD like the
    iceberg threatened the Titanic, some above the surface and some
    below the surface. For example, I commend your leadership, Mr.
    Secretary, for HUD's diligent efforts to identify and reserve
    all excess section 8 contract reserves. Last year HUD made a
    surprise announcement of finding $5.8 billion in excess section
    8 contract reserves held by public housing authorities. This
    year the HUD fiscal year 1999 budget recommends using the
    remaining $3.7 billion in excess section 8 reserves to help
    fund the $10.9 billion needed to fund all expiring section 8
    contracts in fiscal year 1999. That is responsible budgeting
    and I appreciate what you are doing.

                          market-to-market legislation

        In addition, I worked with you, as well as a number of
    other members of this subcommittee, particularly Senator
    Mikulski, and the Banking Committee with Senator D'Amato,
    Senator Mack, Senator Sarbanes, and Senator Kerry, to pass
    successfully the section 8 Mark-to-Market legislation that will
    restructure the funding of section 8 project-based multifamily
    housing to reduce the costs of housing and preserve this
    housing for low-income families, especially the elderly. That
    is another important achievement.
        Nevertheless, within the next 10 years we will have the
    financial reality that it will require more than $20 billion a
    year to renew all expiring section 8 contracts. This cost is
    without any new incremental section 8 contracts. However,
    despite this cost and concern, I am now to understand that
    HUD's mismanagement of the section 8 voucher program has
    resulted in unauthorized and likely illegal use of a
    substantial number of section 8 vouchers in a number of areas.
        For example, I understand, at a cost of some $90 million
    per year, some 13,000 vouchers, out of 77,000 vouchers, in New
    York City were illegally issued and are currently in use. I
    also understand that it is possible that there are as many as
    50,000 illegally authorized section 8 vouchers currently in
    use, and a financial obligation of this subcommittee?
        On top of this, HUD is now coming in and asking for an
    additional 100,000 new incremental vouchers. I think it is
    clear that we first need to understand how many legal and
    illegal vouchers are currently in use before we start talking
    about funding new incremental vouchers.

                 mc kinney homeless continuum of care programs

        Second, there is The McKinney Homeless Continuum of Care
    programs that I support. Nevertheless, these programs appear to
    be in substantial financial distress. Last year because of
    apparent mismanagement at HUD, HUD ended up issuing three
    separate notices of funding availability, or NOFA's, with
    separate requirements to award the same fiscal year 1997
    homeless assistance funds. This confusion has left a number of
    local homeless assistance programs in disarray with the result
    that I have heard complaints from around the country about good
    programs being rejected for the renewal of McKinney homeless
    assistance funding without cause.
        For example in Missouri, a major concern, the Kitchens
    program in Springfield, MO, was rejected for the renewal of its
    homeless assistance grant despite its longstanding and
    successful participation in HUD's homeless assistance programs.
    It is a program of consistent high quality and there is a
    demonstrated need in the community. Without these funds,
    Kitchens as the available food supply and feeding program for
    the homeless may have to close its doors. That is a serious
    problem and a tragedy. Certainly, we know of other failures by
    HUD to fund what appear to be successful and important homeless
    assistance programs, but Kitchens I know works well and the
    failure by HUD to fund this program is a grave concern to me.

                    fiscal year 1997 emergency supplemental

        Finally, a new red flag on the horizon, as if we did not
    have enough. The fiscal year 1997 emergency supplemental, as
    you will recall, provided HUD with $500 million in emergency
    CDBG funding intended to complement the funding of disaster
    relief under FEMA and other disaster relief programs. This $500
    million was an unprecedented amount of emergency CDBG funding
    and HUD's implementation of this program continues to raise
    significant issues regarding the use of objective criteria and
    questions of accountability. I expected and my staff has
    requested on a number of occasions a full accounting by HUD on
    the procedures and process for allocating these funds, as well
    as a specific accounting of all grant amounts, activities,
    grantees, and beneficiaries. We have received only minimal
    information at best and certainly not the amount or quality of
    information needed to evaluate the use of these CDBG funds.
        Accountability is critical, especially since Congress
    currently is considering a fiscal year 1998 emergency
    supplemental in which disaster relief is a prominent component.
    This subcommittee especially needs information on this program,
    as on all other programs, in order to evaluate their worth and
    value.
        To be quite frank, Mr. Secretary, I think we have a common
    interest in making HUD's housing and community development
    programs both work well and be financially responsible. We can
    only do this with your cooperation and help. We look forward to
    working with you and we appreciate the cooperative attitude
    that you and your top management have had. I understand, that
    is why I recognized the members of HUD, that we have a very
    difficult task that we have to pursue and we will only succeed
    by working together.
        Finally, I emphasize the continued need of the Department
    to redirect the responsibility for HUD programs and activities
    from the Federal Government to State and local decisionmaking.
    Programs like CDBG and HOME work well because of local control
    and decisionmaking where HUD is, at most, the junior partner in
    directing the use of block grant funds.
        This is critical. No longer can or should the Federal
    Government do it all. We cannot do it all. The future of
    successful housing and community development resides at the
    State and local level where other State, local, private, and
    nonprofit resources can be leveraged to expand the availability
    of affordable housing and to create new economic development
    initiatives. Most important, State and local decisions respond
    best to State and local needs.
        We look forward to hearing your comments, but first it is
    my pleasure to turn to my distinguished ranking member, Senator
    Mikulski. Welcome, Senator.

                         Statement OF BARBARA MIKULSKI

        Senator Mikulski. Thank you, Mr. Chairman, and let me begin
    by welcoming the Secretary of HUD, Mr. Andrew Cuomo, for his
    second hearing before this subcommittee and a welcome to his
    entire team, the Budget Officer and others who operate HUD, and
    also to the inspector general, Ms. Gaffney, whose valuable
    advice has been enormously helpful to both me and this
    subcommittee.
        I also want to extend my welcome to the new Director of the
    Community Development Financial Institutions Fund, Ellen Lazar.
    Ms. Lazar is a constituent of mine from Maryland who worked
    several years for the Maryland-based Enterprise Foundation
    which was really founded by the great visionary for urban
    economic development Jim Rouse. We look forward to hearing from
    her and John Hawke, the Under Secretary of the Treasury.
        Mr. Chairman, both HUD and CDFI are agencies with a mission
    to help improve the conditions of local communities. Ultimately
    this is a job of a Federal agency to help local communities be
    able to help themselves and provide opportunity structures that
    help people who practice self-help.
        I have worked with four Secretaries at HUD and I want to
    ensure that we will continue to work with Mr. Cuomo to make
    sure that HUD fulfills its mission and that there are financial
    and human resources available to do so.
        First, I want to commend the Secretary and his new staff
    team for producing and submitting the HUD budget to the
    committee on time this year, which was a major breakthrough.
        I also want to commend him for submitting a budget that
    shows a strong commitment to several programs that I think are
    important to local economic development, but also to take
    important steps in management reform while streamlining the
    work force. That is not always an easy job, and we want to
    thank him for the important first steps and additional steps
    that he has taken under the HUD stewardship. So, we look
    forward to working with him on this.

                    issues important to economic development

        There are several issues which I think are important to
    economic development that emerged over the last few years: the
    HOPE VI Program which is vital to rebuilding urban communities
    with a new approach to public housing, the Brownfields Program
    which could be a significant tool to older communities both
    urban and rural, and then, of course, the lead abatement
    program which is very much important for public health.
        I know, Mr. Secretary, that you are working hard to try to
    make HUD more effective and efficient. So, we will look forward
    to hearing from you about your reforms.

                       implementing the fair housing act

        But let me tell you my yellow flashing lights. Part of
    HUD's fulfilling its mission to help people have safe and
    decent housing is to assist in efforts to eliminate illegal and
    despicable housing discrimination. That is why we look forward
    to how the Fair Housing Act is being implemented, but I also
    want to be sure that in implementing the Fair Housing Act we do
    not ultimately end up in a situation whereby the way it is
    being implemented denies opportunity to the very people we want
    to help.
        I want to focus on the disabled housing program because I
    do not believe--and look forward to hearing from you what clear
    guidance has been provided to State and local entities and
    particularly the builders of housing that will house not only
    the special subsidized programs for the disabled but the
    private market and to be sure that they have clear guidelines,
    consistent regulations, and a reliable way of enforcing so that
    the supply is available while we guarantee removing the
    barriers of access, both architectural and attitudinal.
        Second, we also want to be clear that we are concerned
    about the issue around the 202 elderly housing program. I am
    concerned about the proposed cut of nearly $500 million to the
    202 program. We have an increasing population of elderly
    Americans who are aging in place and we are deeply concerned
    about the cut.
        But also I do not think they have come up with any new
    ideas for housing for the elderly. I think giving them the
    money, they will build, and they will come. So, we want to be
    sure that there is new thinking as well as adequate resources.
        In my own community, a faith-based organization Catholic
    Charities is trying to see how they could, for people with very
    modest incomes, provide the same kind of continuing retirement
    community that the more well healed have, that the services are
    there, that there is the social service coordinator.
        Across the street from my former home in Fells Point were
    faith-based units that were built called Lemco. When people
    moved in, they were 60. They did not move out. They are now 80.
    The building is getting old. The people are getting old and so
    are our ideas. I think we need to make sure that our ideas on
    housing for the elderly do not age in place the way the seniors
    are themselves.
        I also want to make sure that the vision and mission of
    HOPE VI does not get lost and diminished. As you know, there
    have been accusations that these projects are expensive, that
    they are lavish, that it is costing $300,000 to build a
    townhouse. This does not seem like what HOPE VI is, and we
    would like clarification on that and look forward to hearing
    what your management suggestions are to improve accountability
    in HOPE VI so we can continue the program as a new tool.
        Also we look forward to hearing about the brownfields. I
    know that Senator Lautenberg has been a tremendous leader in
    the Superfund sites, but it is the brownfields that offer us
    the most tools to recover land and to be able to move on.
        Those are the kinds of questions that I would like to raise
    with you in this hearing. Questions related to CDFI I will save
    for a later time. But I think you have got a real momentum
    going on at HUD both in terms of mission, management, and
    stewardship over the money. If we could deal with some of these
    yellow flashing lights, I think it will even be able to move us
    more forward in the same vigorous way that you have brought to
    the program. You have really brought a vigor that I appreciate.
        Senator Bond. Thank you very much, Senator Mikulski.
        Now, following the early bird rule, our next early bird was
    Senator Lautenberg.
        Senator Mikulski. The early bird special.
        Senator Bond. Yes; we hand out worms to late early birds.
    [Laughter.]

                        Statement OF FRANK R. LAUTENBERG

        Senator Lautenberg. Thanks, Mr. Chairman, Senator Mikulski.
    I appreciate the opportunity to register some comments on HUD's
    fiscal year 1999 budget request, and I want to welcome
    Secretary Cuomo to this hearing.
        The administration has worked hard under his diligent
    guidance to restore accountability and credibility at HUD, and
    we have talked about things many times, Mr. Secretary, and I
    congratulate you on your efforts.
        Although the task is not yet completed, it is safe to say
    the atmosphere at HUD is far different today than it was just a
    few years ago. The chairman was very specific as he outlined
    some of the problems that we have to deal with. I sense, Mr.
    Chairman, that the Secretary is prepared to take on these
    assignments, as a matter of fact, with some vigor and some
    gusto, if we can use the expression, to straighten things out.
    We want the agency to function as it should. It is a very
    important place in our society.

                              unsubsidized housing

        But as we sort through the HUD funding for the coming year,
    I want to ask my colleagues to keep a few housing statistics in
    mind. From a 1997 study at Harvard, we found that two of three
    extremely low-income households now live in unsubsidized
    housing. Eighty percent of those households pay more than one-
    half of their income for housing or live in structurally
    inadequate housing. At least 4 million families nationwide are
    on public housing waiting lists. Roughly 10 million households
    are eligible for housing assistance but do not get it. For
    every family in public housing, there are seven that qualify
    but do not receive assistance.
        It is fair to say these numbers speak for themselves. They
    clearly illustrate that we must do more to improve housing
    opportunities for Americans whose basic housing needs are not
    being met.
        I am pleased that HUD's fiscal year 1999 budget request
    works toward this goal. It requests the largest level of
    funding ever for homeless assistance. It proposes new vouchers
    to help people find affordable housing and seeks to help more
    Americans become homeowners.

                           economic development needs

        I am also pleased that HUD's budget request emphasizes our
    Nation's economic development needs. In my discussions with New
    Jersey's mayors, the conversation always turns to the
    following: How can our cities increase economic development
    opportunities and produce more jobs so that we can get more
    ratables and establish a more stable urban life?
        HUD's budget request tackles this question head on. The
    administration has proposed several innovative ideas to meet
    these challenges such as vouchers to help people move from
    welfare to work, the community empowerment fund to provide
    businesses with startup capital in the urban centers to create
    jobs, a second round of empowerment zones, and increased
    funding for brownfields. Senator Mikulski highlighted the value
    of brownfield restorations. We want to get these sites
    converted to go from contaminated sites to usable, income
    producing, job producing sites.
        So, Mr. Chairman, I look forward to working with you and
    Senator Mikulski throughout this appropriations season, and I
    thank Secretary Cuomo once again for these initiatives, hard
    work, and results that we have seen thus far.
        Senator Bond. Thank you very much, Senator Lautenberg.
        Senator Craig.
        Senator Craig. Mr. Chairman, I have no opening comments. I
    am here to listen and I have several questions to ask when we
    get there. Thank you.
        Senator Bond. Well, thank you very much.
        With that, Mr. Secretary, let us turn to you for your
    statement.

                           statement of andrew cuomo

        Secretary Cuomo. Thank you very much, Mr. Chairman, ranking
    member, Senator Lautenberg, Senator Craig.
        First, let me take this opportunity to first thank the
    committee for all the good work that we have been able to do
    together. I think the reflections of the committee are correct.
    We have made significant progress this past year, and I think
    that is because of the relationship and the cooperation that we
    have enjoyed both on a principal level and a staff level. I am
    excited about what we have done. I am more excited about what
    we can do together.

                           mark-to-market legislation

        The Mark-to-Market legislation that we passed last year,
    Mr. Chairman, was an historic piece of legislation. We were
    trying to get that done for 4 years. It was the first major
    piece of housing legislation in 5 years, and it was probably
    one of the thorniest issues that we faced as a Department. It
    was a very controversial issue. If we could address the so-
    called Mark-to-Market problem, we can address anything
    together.
        You pointed out that we have the whole HUD team here. I
    wanted to bring them because many of them are new members and I
    wanted to give the committee an opportunity to put a face with
    a name. I also wanted them to hear the sentiments of this
    committee so when we go back and do our work, they have heard
    firsthand your points and your concerns.
        I have a quick presentation for the committee that gives
    you a brief outline of what we are talking about. The committee
    has made it clear to keep the presentation relatively short
    because we have a limited amount of time, and I will go through
    that at this time.
        But, as a general comment on the opening statements that
    the committee made, I think both points are fair. We have made
    real progress. This is a fundamentally different Department
    than it was just 1 year ago, but there are also yellow lights,
    to use the ranking member's expression, icebergs ahead, to use
    the chairman's expression, but I think what is important is we
    see them. The iceberg in and of itself is not life-threatening
    unless you do not see it. We see them. We see the yellow lights
    and I believe we have altered our course to go around them. I
    think you will start to get that sense in this presentation.

                               necessary reforms

        In 1997 when I came before you for the appropriations
    hearing, your mandate was clear. You said, Mr. Chairman, at
    that time, ``We challenge you to make the necessary
    administrative, management, and fiscal reforms that will
    justify Congress' continued support of the agency.'' Ranking
    member Senator Mikulski said, ``This is what we are looking
    for, which is to stick to the mission. Let us make sure we make
    wise use of the money and really pursue those management
    priorities that I know you have in mind.''
        We heard that message. We internalized it. We acted upon
    it. We had a two-step process. Step one, clean HUD's own house.
    Before we can get back into the housing business, we said we
    had to clean our own house. Then, step two was get back to the
    business of housing.

                           cleaning up the department

        As far as step one is concerned, cleaning up the
    Department, we have embarked on our management reform which we
    religiously performed for the past year. HUD today is leaner
    and stronger than it was 1 year ago. We are now down to about
    9,200 employees. We have a plan that gets us to 7,500 by the
    year 2002 with program consolidations as well as legislation
    which would be necessary from this committee. But the HUD today
    is a much different HUD, a much stronger HUD.
        We have cracked down on waste, fraud, and abuse. There has
    been a 325-percent increase in what we call debarments, which
    are actions against the bad landlords, bad actors, that we have
    been dealing with for a long period of time. We basically
    kicked them out of the program. That is a debarment. That is up
    325 percent.
        We have in place for the first time a national evaluation
    of our portfolio: What do we have out there, what does it look
    like, how it is run--public housing, multifamily. We could not
    tell you 1 year ago. We cannot tell you comprehensively today.
    This time next year, we will with the first national physical
    evaluation of our portfolio and financial assessment.

                            fiscal year 1999 budget

        As you mentioned, this is the first year we had our budget
    in on time. OMB said we were the first Federal Department to
    have our budget in on time, not always an honor that we were
    able to claim. We have done a lot of work on the financial
    side. We have moved from 89 systems to 1 integrated system, so
    the numbers add up at HUD.
        We are changing the focus to client responsibility. We have
    a new community builder which is a customer relations
    acknowledgement, and we are doing a lot with new technology. We
    won the Harvard Kennedy School of Government Award for use of
    technology--Innovations in Government Award--which is the first
    such award that HUD has ever won.

                         excellent vision for a new hud

        We brought in Booz Allen. There were a lot of opinions on
    how the management was going depending on your perspective and
    your stance and your outlook in life. We brought in Booz Allen
    to get a definitive view of how the Department is doing in
    terms of management reform. They will be issuing a report
    shortly. We have the draft inhouse. And the sum-up quote is,
    ``HUD appears to have an excellent vision for the new HUD and
    in early 1998 appears to have made excellent progress toward
    achieving the management reforms that are critical to making
    the Department perform effectively.'' And that is Booz Allen
    who, when it comes to this, most people would say are an
    authoritative source.
        Step two then--what you start to see in this budget--and it
    is a budget that we are excited about--says we have started the
    management reforms. We have made good progress on the
    management reforms. We are not saying we are done with the
    management reforms. We have a lot more to do, but now we can
    start to get to step two which is getting back into the
    business that the Department was meant to. Two steps. One, get
    back into the housing business. Step two, putting the UD back
    in HUD, the ranking member's point. HUD at one time did a lot
    in economic development, urban development. We lost that
    capacity over the past decade. We want to reenergize that.
        As far as the urban development, the economic development,
    Senator Mikulski's point, this economy is going great guns.
    Fifteen million new jobs, signs of economic progress
    everywhere, but when you look at where those jobs are being
    created, they are not being created in central cities. Only 13
    percent of the jobs are in central cities. So, the economy is
    going very well. It is not doing especially well in cities. Put
    on top of that the demands for welfare reform. It will make a
    bad situation worse.
        For example, the city of Philadelphia has an excellent
    mayor--Mayor Ed Rendell. Over the past 2 years, with the
    strongest economy in history, Philadelphia lost 600 jobs. Great
    mayor, best economy in history. They lost 600 jobs. How many do
    they need for welfare reform over the next 5 years? Fifty
    thousand jobs.
        In Detroit, they are 75,000 jobs short just to meet the
    needs of the people coming off welfare.
        In St. Louis, they are 7,000 jobs short just for the people
    coming off welfare, and that is with the strongest economy.
        Cities are often at a competitive disadvantage today in
    competing for businesses and jobs. We are saying let us work
    with the cities the way we did at one time to get those jobs
    back in the cities, and we have some ideas to do that.

                                    housing

        Getting back into the housing business, the housing picture
    is very clear. Fiscal year 1996 is the first year since they
    started keeping numbers that the production of affordable
    housing in this Nation went below zero. Fiscal year 1996 was
    the first time since they started keeping numbers. In every
    other year, we have produced more units than we lost. We
    produced at one time 300,000 units per year, 200,000 units per
    year in the 1970's and the 1980's. In 1996, we went to a net
    negative, first time in history, with the strongest economy.
    When we had slower economies, when we were in recession, we
    were building more affordable housing than we are building
    today.
        Well, maybe we do not have the same need, one could query.
    Actually we have the highest need that we have ever had in
    history. So, you have two facts coincident: the lowest
    production of affordable housing and the highest need in
    history. That is the story of housing as we stand here today
    with the Department whose first name is housing.

                                reserve account

        On some of the points that were raised, if I could just
    touch on them quickly, and I understand, Mr. Chairman, that
    time is limited, but the chairman made a point on the section 8
    program, which is a major piece in our budget.
        The section 8 program operates with a reserve account. The
    reserve account was the subject of much scrutiny last year, as
    the chairman pointed out, that it was hard to define how much
    remains in reserves. We went back to the reserve account. We
    worked on the reserve account. We came up with the specific
    number, and that number in the reserve account was eligible for
    housing authorities to lease section 8 units against. That was
    the Department's policy. In other words, the housing authority
    had a reserve account. They could use that reserve account to
    issue section 8's.

                       no leasing against reserve account

        When we worked together last year to clean up the reserve
    accounts, one of the things the committee said was we do not
    want them using those reserves to lease against anymore. We
    said fine. We put out a new notice that said no longer lease
    against the reserve account. That practice must stop. We put
    out that notice.
        Several weeks ago, there was a very strong response from
    housing authorities against that notice because they said you
    would actually be displacing people. We got significant concern
    from certain Senators saying you would be displacing people,
    and that was not the intention.
        So, as an administrative reform, we said you could no
    longer lease against that reserve account. The response was we
    would be displacing people, and the position the Department
    took last week was those units that you have already leased you
    can keep, but you cannot lease any more units. We thought that
    was the best compromise position without actually displacing
    people.
        The 50,000 vouchers, section 8's, that you referred to are
    against those leased reserve account. The reason we know about
    it is because we fixed it subject to our work from last year.
    The 50,000 are on a base of 1.4 million that are issued.
        When you use the word illegal, Mr. Chairman, the committee
    does not authorize a number of units under section 8. It
    authorizes a dollar amount, and these units were all authorized
    within that dollar amount, so they did not exceed the dollar
    amount.
        I just wanted to clarify that and I will conclude quickly.

                                 home ownership

        We think in the housing agenda, one of our main thrusts is
    home ownership. Home ownership is at a record high in this
    Nation at 66 percent. At the same time, there is significant
    disparity when you look at who does own homes. Home ownership
    in the suburbs is at 73 percent. In the cities, it is at 49
    percent. Whites are very high at 71 percent. Women are lower at
    51 percent. African Americans are lower still at 43 percent.
    Hispanics are lower still at 41 percent. The FHA loan limit
    increase would start to get at that.

                              highlights of budget

        I have further highlights of our budget, and I will
    conclude.
        Homeless assistance had a record increase at $372 million
    because that is a program that is working. We want to invest in
    that.
        Public housing. We would go to 100 percent of operating
    expenses for the first time.
        The HOME program, which is a program that is working well,
    we're requesting a $50 million increase, and then start
    something called the HOME Bank which would allow us to loan
    money to a local jurisdiction up to five times of their HOME
    allocation. We are doing this with the CDBG program and section
    108. It works extremely well.
        We would raise the FHA loan limits which will get more
    people housing and actually make money at $225 million.
        And we would increase the Fair Housing budget because home
    ownership is going up and the home ownership rate is a great
    American story as long as it works for everyone.
        On the economic development side, the Community Empowerment
    Fund which is the economic development aspect of the
    Department, we request $400 million.
        We are requesting 50,000 welfare to work vouchers. Again,
    Mr. Chairman, I believe the issue for the cities is going to be
    welfare and whether it works or not. How do you get people from
    welfare to jobs? And 50,000 welfare to work vouchers, where we
    could give a person a voucher and let them actually move to an
    area closer to work, would be a significant tool.
        CDBG, which is a program that works well, we're asking for
    a $238 million increase.
        Brownfields is the No. 1 concern of the Conference of
    Mayors.
        And we have $100 million for regionalism awards. Every
    academic, all the best practices will say we have to move to
    regional approaches, getting cities to work with the outlying
    counties, and we as the Department want to start to articulate
    that principle and move forward on that.
        These are the highlights of the budget. It is the best
    budget from our point of view that has been proposed in a
    decade. We believe we can find the money within our sphere, and
    we understand, Mr. Chairman, the overall constraints on the
    committee. We are trying to work just within the sphere that we
    control, and we think we can find the numbers to make this
    budget work within our own domain.
        But again, let me thank the committee for all their good
    work, for the cooperation and partnership. We look forward to
    the same productive year going forward this coming year that we
    had last year. Thank you.
        [The statement follows:]

                  Prepared Statement of Secretary Andrew Cuomo

        Chairman Bond, Ranking Member Mikulski, members of the
    Subcommittee: thank you for inviting me here this morning to share with
    you HUD's 1999 budget proposal. If it pleases the Subcommittee, I would
    like to enter my testimony for the record. Thank you.
        HUD's 1999 budget proposal represents the second step of a two step
    process we're undertaking to restore the Department's capacity to
    fulfill its mission of empowering communities across the country. The
    first step of that process was carried out last year and is still
    underway. HUD is focusing its energy on reform, reinvention, and
    renewal. In 1997 and now in 1998, the Department is devoting itself to
    reorganizing its functions, streamlining its workforce, and cracking
    down on waste, fraud, and abuse of HUD programs.
        This 1999 budget proposal--the smartest and strongest budget in 10
    years--builds on the progress HUD has made over the last year and a
    half in proving competence and restoring public trust in the agency.
    The budget reflects the President's belief that HUD today is smaller,
    faster, and more efficient than it was a year ago. We have requested
    some $1.8 billion in funding for program activities directed toward two
    fundamental goals: producing jobs and economic opportunity and
    expanding housing opportunities for low and moderate income families.
        The budget increase will not, however, support new programs. It
    will not support new bureaucracies. It will not be wasted on programs
    that are fundamentally flawed or blatantly abused. This new funding
    will support only those programs that have proven successful and those
    programs that have been improved or enhanced by design changes. In
    other words, HUD will put the new funding only where it works best to
    fulfill our mission.
        All told, the 1999 HUD budget represents not just a shift in
    policy, but a shift in philosophy. This budget seeks to change HUD's
    role from Washington director to community empowerment. Not with
    federal mandates, but with a federal menu of opportunity. Not with
    solutions driven from the top-down, but from the bottom-up. Not with a
    one-size-fits-all mentality, but with action plans written by and
    tailored to local communities. HUD's goal is not to tell communities
    what to do, but to help communities do what they want to do. In the
    process, it takes partnership to a new level--by setting aside part of
    the CDBG program to encourage cities and counties to work together on a
    regional level to solve problems.
           management reforms lay the groundwork for budget increases
        Before I outline our funding requests, let me explain in a little
    more detail the foundation of reforms on which we built this budget
    proposal. President Clinton's second-term urban agenda recognized that
    the mission of HUD was as vital as ever, but the Department itself
    faced a competence gap that compromised its ability to fulfill that
    mission. Decades of neglect left HUD with the dubious distinction of
    being the only federal agency designated as ``high risk'' by the
    General Accounting Office (GAO). What's more, HUD's main rent subsidy
    program for the poor, Section 8, was on the brink of becoming the next
    savings and loan scandal, with grave consequences for more than four
    million low-income Americans who depended on the program for a place to
    live.
        At the President's direction, and with the Vice President's
    guidance, we didn't set out to defend the problems, we set out to fix
    them. Our efforts have focused on closing the competence gap by
    eliminating waste, fraud, and abuse. We are partnering with the Justice
    Department to crack down on bad landlords. We partnered with the FBI to
    create a new Enforcement Center. We are creating an Assessment Center
    that will inspect all HUD properties nationwide for the first time.
        And, drawing on the lessons of the private sector, we consulted
    with reinvention experts James Champy and David Osborne to implement
    the most sweeping reform plan in HUD's history. In conjunction with our
    unions, we enacted a plan that clarifies HUD's mission, streamlines its
    operations, improves customer service, harnesses new technology, and
    infuses a new generation of talent called ``community builders.''
        Most importantly, this plan is moving from the drawing boards to
    reality. HUD has undertaken exhaustive consultations with affected
    stakeholders, including public housing authorities and resident groups,
    multifamily project owners and lenders, HUD's Inspector General and
    Members of Congress and their staffs. HUD has overcome tremendous
    institutional inertia and built a momentum for change that will carry
    the implementation of the Plan forward. I am happy to report
    significant progress has already been achieved.
      --Through unprecedented employee personnel actions such as buy-outs
            and personnel reorganization, HUD has been able to streamline
            staffing and reorganize operations. HUD's workforce (funded by
            the Salaries and Expenses account) is now approximately 9,000,
            down from 10,500 at the end of 1996. To date, HUD has posted
            and filled 1,100 positions and hired 90 percent of new managers
            for the new organizational structure, while executing 1,000
            buyouts to downsize the agency. The Department also negotiated
            an historic agreement with the employee unions to staff the new
            streamlined HUD with no layoffs before 2002.
      --Four FHA Single Family Homeownership Centers are already
            operational. By April 1, all 18 FHA Multifamily Program Hub
            offices will be operational.
      --Public and Indian Housing already has 27 Program Hubs and 16
            Program Centers operational. By August, 1998, the Public
            Housing Grants Management Center and Troubled Agency Recovery
            Centers will also be operational.
      --The Assessment Center is currently using its new physical
            inspection protocols and hand-held computers to inspect a
            sample of public housing and multifamily properties.
      --The Section 8 Financial Management Center will be fully operational
            and handling 100 percent of the Section 8 financial processing
            by October, 1998.
      --The Enforcement Center has already begun working on cases. Four
            Assistant U.S. Attorneys have been detailed to the Center.
      --More than 300 Community Builders from existing HUD staff have
            already been selected. Their training will has just begun and
            the first training sessions at Harvard University's Kennedy
            School of Government will take place in August 1998. Outside
            hires of 230 Community Builders will also be completed by
            August.
                        the best hud budget in a decade
        HUD undertook management reforms to improve administrative
    capacities, and with the realization that we must put our own house in
    order before we can truly fulfill our mission. HUD has worked to
    restore public confidence to win more resources to create jobs,
    stimulate economic activity, house low and moderate income Americans
    and end the plague of discrimination.
        The Clinton Administration has taken note of the progress that HUD
    has made in reforming itself. The result: the best HUD budget in a
    decade. New funding for HUD is increased by $1.8 billion, a significant
    increase for program activities. Consistent with the Government
    Performance Reform Act (GPRA), new funding will be directed to achieve
    objectives outlined in HUD's 1999 Performance Plan. Taken as a whole,
    the budget reflects two very clear themes that reinforce the twin
    missions of the Department of Housing and Urban Development.
        The first theme is jobs and economic opportunity. Nothing empowers
    an individual, develops a community, or builds a stable tax base like a
    job. The challenges of the global economy combined with the
    implementation of welfare reform has placed new demands on communities
    across America, and made HUD's economic development mission more vital
    than ever. This budget reinvents several HUD programs to meet that
    challenge in an innovative way, proposing vouchers to help people move
    from welfare to work, a Community Empowerment Fund to get businesses
    the start-up capital they need to create jobs, and funding for second
    round of Empowerment Zones to bring opportunity back into the inner
    city. It also builds on successful core programs, doubling funding to
    convert old brownfields into thriving businesses, and streamlining the
    Community Development Block Grant program to provide communities with
    more resources and more flexibility to turn their plans into reality.
        The second theme is housing and homeownership. Housing is the
    foundation on which everything else is built. For the past two years,
    tight budgets have reduced America's net increase of rental assistance
    to virtually zero. The 1999 HUD budget gets America back into the
    housing business, not by creating new programs but reinventing old
    ones. It proposes new vouchers to help people find affordable housing,
    a new ``bank'' to allow communities to leverage up to five times their
    HOME allocations to build housing, and the largest level of funding
    ever to end the tragedy of homelessness. It also makes clear that all
    of HUD's separate housing roads should ultimately lead to one place:
    homeownership. Our goal is to help more people become homeowners, and
    this budget does so in innovative ways: by raising FHA loan limits to
    help more middle class families buy homes, and by increasing HUD's
    campaign to weed out housing discrimination once and for all.
        The goal of HUD's fiscal year 1999 budget is to be a better partner
    for communities to empower them to address their full array of needs.
    To accomplish this goal, HUD has provided both more resources and
    better tools for communities to tap.
        Let me outline some of these initiatives in more detail.
                         jobs and economic opportunity
        The biggest challenge for distressed communities in central cities,
    suburbs and rural areas is creating jobs. In an increasingly globalized
    economy, new jobs are more likely to be created in suburban areas, or
    in developing nations than in the core of America's central cities.
    While the nation has experienced unprecedented economic prosperity,
    distressed communities, particularly central cities still face critical
    challenges.
        Poverty is disproportionately concentrated.--Between 1970 and 1990,
    the proportion of city residents living in neighborhoods with poverty
    rates of more than 40 percent doubled. By 1990, more than 10 percent of
    all city residents lived in these high poverty neighborhoods.
        Unemployment rates remain high.--While nationwide unemployment
    rates have plummeted to 24-year lows, city unemployment rates remain
    substantially higher than the nation as a whole and suburbs. In all
    metro areas, central city unemployment rates are 5.1 percent, a full
    one and a half points higher than their suburbs.
        Most job creation is occurring in the suburbs.--While the economy
    has generated more than 14 million new jobs since 1993, the vast
    majority of those jobs are being created in suburban areas. In the
    early 1990's, only 13 percent of new entry level jobs were created in
    central cities.
        Job creation is the foundation for economically and socially
    healthy communities. Job creation will also be critical to make welfare
    reform a success, particularly in light of concentration of welfare
    recipients. Nationwide, recipients moving from welfare to work will
    need an estimated one million jobs in the next several years. Our
    fiscal year 1999 budget increases funding for economic development and
    job creation by more than 15 percent over 1998 enacted levels, based on
    a number of programmatic improvements.
    Community Empowerment Fund and Economic Development Initiative
        The centerpiece of HUD's job creation efforts is the Community
    Empowerment Fund, an enhancement of HUD's existing Economic Development
    Initiative and Section 108 Loan Guarantee program. The Community
    Empowerment Fund (CEF) will provide resources for spurring private
    investment in our nation's cities and increasing opportunities for
    former welfare recipients to successfully move from welfare to work.
    The 1999 request of $400 million will leverage an estimated $2 billion
    in private sector loans over time and will support an estimated 280,000
    jobs when projects are completed.
        The Community Empowerment Fund is a creative financing tool that
    combines local control, private sector capital and federal loan
    guarantees to rebuild distressed urban and rural communities. The Fund
    will finance a wide range of job-creation projects, from loans for new
    small businesses to neighborhood commercial revitalization efforts.
        HUD's fiscal year 1999 proposal will also incorporate substantial
    innovation by providing strong incentives for standardization of
    economic development lending. Unlike the housing finance system, where
    Fannie Mae and Freddie Mac have established standard underwriting
    criteria, economic development lending has no cookie-cutter deals.
    Without such standardization and the evaluation of loan performance
    using standard criteria, there can be no effective secondary market for
    economic development loans.
        EDI funds have been used to support a wide variety of innovative
    community lending initiatives. The Community Empowerment Fund will
    support more such innovative projects. Some successful EDI projects
    include:
      --Revolving Loan funds, such as Ohio's Mahoning Valley Economic
            Development Fund that is aimed at helping communities retool
            their economies in the wake of the steel industry's decline,
            which had once been the backbone of the local economy.
      --Inner-city shopping centers, such as the Good Hope Marketplace in
            Washington DC's Anacostia neighborhood, which includes a full-
            service 55,000 square foot Safeway Food and Drug Store.
      --Welfare-to-Work efforts, such as Cessna Aircraft's Learning and
            Work Complex in Wichita, Kansas, which provides daycare and job
            training for former welfare recipients employed in the
            company's adjacent industrial facility.
        President Clinton said it best when he unveiled the Community
    Empowerment Fund proposal earlier this year. The Community Empowerment
    Fund, he said, ``will provide capital to businesses who recognize the
    potential and the possibilities of the inner cities. This is the right
    way to help our cities. It is not a handout. It will bring new credit,
    new jobs, and new hope to the people.''
    Welfare-to-Work Vouchers
        HUD's budget provides a flexible new tool to help states and
    communities meet the challenge of moving welfare recipients into jobs.
    Specifically, HUD proposes to provide 50,000 new welfare-to-work
    vouchers at a cost of $283 million, targeted to welfare recipients who
    need housing assistance to get or keep a job. Families could use these
    new vouchers to move closer to new jobs or to reduce long and
    cumbersome commuting patterns.
        In many parts of the country, jobs are being created far from where
    many welfare recipients live. Three quarters of welfare recipients live
    in cities or rural areas and the vast proportion of jobs are being
    created in suburban areas. Few welfare recipients own cars. Even when
    jobs are available, long commutes by public transit pose a substantial
    barrier for welfare recipients finding and keeping jobs. For example,
    45 percent of entry level jobs in the Cleveland metropolitan area are
    accessible from Empowerment Zone neighborhoods within an 80-minute one-
    way commute via public transportation; 55 percent are not public
    transit accessible at all.
        HUD has developed an innovative transportation solution to this
    problem: the Bridges to Work demonstration is connecting inner-city
    residents to suburban jobs in 5 cities. Based in part on this
    demonstration, the Department of Transportation is proposing a $600
    million Access to Jobs initiative to improve transportation connections
    for welfare recipients.
        But some welfare families will not be able to maintain long and
    difficult commutes to keep their jobs. Our proposal goes one step
    further: helping families move closer to available jobs. HUD's request
    for these 50,000 additional portable housing vouchers will help
    families making the transition from welfare to work. The additional
    vouchers will be available on a competitive basis to local public
    housing agencies (PHA's) who, in collaboration with their local welfare
    and employment agencies, will develop plans to use the new vouchers to
    support families transitioning from welfare to work.
        We imagine these vouchers could be critically important in many
    circumstances: in suburban counties like Anne Arundel County in
    Maryland, where jobs are concentrated in a few areas but welfare
    recipients are dispersed; and in central cities, where welfare
    recipients living in isolated poverty neighborhoods must take several
    buses to get to downtown jobs. Some central city residents will move
    from central cities to suburbs, where most of the new entry level jobs
    are located. Finally, some rural recipients could use portable housing
    assistance to move from rural areas where there are simply no jobs to
    metropolitan areas with better employment prospects.
        The vouchers will be focused exclusively on families where housing
    assistance is deemed essential to help families transition from welfare
    to work--that is, where housing assistance is essential to getting or
    keeping employment. Local agencies will have great flexibility to
    design and operate the welfare-to-work voucher program within broad
    national guidelines.
    Empowerment Zones
        In 1995, the Administration selected nine Empowerment Zones,
    entitling them to receive federal tax incentives and direct funding for
    physical improvements and social services. These communities fashioned
    comprehensive revitalization strategies, with all local stakeholders--
    residents, non-profits, businesses and government--at the table. The
    early results have been extremely encouraging: they have leveraged
    billions of dollars in private investment and new jobs and business
    activity are expanding in many of these communities.
        To build on this early success, the 1997 Taxpayer Relief Act
    created 20 new Empowerment Zones--15 new urban zones and 5 new rural
    zones. Second Round Zones were provided with tax incentives to attract
    new economic activity, but need the direct spending equivalent to the
    assistance the successful first round zones received. The President's
    Budget for 1999 requests $1.5 billion funded over 10 years in equal
    $150 million amounts for the 15 new urban Zones. The legislation to
    authorize the EZ program is being proposed under of Title XX of the
    Social Security Act.
        Following the model set forth in the first round, funding will be
    made available for a broad range of job stimulation activities, with an
    effort to link revitalization plans to welfare reform strategies.
    Examples of eligible activities include: community policing, health
    care, neighborhood development, brownfields cleanup and redevelopment,
    economic development projects, work force development, and housing
    assistance.
    Community Development Block Grants
        A total of $4.725 billion is requested for the major Community
    Development Block Grant Program, an increase of more than $50 million
    over the 1998 enacted level, and an all time high. Further, HUD has
    substantially reduced the requested set-asides for other programs
    within CDBG, from $479 million in fiscal year 1998 to $292 million in
    fiscal year 1999. As a result, funding available for formula allocation
    to state and local governments effectively increases by $238 million in
    fiscal year 1999, a five percent increase.
        In addition, the CDBG funds will support $1.3 billion in new loan
    guarantees under the Section 108 program of the Housing and Community
    Development Act. This is the same level enacted in 1998.
    Regional Connections Initiative
        In light of the long-term shift of jobs and people to the suburbs,
    regions have become the building blocks of the larger national economy.
    The challenge for local communities is to take full advantage of the
    opportunities presented by the new regional economies.
        At the same time, communities need to find ways to respond to some
    of the acknowledged negative impacts of the metropolitan economy: a
    growing job skills and training gap; the concentration of poverty in
    central cities; the spatial mismatch of housing and jobs; a growing
    disparity in local government fiscal capacity; schools at risk; rising
    infrastructure costs; higher vehicle miles traveled; increasing
    congestion; air and water pollution; and loss of prime farmland and
    open space. A new challenge facing communities is to make welfare
    reform work in the context of new regional economies.
        This initiative is a $100 million set-aside within the CDBG
    program. It will make funds available by competition to states and
    localities to cooperate regionally to develop strategic plans that
    address key regional issues facing the nation's metropolitan areas and
    rural communities. The initiative will help communities adjust to the
    significant demographic and economic shifts that are taking place in
    metropolitan regions. It will encourage regional strategies that
    emphasize coordinated metropolitan economic growth and regional
    solutions to a range of environmental and social equity issues.
        HUD will establish an Advisory Board of city and county officials,
    distinguished urban planners, economists, and regional experts to
    develop the competition, and expects to contract with a qualified
    national organization to assist in managing the funding awards process.
    This will limit the administrative burden on HUD.
    Brownfields
        The 1999 Budget proposes to double, from $25 million in 1998 to $50
    million in 1999, the level of funding for the Brownfields Redevelopment
    program. This will significantly accelerate the Administration's
    commitment to provide $100 million toward brownfields redevelopment.
        Brownfields are low-to-moderately contaminated sites, often on
    former industrial sites in American cities. An estimated 450,000 sites
    exist, and the vast majority of those are located in urban areas. None
    of the sites has levels of contamination which would score high enough
    to be placed on the National Priorities List under the Superfund
    program. Without any cleanup mandate, these sites could go for years
    without being restored to alternative and modern uses. Their clean-up
    not only improves the environmental condition of the area, it provides
    a unique opportunity to revitalize downtown areas that have been
    essentially abandoned.
        Each Brownfields dollar is highly leveraged. The $50 million being
    proposed for 1999 will leverage $200 million in loans and loan
    guarantees and the clean-up effort will generate 28,000 construction
    and related jobs precisely where employment opportunities are most
    needed.
        The Administration has established a Brownfields National
    Partnership among 15 agencies to turn contaminated Brownfields into
    greenfields of economic opportunity.
                           homeownership and housing
        Housing needs in America remain substantial. More than five million
    very low income families pay more than half their limited incomes for
    rent or live in substandard housing. Staggering numbers of families and
    individuals have no homes at all: the best estimates suggest there are
    600,000 homeless on any given night. While the nation has achieved
    record homeownership rates, homeownership for minorities, for female-
    headed households, and for residents of central cities remain 20 to 30
    points below the national rate.
        The President's fiscal year 1999 budget reverses this course. The
    President's 1999 budget gets HUD back into the housing business--not by
    creating new programs, but by reinventing existing ones.
        To expand homeownership opportunities, HUD proposes higher FHA loan
    limits, additional Homeowership Zones, new Empowerment Homeownership
    Vouchers and increased funding for housing counseling.
        To expand affordable rental housing opportunities, HUD proposes
    100,000 new vouchers to help welfare recipients, homeless individuals
    and families and other targeted groups find affordable housing; a new
    HOME Bank, which combines increased funding for the HOME program with a
    new loan guarantee feature to help communities finance large-scale
    multifamily and homeownership developments. HUD is also maintaining our
    investment in HOPE VI and other public housing programs and renewing
    all expiring Section 8 contracts. HUD continues to implement the
    successful Continuum of Care strategy and the 1999 budget includes a
    record level of funding to help end the tragedy of homelessness. In
    addition, the Clinton Administration proposes to expand the Low Income
    Housing Tax Credit (LIHTC) by raising the per capita cap from $1.25 to
    $1.75 to significantly compensate for the loss of the Credit's value
    since 1986 and to finance a $30 million pilot program through the
    Neighborhood Reinvestment Corporation. The LIHTC expansion will assist
    an additional 180,000 Americans a year.
    Continuing the Growth of Homeownership
        Nothing manifests the American dream more than owning a home.
    Nothing helps create stability and safety for families and communities
    like homeownership. This administration has made a unique commitment to
    homeownership: in June 1995, the President pledged to reach the goal of
    67.5 percent by the end of the year 2000. We have already reached the
    nation's all-time highest rate of homeownership--66 percent.
        But the job is not done. Homeownership in central cities and among
    women, minorities, and lower income Americans hovers at or below 50
    percent. In many parts of the country and in many neighborhoods even
    middle class families have a hard time affording homeownership or
    making the continued investments needed to project their most valuable
    asset.
        The budget includes a number of initiatives to allow more Americans
    to make the dream of homeownership a reality.
    FHA Loan Limits Increase
        President Clinton's budget calls helping hundreds of thousands of
    hard-working middle-class American families qualify as homeowners by
    raising home mortgage insurance limits used by the Federal Housing
    Administration (FHA).
        Despite record national homeownership rates, many Americans--
    including young, first-time homebuyers, center-city residents, and
    racial and ethnic minorities--are shut out of homeownership because
    they have difficulty accessing mortgage credit. Raising the loan limits
    will enable FHA to meet the mortgage credit needs of hundreds of
    thousands of American households not presently served by the private
    mortgage industry.
        The Federal Housing Administration's single family mortgage program
    has been one of the most successful public-private ventures ever
    established by the Congress. FHA provides mortgage insurance that
    enables homebuyers to secure mortgages from private lenders. Over the
    past 60 years, FHA has made homeownership available to nearly 25
    million families throughout the country.
        Today, FHA has over 250 separate loan limits ranging from $86,317
    in more than 2,000 low cost counties to $170,362 in 130 higher cost
    counties. About 930 moderate cost counties have loan limits set at 95
    percent of local median home sales price which fall between $86,317 and
    $170,362.
        HUD proposes to create a single, nationwide limit of $227,150,
    which would simplify the current system and bring FHA back in line with
    the limit used by Fannie Mae and Freddie Mac, the two largest providers
    of mortgage credit in the market place. Increasing the loan limits will
    expand FHA's ability to reach underserved markets. Mortgage lending
    information gathered by the Federal Reserve Board, as part of the Home
    Mortgage Disclosure Act (HMDA) requirements, show that in 1996, some
    350,000 households--approximately one in eight applicants--were denied
    credit in the conforming conventional market. These denials limit
    homebuying opportunities for both minority and white households seeking
    to live in urban and suburban communities.
        Mortgage denial rates are particularly high for African-Americans
    and Hispanic families who are nearly twice as likely to be denied home
    loans as white applicants. In the aggregate though, white families
    accounted for nearly two-thirds of the 350,000 households denied
    credit. Raising the loan limits will enable FHA to meet the mortgage
    credit needs of these American households who are not well-served by
    the private mortgage industry.
        The higher loan limits will also increase the capacity of families
    to purchase and rehabilitate older homes, an important component of
    neighborhood revitalization efforts. Overall, the average loan insured
    under this initiative would be $145,000.
        FHA-insured loans benefit homebuyers by: allowing down payments
    under 5 percent, allowing homebuyers to borrow closing costs, allowing
    more homebuyers to qualify for mortgages, and allowing homebuyers to
    use gifts from family members and others to make their downpayments.
        In addition to enhancing homeownership opportunities, raising FHA
    loan limits is good for the federal budget. The insurance premiums and
    fees associated with new mortgage business will provide FHA with an
    increase in revenues of more than $225 million per year.
    HOME Bank: Leveraging the Home Program
        The budget proposes a substantial enhancement to the HOME Program,
    which provides flexible grants to states and local governments. HOME is
    the model of effective devolution. Our initiative would add a new loan
    guarantee feature, enabling states and localities to leverage private
    investment with current HOME grants for large-scale rental housing and
    homeownership developments. This enhancement provides an effective new
    tool to enhance housing production.
        The HOME program request for 1999 is $1,883 million, which includes
    $1.55 billion for the standard HOME program (with $25 million for
    Housing Counseling assistance) and $333 million for Elderly and
    Disabled housing. Funding HOME at $1.55 billion (a $50 million increase
    from 1998) will provide 78,520 units of affordable housing for owners
    and renters through construction, rehabilitation and acquisition
    activities and 11,200 families would receive tenant-based rental
    assistance.
        HUD proposes $333 million for Housing for the Elderly and Disabled,
    and would shift administration from HUD to state and local governments
    through the HOME program. While maintaining the integrity of the
    Section 202 and Section 811 programs, the shift of the program into
    HOME will allow the Department to further consolidate its program
    structure, and provide substantial opportunities for state and local
    participating jurisdictions to leverage additional resources for
    elderly and disabled housing. HUD intends to submit a legislative
    proposal to accomplish this consolidation.
        In addition, HUD's funding for the elderly includes an additional
    8,800 new incremental vouchers. These vouchers replace direct grant
    funding and allow HUD to serve a greater number of elderly households
    with more limited resources. The overall funding proposed to support
    the elderly and disabled in the fiscal year 1999 budget will serve more
    households than were served by the fiscal year 1998 funding.
        HOME Loan Guarantee Program. Building on HUD's recent success with
    the Section 108 loan guarantee feature of the CDBG program, the fiscal
    year 1999 budget proposes to provide a similar enhancement to the HOME
    program: a new loan guarantee.
        This legislative initiative will permit HOME participating
    jurisdictions to finance large-scale development activities by
    leveraging their future HOME allocations. The budget supports $100
    million of new loan guarantees at an estimated credit subsidy cost of
    $11 million in fiscal year 1999. Communities may borrow up to five
    times their most recent HOME allocations.
        The ability to borrow a large sum of money will encourage PJ's to
    undertake broad-based neighborhood revitalization strategies and to
    take advantage of economies of scale, producing or rehabilitating a
    large number of rental or ownership units in a single undertaking
    within a relatively short time frame.
    Homeownership Zones
        The Budget proposes $25 million in 1999 to enable cities to
    undertake large-scale single family developments in inner city
    neighborhoods.
        Creating new concentrated homeownership developments as part of a
    whole neighborhood strategy is central to redeeming blighted and
    troubled neighborhoods. Homeownership would serve as a foundation for
    additional investment in residential, commercial, and economic
    development of the Homeownership Zone. HUD has funded six Homeownership
    Zones with 1996 funding and will soon be announcing a new round of five
    to seven designated zones in the near future.
        With an infusion of low- and middle-income homeowners, these zones
    are transforming their city neighborhoods. More than 2,000 units of
    housing are being constructed or rehabilitated in Louisville,
    Cleveland, Sacramento, Buffalo, Baltimore, and Philadelphia and are
    having an enormous impact on the economies of these cities. Not only do
    these zones attract homeowners, they create demand for other
    neighborhood economic activities like grocery stores and dry cleaners.
    While a majority of the newly constructed units are reserved for low-
    and moderate-income families, the zones are also designed to attract
    middle-income families in order to increase the long term stability of
    a neighborhood. This program is expected to help solve one of the most
    difficult problems faced by cities: retaining middle class families.
    Housing Counseling
        The Housing Counseling program, a set-aside in the HOME program, is
    designed to provide pre- and post-purchase counseling assistance to
    clients on housing issues. The request for counseling funds is
    increased by 25 percent over the 1998 enacted level of $20 million to
    $25 million in 1999.
        Despite the success of the President's National Homeownership
    Strategy, homeownership education and counseling is still in great
    demand, providing both an opportunity and a challenge in raising the
    homeownership rate. Recent ethnographic studies completed in 1997
    examined the homebuying experience of minority and immigrant
    households. These groups are the least likely to become homeowners, the
    studies concluded, because of the lack of knowledge about the
    homebuying process, the lack of credit histories to justify mortgage
    applications and a lack of information about financing options.
        Therefore, housing counseling remains an important feature of the
    President's commitment to increase the country's homeownership rate.
    Ending Discrimination in Housing
        Under Secretary Cuomo's leadership, HUD has taken a prominent role
    in the President's One America initiative, doubling its targeted number
    of housing discrimination enforcement actions and partnering with 67
    non-profit housing groups to reduce housing discrimination. HUD has
    also entered into 113 best practice agreements with key lenders,
    resulting in more fair lending practices and expanded opportunities for
    low-income minority families.
        At the President's direction, Secretary Cuomo launched efforts to
    double the number of fair housing enforcement actions to crack down on
    housing discrimination during the President's second term. These
    efforts include HUD's new ``Make Em Pay'' initiative to take civil
    action against people who commit housing-related hate crimes. During
    1997, the compensation for persons alleging discrimination and hate
    acts has increased dramatically, resulting in a 224 percent jump in
    compensation to victims--$7.7 million for May-September 1997, compared
    with $3.5 million for May-September 1996.
        The fiscal year 1999 budget proposes a 73 percent increase in
    funding for fair housing activities to allow HUD to follow through on
    the Secretary's commitment to protect the right of every American
    family to live and raise their children in any neighborhood they can
    afford. The 1999 Budget nearly doubles funding for the Fair Housing
    Initiatives Program (FHIP)--from $15 million in 1998 to $29 million in
    1999. The FHIP program provides funding to help private, non-profit
    fair housing organizations carry out programs that enhance compliance
    with fair housing laws.
        There are three key components to the increase. First, the budget
    proposes a $10 million housing discrimination audit, to assess
    systematically the levels of housing discrimination in 20 communities
    across the country. The audit findings and data will also be used as
    evidence to enhance fair housing enforcement efforts. Second, fiscal
    year 1999 resources will increase funding available to private non-
    profit fair housing groups around the nation, so they can do more to
    reduce housing discrimination. These groups use HUD assistance to help
    pay for investigations and lawsuits. Third, funding will create a
    national Fair Housing Rights Education Campaign to inform Americans
    about their legal rights and responsibilities under the Fair Housing
    Act and to provide them with assistance when confronted by illegal
    discrimination.
        The Fair Housing Assistance Program (FHAP) program enables HUD to
    certify State or local fair housing enforcement programs as
    ``substantially equivalent'' agencies. FHAP reimburses the agencies for
    handling fair housing complaints filed in their jurisdictions. Funding
    for FHAP is proposed at $23 million, up from $15 million in fiscal year
    1998.
    Affordable Housing
        Not all Americans can afford the benefits for homeownership. In
    fact, the need for affordable housing is at an all-time high. In 1995,
    5.3 million low-income families had ``worst-case'' needs--that is,
    spent more than half their income on rent or lived in severely
    substandard housing. This 5.3 million does not even include the
    Americans who are literally homeless, since these families and
    individuals cannot be counted by the biannual survey of housing
    conditions conducted by HUD and the Census Bureau. The best estimates
    suggest that 600,000 individuals and families are homeless on any given
    night.
        This budget puts housing at the top of HUD's agenda, where it
    rightfully belongs. Total funding for housing initiatives increases 10
    percent over 1998 levels. The Administration proposes a comprehensive
    agenda of new housing initiatives.
    Expanding and Preserving Section 8 Assistance
        A centerpiece of HUD's housing agenda is a proposal to provide
    100,000 new incremental rental vouchers. Unlike previous years,
    however, HUD is proposing to martial new housing resources for specific
    strategic purposes: 50,000 for helping welfare recipients make the
    transition to work; 34,000 for homeless persons and families who are
    ready and able to make a transition into permanent housing in the
    private rental market; and 16,000 for the elderly, family unification
    and other targeted purposes.
        To further increase the supply of tenant-based rental assistance,
    HUD proposes to eliminate a provision that requires PHA's to delay for
    3 months the re-issuance of existing tenant-based units at turnover.
    This provision substantially reduces the number of families who can be
    assisted tenant-based certificates and vouchers at any point in time.
        In addition, HUD proposes to renew all expiring Section 8
    contracts. Last year, HUD's budget described the crisis posed by
    expiring Section 8 contracts. With HUD's vigorous support, Congress
    included sufficient resources in the Balanced Budget Act to renew all
    expiring contracts through 2002. In addition, Congress enacted landmark
    legislation to restructure the contracts of private owners of Section
    8-assisted housing. This legislation will stop paying landlords
    excessive rents, while restructuring their mortgages.
        The fiscal year 1999 budget requests $7.2 billion to renew Section
    8 contracts covering 2 million units expiring in 1999. This continues
    HUD's clear policy to continue to renew all contracts that expire in
    the future. To reduce our request for new budget authority for renewing
    Section 8 contracts in 1999, HUD will first use $3.7 billion in Section
    8 reserves being held in the Section 8 Preservation Reserve Account.
        Moreover, HUD has improved the Section 8 funding process by
    identifying and taking back excess project reserves held by public
    housing authorities who administer the tenant-based Section 8 program
    and utilizing more accurate methods for estimating renewal costs. Some
    PHA's simply held unused funds, while others used excess funds to
    provide rental assistance to additional households. To monitor the use
    of the funds, HUD is now requiring PHA's to report regularly on their
    funding balances. As a result of the new reporting requirements, HUD's
    future funding requests will reflect accurately both the availability
    of and need for additional Section 8 budget authority.
    Homeless Assistance Grants
        Reducing homelessness is one of my top priorities. While I was
    Assistant Secretary for Community Planning and Development, HUD
    initiated a new strategy for reducing homelessness, requiring
    communities to establish ``Continuum of Care'' strategies. A Continuum
    of Care strategy is a coordinated community approach that ensures that
    homeless families and individuals can make the transition from
    homelessness to permanent housing.
        HUD's innovative Continuum of Care approach serves the specific
    needs of all homeless persons, including those with mental illness,
    those in need of substance abuse treatment, and those in need of job
    skills. Continuum of Care strategies focus on filling existing gaps in
    housing or other services within a community that are necessary to move
    individuals and families from temporary shelters to permanent housing.
    The Plan must, therefore, be inclusive of and utilize the services of
    public, private and non-profit participants within a community.
        The 1999 Budget requests a total of $1.15 billion, an increase of
    almost 40 percent over the 1998 enacted level of $823 million. This
    includes $958 million for homeless assistance grants and $192 million
    for 34,000 vouchers. This is the highest level ever requested for this
    program.
        Moreover, any increase in funding, if enacted, combined with recent
    policy changes will have a tremendous impact on the number of needy
    individuals receiving assistance to help them achieve independent
    lives. A recent Columbia University study concluded that the number of
    individuals and families that have been assisted in moving to permanent
    housing increased by 14 times between 1992 and 1995 while federal
    funding only doubled.
        When families and individuals are ready to graduate from emergency
    and transitional homeless facilities to permanent housing, affordable
    permanent housing is too often not available. Therefore, HUD proposes
    the inclusion of $192 million for 34,000 additional incremental Section
    8 vouchers intended for homeless individuals and families who would
    otherwise have the most difficult time securing permanent housing, as
    determined through the approved continuum of care strategy. The
    vouchers will help ensure that when families and individuals are ready
    to leave the Continuum of Care and enter private housing, affordability
    will not be a barrier that inhibits this progress.
        By assisting homeless individuals and families, including those
    with disabilities, in moving to permanent housing, shelter and services
    are freed up for other homeless persons to achieve self-sufficiency.
    Also, while transitional assistance provides good progress--an average
    stay is 9 months--some rental assistance with services is key to the
    restoration of dignity and independence that is critical for children
    and parents.
    Maintaining HUD's Investments in Public Housing
        Over the last 50 years, the Federal government has invested
    billions of dollars into the construction and operation of the 1.4
    million units of public housing. In most communities, it is well-
    managed and provides decent quality affordable housing for poor
    families who cannot afford private market housing. Public housing units
    represent one-third of all housing that is affordable to families with
    minimum-wage incomes.
        But in too many communities, public housing is found at the heart
    of urban communities plagued by deterioration, crime and drugs.
    Critical mistakes were made in the design, construction and maintenance
    of many of these public housing developments.
        The Clinton Administration has worked for five years to implement a
    physical and social transformation of public housing. At its heart,
    this transformation requires the demolition of the worst public housing
    developments. To replace these developments, HUD has created a new mold
    for public housing: mixed-income, mixed-finance projects that blend
    into their neighborhoods. HUD has sought and will continue to seek
    enactment of comprehensive legislation that will provide responsible
    deregulation of the public housing industry and new tenant rent rules
    that encourage and assist tenants to move from welfare to work.
    Finally, HUD is developing new real estate assessment and enforcement
    capacities to fix the most troubled housing agencies and create
    incentives for good performance.
        HUD's fiscal year 1999 budget supports the continued transformation
    of public housing while maintaining HUD's financial investment.
        HOPE VI.--The Department is requesting $550 million for the
    Revitalization of Severely Depressed Public Housing Program, commonly
    referred to as HOPE VI. The Department has set a goal of approving the
    demolition of 100,000 blighted or obsolete units by the year 2000, and
    providing essential replacement housing in their place.
        In 1999, the Department plans to approve an additional 15,000 units
    for demolition. and will fund 14,000 replacement units, of which 4,000
    are ``hard'' units and 10,000 are tenant based rental assistance. By
    the year 2000, 99,670 replacement units will be funded. The hard
    replacement units will be incorporated into economically diverse
    communities to foster more stable communities. HUD is committed to
    changing the patterns of social and economic isolation, high
    concentrations of very low-income families and segregation.
        Public Housing Capital Fund.--The 1999 Budget requests a total of
    $2.55 billion for 1999, an increase of $50 million over the 1998
    enacted levels. This increase will help reduce substantial backlogs of
    PHA capital improvement needs. Capital funds may be used to upgrade
    viable housing units, demolish obsolete worst units, provide continued
    assistance to displaced families or build replacement units.
        Public Housing Operating Fund.--HUD requests $2.818 billion for the
    Public Housing Operating Fund in fiscal year 1999. When supplemented
    with $113 million in anticipated carryover funding, available Operating
    Fund resources will be $2.931 billion. This level represents a $31.6
    million increase over fiscal year 1998 levels and will enable the
    Department to meet its commitment to fund 100 percent of the amount
    established by the Performance Funding System.
        Drug Elimination Grants.--HUD proposes that $310 million be
    appropriated for Drug Elimination Grants again in 1999 for anti-crime,
    anti-drug and clearinghouse information services. Eligible activities
    include the employment of security personnel, reimbursement of local
    law enforcement agencies for protective services, enhanced security
    through physical improvements and drug prevention, intervention and
    treatment programs.
        Funding also includes $20 million for Operation Safe Home.
    Operation Safe Home is an effort to combat violent crime in public and
    assisted housing and is administered by the Department's Office of
    Inspector General in close coordination with local and federal law
    enforcement authorities. The program establishes coalitions to
    implement a coordinated fight against gang and other criminal activity.
        Native American Housing Block Grant.--HUD requests $600 million for
    the Native American Housing Block Grant. This funding level is critical
    to maintain and expand affordable housing opportunities for Native
    Americans. Funds can be used for a wide variety of activities that will
    increase the availability of affordable housing stocks. The program
    operates as a block grant to eligible Indian tribes or through their
    Tribally Designated Housing Entities.
        Federal aid plays a critical role in providing affordable housing
    for Native American populations. Presently, almost 45 percent of all
    low-income households in tribal areas are served by HUD assisted
    housing units. Of the estimated 69,000 units assisted, 32 percent are
    in the rental program. For the Native American Indian and Alaskan
    Native areas, the 1990 census reported an unemployment rate of 20
    percent and a poverty rate of 36 percent.
    Housing Opportunities for Persons with AIDS (HOPWA)
        The 1999 HUD Budget requests an increase of 10 percent or $21
    million over the 1998 level of $204 million for Housing for Persons
    with Aids (HOPWA). If enacted, the funds would support 41,500 units of
    housing assistance and would provide related services to approximately
    74,875 individuals.
        The number of eligible jurisdictions has grown each year and that
    trend is expected to continue. The Centers for Disease Control reported
    69,101 new cases of AIDS in 1996 alone. An increase in funding is,
    therefore, essential to keep pace with the need and the increase in
    jurisdictions eligible for funding. Based on the current formula
    allocation of HOPWA funds, the only alternative to increasing the
    funding level would be to require that all jurisdictions take a
    significant reduction in assistance.
    Enhancing Tenant Mobility in the Section 8 Program
        HUD is also requesting $20 million in new funding for Regional
    Opportunity Counseling in the Housing Certificate Fund. This program is
    targeted to reducing concentrations of poverty by helping at least
    13,000 families in 10-20 metropolitan areas choose housing in low
    poverty areas. Funds will be awarded by competition to collaboratives
    of housing authorities and non-profit organizations.
        These collaboratives will develop specific strategies to help move
    individuals to areas with low poverty rates. Examples of eligible
    activities include; landlord outreach, motivational counseling,
    training in household budgets, direct search assistance, payments to
    landlords, assistance with security and utilities deposits.
        In addition, the Secretary is requesting a small set-aside within
    the Housing Certificate Fund to reward public housing agencies that
    successfully reduce the poverty concentration of families using
    portable tenant-based assistance. Research suggests that families
    moving from high poverty to lower poverty neighborhoods can access
    better schools and jobs, and ultimately improve life outcomes for
    children. The 1999 budget would set aside $8.75 million in Section 8
    funding to increase the administrative fees paid to PHA's if agreed
    upon targets are achieved. The program is modeled after a successful
    pilot conducted in Chicago, where a private contractor is managing the
    tenant-based Section 8 programs.
    Property Disposition Reform
        The proposed reforms to the single family property disposition
    program would provide HUD with the flexibility to choose the most cost-
    effective way of paying insurance claims and disposing of acquired
    (defaulted) notes on insured homes. Current law requires HUD to pay
    insurance benefits for defaulted single family mortgagees and details
    the manner of calculating the amount of insurance benefits that must be
    paid.
        If enacted, HUD would be able to take assignment of the mortgage
    notes (instead of taking properties into inventory) and then selling or
    transferring the property to a third party for servicing, loss
    mitigation, foreclosure and potentially disposition. It is expected
    that savings of more that $525 million (on a present value basis) will
    result from the higher return on sales and reduced interest payments to
    lenders because properties will be disposed of much sooner than can be
    accomplished under current law.
                                   conclusion
        In the end, this budget is the best in a decade not just because
    HUD has closed its competence gap, but because America still has an
    opportunity gap. Our nation has created more than 14 million new jobs,
    but only 13 percent are in cities. We have more homeowners than ever,
    but over five million Americans either live in substandard housing or
    pay 50 percent or more of their income in rent. We have more
    millionaires than any time in our history, but an estimated 600,000
    Americans still sleep on our streets every night. That's why HUD's
    mission is more vital than ever. We closed the competence gap so we
    could close the opportunity gap. That is both our challenge and our
    continuing commitment today. This budget says we can do it--but only if
    we work together.

        Senator Bond. Thank you very much, Mr. Secretary. Let me
    make just a few comments on the things that you have raised.

                             issuance by the PHA's

        I would like to see you ask for a legal opinion on the
    issuance by the PHA's of those 15,000 vouchers that you say are
    not illegal. We have some questions about it. I think that is
    something we need to pursue.
        Also I question your comments about the declining number of
    housing units. There may not be an expansion of HUD programs,
    but the reason we have the HOME program, the CDBG program, HOPE
    VI is to encourage the development and the provision of
    affordable housing through these local government, private, and
    not-for-profit partnerships. I would like to see the statistics
    on the number of housing units developed there.

                              economic development

        We also had a very good discussion about the importance of
    economic development in the central city areas. Let me point
    out that with total bipartisan support of another committee,
    the Small Business Committee, and the unanimous support on the
    floor of the Senate, we have passed and enacted into law
    something called HUB zones, for historically underutilized
    business zones, to make small business set-asides available to
    small businesses that will set up operations in center cities
    or in rural poverty areas where there is high unemployment and
    there are high levels of poverty. This is a new tool that I
    know many people in St. Louis were interested in using, and I
    think this is one thing that HUD should be aware of as you work
    with other committees.
        With respect to those things, let me just ask one question.
    Then I will try to get as many rounds as we can in with the
    other members.
        I am concerned that while we applaud you for reforming and
    downsizing the Department, that you may not have adequate staff
    resources to meet the needs and requirements that you have. You
    still have 240 programs. HUD needs to trim down and slim down
    and focus its activities.
        What is the current status of your 2020 plan? What steps
    have you taken to ensure that the delivery system of HUD
    programs has not suffered through reorganization and
    downsizing?

                          housing need and production

        Secretary Cuomo. A couple of quick responses, if I might,
    Mr. Chairman.
        First of all, the numbers on the housing need and
    production. These are from CBO. That is where we got those
    numbers. On the net negative production, when we say we went
    out of the housing business in 1996, that we got from CBO.

                              economic development

        On the economic development, I agree with you 100 percent.
    There are a number of economic development programs that are
    working now. HUB Zones is a good work and I know that the
    chairman was instrumental in that. We have Empowerment Zones
    which is something that we are working on.
        But I do not want to underestimate the extent of the
    undertaking that this is. You look at some of those numbers in
    the cities, the numbers of jobs they are going to need just for
    the people coming off welfare--and this is all in an
    environment where the economy cannot be going any better.
    Hopefully this economy just keeps going like this ad infinitum,
    but if this economy slows, one has to wonder what is going to
    happen with welfare. So, I do not think we can do enough in
    this regard, Mr. Chairman.

                               section 8 account

        On the section 8 account, I do not belabor the point. I
    will get you an Office of General Counsel opinion on the
    vouchers, but I just want to make sure we are clear on the
    context. This is us trying to fix a situation that we
    discovered last year on the reserves.
        [The information follows:]

       Legality of ``Overleasing'' by PHA's Administering the Section 8
                        Certificate and Voucher Programs

        In response to the concerns raised by Senator Bond, this opinion
    analyzes the legality of so-called ``overleaping'' by PHA's that
    administer the Section 8 certificate and voucher programs. Overleasing
    is the practice of assisting more families than the number of units
    ``reserved'' for a PHA's certificate or voucher program in HUD program
    information systems.
        Overleasing is not prohibited by any statute or regulation. HUD
    payments to a PHA may not exceed the amount of funds (budget authority)
    reserved for the PHA from amounts appropriated by the Congress. The law
    (successive annual appropriations) does not specify the number of units
    or families that may be assisted with available appropriated funds.
        During the history of the programs since 1976, HUD has changed
    requirements that determine the number of families that may be assisted
    by a PHA within available funding, the annual amount budgeted for
    assistance, and the amount contracted by HUD for renewal of expiring
    funding commitments under the PHA ACC. However, HUD procedures have
    always been designed to assure that amounts budgeted and paid to a PHA
    for support of its certificate or voucher program may never exceed the
    funds appropriated by the Congress. Current program instructions
    provide that a PHA may generally only lease the number of units which
    can be supported within the annual contractual limitation on payments
    for a PHA's certificate or voucher program from amounts available under
    the PHA's ACC.\1\
    ---------------------------------------------------------------------------
        \1\ Notice PIH 97-59, issued 11/26/97, Sec. 3.
    ---------------------------------------------------------------------------
        For clarity in this discussion, we start with a brief review of
    basic program concepts. Each fiscal year, Congressional appropriations
    release ``budget authority'' for the certificate and voucher program.
    The release of budget authority grants authority to incur financial
    obligations that will result in outlays. When HUD awards new funding to
    a PHA, HUD records show the amount of budget authority reserved for the
    PHA from the Congressional appropriation. The HUD record also specifies
    ``contract authority''--the maximum annual payment by HUD against each
    commitment of budget authority. Finally, the HUD record shows the
    historical number of ``units'' reserved by HUD for each increment of
    funding in the PHA's program. The number of units is set when HUD
    approves the PHA's application for new funding and does not generally
    change when HUD provides renewal funding to continue assistance after
    expiration of the initial funding commitment.
        The number of reserved units is initially used to determine the
    amount of funding contracted for a new funding commitment in the
    certificate or voucher program. The same historical unit number is also
    used to determine the amount of funding contracted for renewal of the
    initial commitment from time to time. In the certificate program (but
    not the voucher program), the number of units reserved is also used to
    calculate necessary ``amendment'' funding during the term of the ACC.
    HUD provides additional certificate funding so that a PHA can continue
    to provide assistance for the same number of assisted units during the
    ACC term (for a particular funding increment).
        The form of ACC lists successive increments of funding obligated by
    HUD to support a PHA's certificate or voucher program.\2\ For each such
    increment, the ACC specifies both the amount of appropriated budget
    authority--the maximum amount that may be disbursed to the PHA over the
    ACC term--and the amount of ``contract authority''--the annual limit on
    payments during the contract term. Budget authority is a hard statutory
    limit on aggregate payments to the PHA. Contract authority is now used
    as an administrative control to limit the rate at which PHA's draw down
    available budget authority over the ACC term.\3\ In any PHA fiscal
    year, the amount available to support the PHA's certificate or voucher
    program is the sum of the contract authority amounts for successive
    funding increments under the ACC.\4\ In addition, if the aggregate
    payment for a PHA's certificate or voucher program in any fiscal year
    is less than the available contract authority (Annual Budget
    Authority), HUD credits the excess to an unfunded reserve account \5\
    that can be drawn for future program payments.\6\
    ---------------------------------------------------------------------------
        \2\ See description of ACC funding structure in Sec. 982.151.
        \3\ In the early years of the certificate program, the Congress
    appropriated ``contract authority'' as an annual limitation on Section
    8 outlays, without specifying the maximum outlay over the contract
    term. The Congress subsequently shifted to appropriations that
    specified both contract and budget authority.
        For some years, however, Congress has only appropriated by
    providing Section 8 budget authority, without any statutory limit on
    the annual disbursement against the appropriated budget authority.
    However, HUD has administratively retained ``contract authority'' as an
    annual contractual and budgetary limit on HUD payments during the ACC
    term.
        \4\ The sum of available contract authority amounts is variously
    referred to as ``Annual Budget Authority'' (ABA), Maximum ACC amount,
    or Maxim Annual Contract Commitment.
        \5\ The account is now called the ACC Reserve Account (previously
    called project reserve). Because of extensive recaptures from these
    program reserves in fiscal year 1997 by direction of the Congress,
    available reserve funds are now very limited.
        \6\ See HUD-52520 (11/93): Sec. 1 (definition); Sec. 7; Sec. 982.4
    (definition); Sec. 982.154.
    ---------------------------------------------------------------------------
        From the beginning of the certificate program (in fiscal year 1976)
    until 1994, the form of program ACC stated the number and unit
    distribution of units reserved for a PHA's certificate program (number
    of units by number of bedrooms). The ACC also provided that, to the
    maximum extent feasible, the PHA must enter into HAP contracts in
    accordance with the authorized unit distribution as stated in the
    ACC.\7\ During this period, the PHA's were only permitted to lease
    certificate program units in accordance with the authorized unit number
    and distribution as specified in the ACC. Consequently, PHA's were
    contractually required to admit families in accordance with the
    authorized unit distribution originally approved and reserved for the
    PHA certificate program. HUD approved PHA budgets to cover assistance
    payments for units leased in accordance with the approved unit
    distribution.
    ---------------------------------------------------------------------------
        \7\ ACC Part I, HUD 52520 B (5/76) Sec. 1.1(b) and Sec. 1.1(d); ACC
    Part I, HUD 52520 B (12/84) Sec. 1.2(b); ACC Part I, HUD 52520 B (6/85)
    Sec. 1.2.D; ACC Part I, HUD 52520 B (8/88) Sec. 1.2.B.
        These ACC forms provide that the PHA may not substantially deviate
    from the prescribed unit distribution without prior HUD approval.
    ---------------------------------------------------------------------------
        In the voucher program, PHA's have never been required to comply
    with a prescribed unit distribution. Under the statutory design of the
    voucher program, PHA's have authority to set ``payment standards''
    which determine the amount of the subsidy for individual families, and
    consequently the number of families that can be assisted from available
    budget authority.\8\
    ---------------------------------------------------------------------------
        \8\ 42 U.S.C. 1437f(o).
    ---------------------------------------------------------------------------
        In May 1994, HUD issued a new form of unified ACC for the Section 8
    certificate and voucher programs. This new ACC and subsequent program
    ACC's do not specify the number or unit size distribution of program
    units for a PHA's certificate or voucher program.\9\ The PHA is no
    longer required to lease units in accordance with an authorized unit
    distribution. This change in the ACC prepared the way for regulatory
    changes that essentially eliminate the ability of the PHA to control
    the distribution of units by family size, and consequently the number
    of units leased with available funds. In July 1994, HUD issued a new
    rule (effective 10/18/94), that prohibits PHA's from selecting families
    according to the unit size for which the family qualifies under the PHA
    occupancy standards (called ``family unit size'').\10\ This regulatory
    change was designed to give applicant families more equitable access to
    available assistance resources. Before this change, PHA waiting lists
    were maintained by unit size, and large families had to wait for
    program openings in the appropriate unit size category. Under the
    current system, however, PHA's select families from a unitary waiting
    list regardless of the unit size needed by each family.
    ---------------------------------------------------------------------------
        \9\ Consolidated ACC (for certificate and voucher programs), HUD
    52520 (11/93). Notice PIH 94-29 (5/26/94) provides instructions for use
    of the new combined ACC for the certificate and voucher programs.
        \10\ Sec. 982.204(d) (as amended at 59 Federal Register 36662,
    36685 (7/18/94). See PIH Notice 94-50 (8/1/94), Sec. 3.c.
    ---------------------------------------------------------------------------
        The changes in the ACC and regulation are described in PIH Notice
    95-39 (6/15/95). The notice remarks that following these changes: `` *
    * * the number of certificates and vouchers that can be issued by a
    [PHA] will be determined by the amount of funding that is available.''
    ``Approval from HUD is no longer necessary for [PHA's] to deviate from
    the number of certificate units and bedroom sizes reserved by HUD and
    formerly designated in the certificate ACC.''
        Following the 1994 changes in the rule and ACC through 1996, a PHA
    was permitted to budget and provide assistance for the number of
    certificate or voucher units that can be assisted from available
    appropriated funds (budget authority) contracted under the ACC. For
    this purpose, the amount available is the total of contract authority
    (Annual Budget Authority) plus available amounts in the certificate or
    voucher program reserve (undisbursed budget authority remaining in the
    ACC Reserve Account). Under this system, the PHA was not restricted to
    the number of units originally reserved for the PHA program, or the
    unit size distribution as originally reserved.
        In 1996 and 1997 HUD made changes in leasing policy so that PHA's
    can continue to assist program families within amounts appropriated by
    the Congress. In August 1996 and November 1997, HUD issued Notices that
    prohibit PHA's from using program reserves (in addition to contract
    authority) to support leasing of additional assisted units.\11\ Under
    these Notices, a PHA may only lease up to the number of units that can
    be supported by available contract authority.\12\ However, the PHA may
    continue to lease more than the units originally reserved
    (``overlease'') so long as the overleasing can be supported by
    available contract authority under the ACC. (These notices also include
    transition provisions to allow continued assistance for currently
    assisted families.)
    ---------------------------------------------------------------------------
        \11\ PIH Notice 96-68 (8/23/96) and PIH Notice 97-59 (11/26/97).
        \12\ Plus ACC reserve funds used to support extension of original
    funding commitments.
    ---------------------------------------------------------------------------
        The preceding broadly describes HUD procedures for determining the
    number of units budgeted and leased over the history of the certificate
    and voucher programs. We find nothing in these procedures as described
    that violates any statutory or regulatory requirement. At all times,
    HUD procedures have been designed to assure that federal payments are
    within the amounts provided by the Congress. While the original pre-
    1994 certificate ACC required the PHA to lease units within the number
    of units originally reserved, this was merely an administrative and
    contractual requirement, not a statutory obligation.

        Senator Bond. And I congratulate you on it. I know that
    this may not have happened on your watch and HUD did find it
    out, but it is a concern when we are being asked for
    significantly new numbers of vouchers and then find out that,
    as a practical matter, the vouchers have already been awarded.
    Somebody just did not bother to go through the normal process.
    That is where our concern is.
        Secretary Cuomo. I understand, except this was the normal
    process for the Department. The Department allowed leasing
    against the reserves. We changed that last year and said you
    can no longer lease against the reserves. That was the change.
    But I will get the chairman the clarification on that.

                                   2020 plan

        And then on the 2020 plan, Mr. Chairman, this is a
    situation where you get pulled from both ends. There is a
    tremendous desire on behalf of this committee and our other
    committees to get the Department down in size. We are doing
    that. We have a glide path to 7,500. When you start to come
    down in size, there is a criticism from the other side that
    said, maybe you are getting too small. At one point we are
    going to have to justify both demands.
        What we say is this in our 2020 plan. We have at the size
    that HUD is today, 9,000 people, the best HUD that has been
    functioning and operating possibly since its creation. We did a
    national overhaul. We aligned functions in personnel for the
    first time. We did a merit staffing for the entire Department
    nationwide. We have new systems, new technology, a new culture
    with waste, fraud, and abuse. It is evident across the
    Department. It is the best HUD we can get at this point. We are
    not finished but we have made real progress.
        We then say there is a second plan. If you want to get to
    7,500, we are going to need real program consolidations to do
    that. We cannot get to 7,500 without massive program
    consolidation. And then we are going to have to have some very
    tough choices, Mr. Chairman. Do you have a 202 program or do
    you not? Do you have an 811 program or do you not? Do you put
    CDBG and HOME together or do you not? We are going to need to
    make those tough decisions to eliminate programs so you can run
    it at 7,500. And we are not there yet.
        We would love to work with the committee to make that
    possible. But with the staffing we have today, we can operate
    the Department well. To get to the 7,500, which was a shared
    goal--and I know this committee felt very strongly about that--
    we would need to work together to do significant program
    consolidation.
        Senator Bond. Thank you, Mr. Secretary.
        With just a few minutes left, let me turn now to our
    ranking member, Senator Mikulski.

                            housing for the disabled

        Senator Mikulski. Thank you, Mr. Chairman.
        Secretary Cuomo, I would like to go over my yellow flashing
    lights, at least try to get through as many as we could. Let me
    first start with some questions I have related to the
    availability and nondiscrimination in housing for the disabled.
        You know that I fought moving the implementation of Fair
    Housing to Justice to keep it at HUD so that we would focus on
    the housing issue and it would not get lost in a whole lot of
    other issues at Justice.
        Now, in terms of housing for the disabled, I have three
    principles. No. 1, let us make sure we never have
    discrimination. No. 2, there has to be access. Remove the
    architectural barriers and the attitudinal barriers. And No. 3,
    availability of supply, both publicly subsidized but also
    private sector.
        I am concerned that we are inadvertently sabotaging our
    goals of availability and access by the lack of clear guidance
    to the private sector. That would be a part of my question.
    Clear guidance, how this is being done.
        In meeting with home builders in my own State, they gave me
    a manual that your agency published. It is very beautiful. It
    is very attractive. It is very expensive. And at the beginning
    of it, it says it was designed and developed by a nonprofit,
    Barrier-Free Environment.
        It goes on in a disclaimer that says, statements and
    conclusions contained in this manual represent the nonprofit.
    They do not represent the views of HUD but HUD paid for it and
    published it. Some portions may even be in conflict with
    current or former HUD regulations. However, because this
    information contained in this manual is advisory, it must be
    refined and developed before being implemented. No guarantee of
    the accuracy or completeness of this information without da,
    da, da, da, is implied.
        In other words, then you go on to say even if you follow
    this, Mr. Builder or Ms. Builder, you are on your own. We have
    paid for this. We have printed it. We have distributed it, but
    it does not mean a warm spit to make sure that you, if you
    comply with what was given to us for recommendations will
    ensure that you have met our test for eliminating barriers. And
    this was signed by your predecessor.
        Then we have a letter from Cisneros saying how terrific
    this document is but it does not mean anything because it might
    even be in conflict or contradiction with our own regs.
        Now, I do not want to go over the document. I want to get
    to the outcome. If you were a home builder or an apartment
    builder, you are already disadvantaged in the tax code for
    multiple family dwellings. No. 2, you now want to provide
    access to the disabled, but you do not have clear and
    consistent guidelines from HUD.
        So, you see I think this then deals with the issues of
    availability. It then sabotages our issues for access and
    ultimately the handicapped.
        What are you going to do in your Department to ensure that
    there is clear and consistent guidance to both the public
    sector ability and the private sector ability so that we can
    make sure supply is out there?
        Secretary Cuomo. Thank you very much, Senator.
        First, I agree with the concern you raised and I might even
    suggest that it is worse than the Senator articulates in some
    ways because not only is there confusion with what complies
    with the Federal Fair Housing laws, but there are multiple
    local building codes, State regulations, et cetera that have
    different interpretations State by State. So, it is a very
    confusing circumstance.
        I think the manual that the Senator pointed to was recently
    removed from circulation.
        Senator Mikulski. Oh, great. What a surprise. [Laughter.]
        Secretary Cuomo. I just wanted you to see how quick the new
    HUD is, Senator. [Laughter.]
        That manual is out of circulation, and you are right. The
    disclaimer----
        Senator Mikulski. My yellow light is on. Could you tell me,
    though, apart from what is in or not in this manual--it might
    be a fantastic document, but what then can the private sector,
    as well as mayors, those who then establish building codes look
    for in saying these are what the rules of the game are going to
    be?
        Secretary Cuomo. We will have out within 30 days a manual,
    guidelines, a definitive document that says these are the
    Federal Fair Housing laws and regulations. If you do this, you
    will be in compliance. Signed, Secretary Andrew Cuomo. And that
    will be out in 30 days.
        Senator Mikulski. Mr. Chairman, do I have time for one
    other question to ask about management?
        Senator Bond. I would imagine so. [Laughter.]
        Senator Mikulski. I know that we do have a vote but----
        Senator Bond. I am sure that Senator Lautenberg and
    Senators Craig and Burns will be most happy. Right?
        Senator Lautenberg. I am afraid not to.
        Senator Bond. Good thinking.
        Senator Craig. Go for it, Barbara. [Laughter.]

                                    hope vi

        Senator Mikulski. HOPE VI. This is a program that seems to
    be working in cities large and midsize around the country. You
    have an able administrator in Ms. Bacon. But prior to her
    coming, we now have reports, like in my own hometown, that
    Lafayette Square would be listed as townhouses costing
    $300,000. When this article was published, it raised eyebrows.
    It really raised my concern because, as you know, I was one of
    the founders of HOPE VI.
        Could you tell us, is the spending of HOPE VI out of
    control? Do townhouses really cost $300,000, and would it have
    not been easier to give the poor $100,000 and let them go
    anywhere they wanted in the Baltimore metropolitan area?
        Secretary Cuomo. Two responses, Senator. First of all, the
    HOPE VI program is a good program. The concept was right and it
    is working well. What we need is some clarity and definition as
    to what we are doing. When they say a $300,000 townhouse, it
    sounds like you spent $300,000 to build a townhouse, and
    somebody would say, why would we be doing that with taxpayer
    money?
        The HOPE VI program is actually three programs. It is a
    housing program. It is also a community development program. It
    is also a human services program. So, it is a little deceiving
    when we say one number, one grant for one purpose.
        We need clarity and definition. We have a regulation and a
    rule at the Department that we are now going to process which
    separates the cost into three separate categories and then
    applies caps to each. We are also then going to go to a
    secondary level of analysis where we look at the cost within
    those costs: How much are the tenant groups getting, how much
    are the attorneys getting, how much are the architects getting,
    et cetera. You would have a finer level of cost control.
        [The information follows:]

                      Office of Public and Indian Housing

                      total development cost (tdc) policy
        TDC is calculated on the basis of R.S. Means ``Economy'' and
    Marshall and Swift ``Fair'' housing quality, adjusted annually,
    multiplied by 1.6 for elevator buildings and 1.75 for townhouse
    construction.
        HOPE VI funds are granted under three subgrants:
        Housing Subgrant.--Cap HUD Funds, including Public Housing funds,
    CDBG and HOME at R.S. Means ``Average'' and Marshall & Swift ``Good''
    housing quality ($85,000 average 1997 cost for 3 bedroom townhouse),
    adjusted annually for current costs, bedroom distribution and
    geographic location.
        Community Renewal Subgrant.--Cap Public Housing funds at TDC
    (including Housing Subgrant) for routine site work, demolition and
    remediation of replacement units, administration, community and
    economic development facilities, etc. Outside TDC, for 1997 grants
    only, cap demolition and remediation of on-site non-replacement units
    and extraordinary site costs, at 110 percent of TDC, using Public
    Housing Funds, verified by an independent cost estimate.
        Human Services Subgrant.--Cap HOPE VI funds at $5,000 per family
    for occupied units at the time of application plus the number of new
    families projected to occupy units in the revitalized development for
    community and supportive services. Cap relocation at $3,000 per
    occupied unit at time of application.
        No cap on non-Public Housing funds used for community renewal
    purposes.
        No cap on non-HUD funds controlled by the locality, State or
    private sector.
        Policy applies to 1997 grants forward.
        For 1998 grants no exceptions over 100 percent of TDC.
        For 1993-1996 grants, approve justifiable exceptions on a case-by-
    case basis according to the policy which was in place at the time the
    Revitalization Plan was approved.
        Policy applies to other Public Housing Capital Program funds,
    consistent with HOPE VI.
    [GRAPHIC] [TIFF OMITTED] TMA12.001

                              hard cost tdc index
        RS Means ``Economy''; Marshall & Swift ``Fair'' (1997--$60,000
    average)
      --2 story, 3 bedroom row house
      --Minimum compliance to uniform building codes
      --Minimum compliance to FHA and VA requirements
      --Energy package for moderate climate
      --Exterior brick veneer on front, T111 exterior on rear/plywood
            material
      --20-year asphalt shingle, factory warranty (25 year is market
            standard)
      --1,200 square feet, 3 bedrooms
      --1\1/2\ baths with enameled steel tub and wall-mounted vanity sink
      --Forced air with minimum output (no air conditioning)
      --Rubber-backed carpeting 80 percent; asphalt tile 20 percent
      --6 linear feet of economy grade kitchen cabinets, plastic laminate
            countertops
      --Slab on grade foundation (no basement)
      --Appliances: 30 inch range and range hood, electric water heater,
            refrigerator, incandescent lighting fixtures (no dishwasher,
            washer, dryer and garbage disposal)
      --Standard builder's general conditions, overhead and profit
      --Davis-Bacon labor rates

                   TDC Hard Cost Indices Average $60,000 \1\

                            [For 3 bedroom rowhouse]

            City                                                Housing Hard
                                                                  Cost Index
    ATLANTA.......................................................   $54,791
    BALTIMORE.....................................................    59,165
    BOSTON........................................................    73,868
    CAMDEN........................................................    69,482
    CHARLOTTE.....................................................    50,159
    CHICAGO.......................................................    69,622
    CLEVELAND.....................................................    67,540
    COLUMBUS......................................................    60,733
    DALLAS........................................................    56,329
    DENVER........................................................    61,100
    DETROIT.......................................................    67,061
    EL PASO.......................................................    52,073
    HOUSTON.......................................................    56,215
    INDIANAPOLIS..................................................    61,470
    KANSAS CITY...................................................    61,470
    LOS ANGELES...................................................    70,261
    LOUISVILLE....................................................    57,926
    MEMPHIS.......................................................    55,633
    MIAMI.........................................................    54,159
    MILWAUKEE.....................................................    62,932
    NEW HAVEN.....................................................    66,687
    NEW ORLEANS...................................................    55,130
    NEW YORK......................................................    85,682
    NEWARK........................................................    73,891
    OAKLAND.......................................................    76,291
    PHILADELPHIA..................................................    70,827
    PITTSBURGH....................................................    65,716
    PUERTO RICO...................................................    56,642
    SAN ANTONIO...................................................    53,161
    SAN FRANCISCO.................................................    78,467
    SEATTLE.......................................................    66,654
    SPRINGFIELD...................................................    63,657
    ST. LOUIS.....................................................    64,405
    WASHINGTON, DC................................................    59,645
                        --------------------------------------------------------------
                        ____________________________________________________

          Housing Hard Cost Cap Average...........................    59,847

    \1\ 1997 Index.
    ---------------------------------------------------------------------------
                             housing hard cost cap
        RS Means ``Average''; Marshall & Swift ``Good'' (1997--$85,000
    average)
      --2 story, 3 bedroom row house
      --Exterior brick veneer on front
      --Vinyl siding exterior on rear with wrapped aluminum fascia and
            vinyl soffit
      --1,200 square feet
      --3 bedrooms
      --1\1/2\ baths with ceramic tile
      --HVAC/electric heat pump with air conditioning
      --Wall-to-wall carpet with vinyl sheet goods in kitchen, bath and
            laundry area
      --12 linear feet of kitchen cabinetry, plastic laminate countertops
      --Basement (slab on grade less approximately $5,000)
      --Appliances: 30 inch range, electric water heater, dishwasher,
            garbage disposal, 30 inch range hood, refrigerator
      --Standard builder's general conditions, overhead and profit
      --Davis-Bacon labor rates

                   Housing Hard Cost Cap Average $85,000 \1\

                            [For 3 bedroom rowhouse]

            City                                                Housing Hard
                                                                    Cost Cap
    ATLANTA.......................................................   $72,818
    BALTIMORE.....................................................    77,962
    BOSTON........................................................    98,248
    CAMDEN........................................................    91,635
    CHARLOTTE.....................................................    66,550
    CHICAGO.......................................................    91,256
    CLEVELAND.....................................................    89,752
    COLUMBUS......................................................    80,316
    DALLAS........................................................    73,703
    DENVER........................................................    79,422
    DETROIT.......................................................    88,811
    EL PASO.......................................................    68,778
    HOUSTON.......................................................    73,921
    INDIANAPOLIS..................................................    81,004
    KANSAS CITY...................................................    81,004
    LOS ANGELES...................................................    91,885
    LOUISVILLE....................................................    76,493
    MEMPHIS.......................................................    76,646
    MIAMI.........................................................    75,269
    MILWAUKEE.....................................................    86,772
    NEW HAVEN.....................................................    90,320
    NEW ORLEANS...................................................    75,866
    NEW YORK......................................................   117,275
    NEWARK........................................................   100,847
    OAKLAND.......................................................   103,083
    PHILADELPHIA..................................................    96,932
    PITTSBURGH....................................................    90,412
    PUERTO RICO...................................................    75,557
    SAN ANTONIO...................................................     3,295
    SAN FRANCISCO.................................................   105,907
    SEATTLE.......................................................    90,354
    SPRINGFIELD...................................................    87,369
    ST. LOUIS.....................................................    88,494
    WASHINGTON, DC................................................    82,008
                        --------------------------------------------------------------
                        ____________________________________________________

          Housing Hard Cost Cap Average...........................    85,293

    \1\ 1997 Index.
    ---------------------------------------------------------------------------
               united states housing act of 1937, section 6(b)(2)
        ``The Secretary shall determine the total development cost by
    multiplying the construction cost guideline for the project (which
    shall be determined by averaging the current construction costs, as
    listed by not less than 2 nationally recognized residential
    construction cost indices, for publicly bid construction of a good and
    sound quality) by--(A) in the case of elevator type structures, 1.6;
    and (B) in the case of nonelevator type structures, 1.75.
    [GRAPHIC] [TIFF OMITTED] TMA12.002

        Senator Mikulski. But we have a rule and a regulation that
    is about to go out, Senator, and I am going to give the
    committee a copy today. I would urge you to consider this for
    inclusion in legislation. Elinor Bacon, whom you know, has done
    an extraordinary job over these months working with local
    groups, consulting everyone, coming up with what we call total
    development costs, the separate grants. I would urge you to put
    it in the legislation, let everybody know what the costs are.
    We have a very good sense of what they should be and what we
    want done. We want a good program, but we do not want an
    extravagant program. The best way to do it is legislatively.
        Well, I think we would like to take a look at it. I want my
    colleagues to have a chance. But what you're saying is that
    $300,000 is the cost of the community center, the cost of all
    the legal fees. Thank you.
        Secretary Cuomo. Exactly.
        Senator Mikulski. Mr. Chairman, thank you.
        Senator Bond. Thank you very much, Senator Mikulski.
        Senator Lautenberg.
        Senator Lautenberg. Thanks, Mr. Chairman.
        One of the things, Mr. Secretary, that I am concerned about
    in the process of reform or consolidation is that we do not
    lose the opportunity for some programs to be measured based on
    their individual or their particular performance results.

                    public housing drug elimination program

        A program that I authored in 1989, the Public Housing Drug
    Elimination Program, was first authorized at $8 million in
    1989. Now we see a request for $310 million. I believe that the
    program has stood on its own two feet. It is a meritorious
    expansion of the spending for the program because it has helped
    relieve these units of crime, gotten these citizens who live
    there more involved in the management, and it has worked
    effectively. I visit these places regularly and I see how
    excited people are about the opportunity to imprint their own
    views into the management of the facility. I just want to make
    sure that we do not consolidate this program into something
    else where there is a diversion of attention.
        How has, in your judgment, Mr. Secretary, the Public
    Housing Drug Elimination Program done thus far? What do you use
    as the criteria for measuring it?
        Secretary Cuomo. Senator, in general I think the program
    has done extraordinarily well. Before we even get to a
    discussion of performance measures, in terms of mission, I
    think it is vital to the Department. We have proliferated law
    enforcement programs to rid public housing from drugs. Local
    police do it. State police do it. Federal police do it. The
    Department of Justice does it. The FBI does it. HUD does it
    under Operation Safe Home, and there is no doubt that there is
    a place for law enforcement. Lock them up. We do that very well
    as a Nation. We have more people in prisons than any country on
    the globe. And HUD does that well.
        The flip side is, do we have a positive course for people
    to follow? Is there some job training? Is there a program to
    get people off the street? The Drug Elimination Grant Program
    is the program that is a possible solution for that, as well as
    it can do, quote, hard law enforcement type activities,
    unquote.
        But we think it is a vital program. It is a program that is
    working very, very well. I can get the Senator specific data on
    how the program is doing, but everything I hear, as I go around
    the country, is all positive.
        Senator Lautenberg. Whatever you could furnish the
    committee with, Mr. Chairman, about the progress because I am
    excited about it not because I authored it, because when I talk
    to the citizens who live in these places, they are really
    enthusiastic and they plead, whatever you do, do not take that
    away. They know what they have at stake is their quality of
    life by the process of eliminating the drug influence there.
        [The information follows:]

                  The Public Housing Drug Elimination Program

        The control and prevention of drug use, drug trafficking, and drug-
    related crime in public housing communities must begin in the
    neighborhoods themselves. Although law enforcement officers public
    housing staff can make important contributions to the anti-drug
    campaign, experience has shown that residents themselves, who are most
    directly affected by drugs and drug-related crime, can have the most
    long-lasting effect by uniting together to fight the problem. The
    Public and Indian Housing Drug Elimination Program (PHDEP), sponsored
    by the Department of Housing and Urban Development (HUD), awards grants
    to empower residents to turn the tide against drugs and drug-related
    crime in their own communities. Money from these grants is put to a
    wide variety of uses, including the following:
      --Employment of security personnel and investigators.
      --Reimbursement of local law enforcement agencies for additional
            security.
      --Physical improvements to enhance security.
      --Voluntary tenant patrols.
      --Drug prevention, intervention, and treatment programs.
      --Security and drug prevention programs operated by resident
            management corporations, incorporated resident councils, and
            resident organizations.
                                 welfare reform
        Housing authorities applying for PHDEP funds are strongly
    encouraged to include in their comprehensive anti-crime strategies a
    discussion of how the proposed PHDEP drug and crime-prevention
    activities will be coordinated with larger Empowerment and Enterprise
    Zone strategies, and Welfare Reform efforts, especially in the areas of
    training and employment of PHA residents. The PHDEP application may
    include specific opportunities for resident employment and training
    with such activities as security guard personnel, housing authority
    police or local municipal police department law enforcement officers,
    and for referrals to employment and training opportunities in the
    health, education, substance abuse prevention, intervention, or
    treatment fields.
        Many communities are already developing and providing such
    services, and housing authorities are strongly encouraged to provide
    community facility space to allow the provision of these services in
    and around public and Indian housing authorities. HUD also encourages
    applicants to implement collaborative efforts with local religious
    organizations in developing substance abuse prevention, treatment, and
    intervention strategies and programs.
                           proven effective approach
        PHDEP's success is rooted in the fact that people respond better
    and become more involved in something that they have helped to build.
    Congress has shown its support for this approach by appropriating
    additional funding each year from $8.2 million in fiscal year 1989 to
    $290 million in fiscal year 1997. This significant increase in funding
    has allowed HUD to award 3,473 grants totaling more than $1 billion
    since 1989 to public and Indian housing agencies. Funding amounts vary
    for individual housing authorities based on their size and need. Last
    year, the smallest grant award was $25,000 and the largest was
    $35,000,000.
                               selection criteria
        All applications received are reviewed against four selection
    criteria:
      --Extent of drug-related problems in public or Indian housing
            communities.
      --Quality of the plan to address drug-related problems and the method
            of evaluating the plan's success.
      --Capability of the applicant to carry out the plan.
      --Extent to which residents, the local government, and the local
            community support and participate in designing and implementing
            proposed activities.
                              for more information
        To receive more information on the Public and Indian Housing Drug
    Elimination Program, please write the Drug Information & Strategy
    Clearinghouse, P.O. Box 6424, Rockville, Maryland 20849, or call 1-800-
    578-DISC (3472).

                             PHDEP Totals 1991-1997

    National Analysis:
        Number of Applicants................................           6,037
        Number of Awards....................................           3,604
        Funding Awarded.....................................  $1,365,054,563
                        ========================================================
                        ____________________________________________________
            Area                                                       Total

    Funding by Area:
        New England.........................................     $75,178,761
        New York/New Jersey.................................     296,546,507
        Midatlantic.........................................     135,960,285
        Southeast...........................................     350,562,327
        Midwest.............................................     210,348,848
        Southwest...........................................     131,828,132
        Great Plains........................................      26,213,701
        Rocky Mountain......................................      22,989,359
        Pacific/Hawaii......................................      84,376,151
        Northwest/Alaska....................................      31,050,492
    Breakdown of Funded Programs by Eligible Expense
        Category:
        Law Enforcement.....................................     437,568,459
        Security............................................     198,527,855
        Investigators.......................................      35,994,717
        Tenant Patrols......................................      19,340,185
        Physical Improvements...............................      62,330,287
        Prevention..........................................     400,293,434
        Intervention........................................     154,263,528
        Treatment...........................................      69,191,332
        Other Costs.........................................      58,231,963
    Awards By State:
        Alabama (229).......................................      53,395,126
        Alaska (16).........................................       2,383,077
        Arizona (62)........................................      13,602,071
        Arkansas (60).......................................       9,109,137
        California (147)....................................      56,529,904
        Colorado (11).......................................       7,023,905
        Connecticut (78)....................................      19,578,319
        District of Columbia (6)............................      14,818,089
        Delaware (15).......................................       4,472,259
        Florida (180).......................................      47,743,273
        Georgia (244).......................................      57,783,432
        Guam (1)............................................         250,000
        Hawaii (6)..........................................       6,971,665
        Idaho (1)...........................................          93,300
        Illinois (135)......................................      87,237,106
        Indiana (52)........................................      16,128,559
        Iowa (18)...........................................       1,748,360
        Kansas (25).........................................       4,845,712
        Kentucky (82).......................................      19,956,325
        Louisiana (142).....................................      23,313,439
        Maine (11)..........................................       2,059,112
        Maryland (42).......................................      26,091,238
        Massachusetts (102).................................      42,580,957
        Michigan (75).......................................      19,451,289
        Minnesota (34)......................................      15,623,025
        Mississippi (91)....................................      15,167,608
        Missouri (79).......................................      20,260,917
        Montana (32)........................................       6,072,072
        Nebraska (9)........................................       4,204,424
        Nevada (27).........................................       7,022,511
        New Hampshire (22)..................................       4,625,988
        New Jersey (184)....................................      59,130,847
        New Mexico (44).....................................       5,675,904
        New York (182)......................................     237,415,660
        North Carolina (262)................................      54,911,316
        North Dakota (12)...................................       3,206,257
        Ohio (87)...........................................      58,261,015
        Oklahoma (85).......................................      24,242,294
        Oregon (23).........................................       6,981,464
        Pennsylvania (112)..................................      54,866,251
        Puerto Rico (4).....................................      43,836,563
        Rhode Island (22)...................................       8,293,497
        South Carolina (61).................................      12,757,172
        South Dakota (17)...................................       3,782,742
        Tennessee (89)......................................      39,638,842
        Texas (215).........................................      64,641,646
        Utah (14)...........................................       2,598,633
        Vermont (2).........................................         100,000
        Virginia (88).......................................      30,051,637
        Virgin Islands, U.S. (5)............................       5,372,670
        Washington (63).....................................      21,592,651
        West Virginia (32)..................................       5,660,811
        Wisconsin (8).......................................      11,588,742
        Wisconsin (2).......................................         305,750

                               GRANT DATA BY YEAR
    ------------------------------------------------------------------------
                                   Number of
             Fiscal year             grants    Total funding  Average amount
                                    awarded       awarded        of grant
    ------------------------------------------------------------------------
    1991.........................        496    $140,775,000        $283,821
    1992.........................        426     140,550,000         329,930
    1993.........................        439     145,525,000         331,494
    1994.........................        520     228,884,574         440,162
    1995.........................        526     250,335,189         475,922
    1996.........................        665     259,000,487         264,827
    1997.........................        532     205,633,418         386,529
    ------------------------------------------------------------------------

                                                                       GRANT DATA BY AREA
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                             Area                               1991          1992          1993          1994          1995          1996          1997
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    New England...........................................    $7,635,809    $7,266,988    $7,596,913   $12,860,993   $14,823,972   $14,169,492   $12,785,694
    New York/New Jersey...................................    25,495,134    28,564,286    29,543,028    55,227,952    57,426,264    52,418,990    47,870,853
    Midatlantic...........................................    13,361,779    13,797,442    14,929,111    21,232,422    26,764,697    26,258,879    24,973,795
    Southeast.............................................    37,764,501    34,315,956    35,745,573    59,075,794    62,786,396    73,365,528    43,278,457
    Midwest...............................................    22,196,459    20,660,267    21,211,867    31,567,262    34,272,866    36,217,213    35,464,009
    Southwest.............................................    14,418,860    13,969,920    13,495,402    18,538,821    19,333,715    18,984,654    15,554,695
    Great Plains..........................................     3,938,777     4,002,607     4,144,285     4,184,150     5,166,886     5,747,500     3,638,634
    Rocky Mountain........................................     1,018,910     1,373,601     1,253,514     1,640,850     1,444,685     2,317,034     1,657,480
    Pacific/Hawaii........................................     7,750,840     8,842,934     9,244,301    12,868,019    14,390,751    15,446,112    10,211,160
    Northwest/Alaska......................................     2,877,784     3,007,050     3,219,122     3,950,417     4,687,119     4,950,690     4,377,839
    NONAP.................................................     4,436,147     4,650,584     5,141,884     7,737,894     9,237,838     9,097,395     5,820,801
    --------------------------------------------------------------------------------------------------------------------------------------------------------

                      PHDEP History--Total Dollars Awarded

                            [In millions of dollars]

    1991..........................................................   $140.80
    1992..........................................................    140.50
    1993..........................................................    145.50
    1994..........................................................    228.90
    1995..........................................................    250.30
    1996..........................................................    259.00
    1997..........................................................    205.60

                               Average Grant Award

    1991..........................................................  $283,821
    1992..........................................................   329,930
    1993..........................................................   331,494
    1994..........................................................   440,162
    1995..........................................................   475,922
    1996..........................................................   264,827
    1997..........................................................   386,529

                   APPLICATIONS RECEIVED AND FUNDED 1991-1997
    ------------------------------------------------------------------------
                          Fiscal year                       Funded  Received
    ------------------------------------------------------------------------
    1991..................................................     496       751
    1992..................................................     426       903
    1993..................................................     439       849
    1994..................................................     520       828
    1995..................................................     526       839
    1996..................................................     665       978
    1997..................................................     532       889
    ------------------------------------------------------------------------

    the arts effectively discourage drug use--the housing authority of the
                          county of marin, california
        The Housing Authority of the County of Marin's (MCHA's) performing
    arts program, which began as an eligible activity under the fiscal year
    1995 Youth Sports Program (YSP) grant, had a significant effect on the
    lives of young public housing residents. Historically, blatant drug
    activity has been a prominent feature in Marin County's public housing
    communities. However, MCHA's successful arts program has contributed to
    a 29-percent decrease in drug-related crime in public housing from 1995
    to 1996.
        MCHA has contracted with the Performing Stars of Marin to bring its
    services to youth in public housing. The program received $14,300 in
    fiscal year 1997 PHDEP funding and $52,640 leveraged through
    partnerships with the Marin County Foundation, the Marin Ballet,
    Pacific Gas and Electric, Pacific Telesis, and the United Way's
    African-American Community Trust grant. These partners donate services,
    scholarships, and a variety of products, including uniforms and a van.
    Performing Stars of Marin has also been successful in its fundraising
    efforts.
        Weekly classes in baton twirling, drill team, tap dance, music
    theory, and theater arts are held at the local Manzanita Center,
    various local schools, public housing facilities, and local childcare
    centers. The program enrolls 200 children between 5 and 13 years of
    age, 85 percent of whom are residents of public housing. Students who
    are waiting for openings in the program enroll in preparatory classes
    that help to assess and channel their individual talents and interests.
    Field trips to cultural events are also included in program activities.
    Monthly meetings that involve parents, grandparents, and other
    guardians are held monthly to demonstrate family support and applaud
    the children's efforts. Scholarships from the Marin Ballet are made
    available to exceptionally gifted and hard-working students.
        There are many benefits of this program. Self-expression in the
    performing arts allows children to channel their aggression and
    emotions into constructive, creative veins. The students are also
    learning valuable life skills that will enable them to confront life's
    obstacles head on and develop pride in their accomplishments, an
    alternative to the instant gratification that drugs provide. Exposure
    to new ideas, new people, and new possibilities for the future not only
    helps the children combat the isolation that comes from living in
    public housing and can result in drug use, but it stretches their
    horizons.
        For more information, contact: Housing Authority of the County of
    Marin, P.O. Box 4282, San Rafael, CA 94913, (415) 491-2525, (800) 735-
    2929 (TDD).

    ------------------------------------------------------------------------
                                                        Fiscal year
                                                      -------------- Percent
                                                        1995   1996   change
    ------------------------------------------------------------------------
    Incidents of Drug-Related Crime..................    157    111      -29
    ------------------------------------------------------------------------

            Marin County PHDEP Funding History: Fiscal Years 1991-1997

    1991....................................................................
    1992..........................................................  $250,000
    1993..........................................................   183,700
    1994..........................................................    89,309
    1995..........................................................    89,845
    1996..........................................................   244,170
    1997..........................................................   149,900
      drug activity reduced by law enforcement programs--danbury housing
                             authority, connecticut
        The Danbury Housing Authority's (DHA's) law enforcement programs
    have made positive strides toward eradicating crime in targeted public
    housing neighborhoods: Eden Drive, High Ridge Gardens, and Laurel
    Gardens. Law enforcement programs at DHA sites received $84,000 in
    PHDEP funding in fiscal year 1997 and another $5,000 contribution from
    DHA. In addition to an increased police presence at targeted sites,
    DHA's policing programs have contributed to an improvement in police
    response time and problemsolving between residents and police. One
    resident commented, ``It wasn't always such a safe place to live, but
    with help from the police patrol, our neighborhood has been cleaned
    up.'' These improvements in safety are quantifiable: Policing efforts
    have resulted in a 74.7-percent decrease in drug activity at targeted
    sites between 1995 and 1996.
        To implement its Community Policing Program, DHA has an ongoing
    contract with the Danbury Police Department. Uniformed police officers
    patrol targeted sites on foot and perform various other policing
    duties, including responding to calls for assistance. These officers
    are developing mutually beneficial relationships with residents and
    encourage partnership for implementation of Neighborhood Crime Watch
    initiatives. To be more efficient in their services, officers' shifts
    correspond with the times when criminal activity is highest as
    determined by police incident reports. These reports continue to be
    maintained and studied on a monthly basis and police shifts are
    adjusted as needed.
        DHA introduced its site-based police ministations, which are housed
    in the neighborhood community resource centers, in November 1994. These
    ministations have been particularly effective in increasing police
    visibility by bringing officers directly into the targeted
    neighborhoods. Foot patrol officers, special narcotics officers, and
    beat officers work out of these ministations on a regular basis. Using
    community policing strategies, the ministations augment existing
    routing patrols and drug investigations. By allowing police to witness
    drug activity in targeted communities on a regular basis, the
    ministations also improve the process of identifying, investigating,
    arresting, and evicting residents and visitors who sell drugs.
        For more information, contact: Housing Authority of the City of
    Danbury, P.O. Box 86, Danbury, CT 06813-0086, (203) 744-2500.

    ------------------------------------------------------------------------
                                                        Fiscal year
                                                      -------------- Percent
                                                        1995   1996   change
    ------------------------------------------------------------------------
    Drug Activity in Targeted Public Housing.........     87     22    -74.7
    ------------------------------------------------------------------------

              Danbury PHDEP Funding History: Fiscal Years 1991-1997

    1991....................................................................
    1992....................................................................
    1993....................................................................
    1994..........................................................  $121,200
    1995..........................................................   201,000
    1996..........................................................   201,100
    1997..........................................................   125,100
        teaching kids to live drug free--framingham housing authority,
                                 massachusetts
        The Framingham Housing Authority (FHA) has made available to its
    resident youth a variety of programs that help them deal with the
    pressures in life that can lead to substance abuse and other crimes. A
    bond between Framingham police officers and FHA youth has been
    effective in changing behaviors and, consequently, reducing crime.
    Between 1994 and 1996, FHA has seen a 26-percent decrease in Part 1
    crimes in its public housing areas.
        A $25,000 COPS and KIDS program grant allows the Framingham Police
    Department and FHA to occupy children with constructive activities
    during the hours that they are not in school. Programs operate in two
    public housing communities and at scattered sites within walking
    distance of middle schools attended by resident youth. FHA transports
    the students to the satellite sites. A mentoring program was
    established in the Fall of 1997, bringing in and training volunteers
    from the Framingham Police Department, FHA, the local courts and
    probation department, Framingham Park and Recreation Department,
    Framingham schools, the Framingham Fire Department, and local colleges.
        FHA has implemented several COPS and KIDS youth programs, which are
    focused on teaching kids how to channel their energies in constructive,
    nonviolent ways, to seek alternatives to violence, to become leaders,
    to counsel their peers, and to avoid drugs and alcohol. A computer
    laboratory has been created and staffed with mentors to allow youth the
    opportunity to learn while having fun. Youth learn leadership,
    teambuilding, and conflict resolution skills. Sports activities include
    mountain biking and the popular boys' and girls' boxing program, which
    is an incentive for kids to stay out of trouble. A teen counseling
    hotline has been established and both middle school students and high
    school juniors and seniors are being trained to counsel and mentor
    peers and younger teens. Other programs currently being offered to
    youth are tutoring, ESOL, and drug education. In the Summer of 1998,
    the program will include youth community service and neighborhood
    beautification projects.
        These programs have made a difference in the lives of community
    youth. One resident, whose three children are involved in the drug,
    alcohol, and violence prevention activities, explains, ``Our children
    are our most important asset and teaching them while they are young
    will really benefit them in adulthood.''
        For more information, contact: Framingham Housing Authority, 1 John
    J. Brady Drive, Framingham, MA 01702-2300, (508) 879-7562.

    ------------------------------------------------------------------------
                                                    Fiscal year
                                               --------------------- Percent
                                                 1994   1995   1996   change
    ------------------------------------------------------------------------
    Part 1 Crimes Framingham..................    208    180    153      -26
    ------------------------------------------------------------------------

                  PHDEP Funding History: Fiscal Years 1991-1997

    1991....................................................................
    1992....................................................................
    1993....................................................................
    1994....................................................................
    1995....................................................................
    1996....................................................................
    1997..........................................................   $70,500
    education programs reduce violent crime--new bedford housing authority,
                                 massachusetts
        Attention to learning and personal growth characterizes the New
    Bedford Housing Authority's (NBHA's) education programs. In a city that
    was called the most violent city in New England in 1991, NBHA's
    personal and educational enrichment programs have contributed to a 69-
    percent reduction in violent crime in targeted NBHA developments
    between 1994 and 1996.
        NBHA's award-winning Family Learning Center (FLC) is located in the
    convenient Mount Pleasant School and is currently funded by a $51,000
    PHDEP grant. More than 100 students in grades 4 through 6 participate
    in daytime and afterschool educational programs. On the average,
    students' skills have improved 1.15 grade levels in vocabulary and 1.07
    grade levels in reading comprehension. The 1996/97 school year brought
    the addition of a special education class that has enjoyed similar
    success.
        Adult education classes are also offered at the FLC and include
    English for speakers of other languages, (ESOL); General Equivalency
    Diploma, (GED) preparation courses; and the Computerized Competencies
    Program, which allows students to learn to use computers and software
    in a self-directed atmosphere. More than 50 adults are enrolled. ESOL
    students have, on the average, achieved a command of the English
    language equivalent to the third grade level. Of the 26 adults who
    attended GED classes regularly, 19 have received their GED's. Many
    others are building career skills.
        Several extracurricular activities, which are funded under the
    single FLC sum, are giving more than 200 children the power of
    knowledge and a safe haven while relieving parents' childcare burden.
    The Smart Moves program, which received $14,560 in PHDEP funds in
    fiscal year 1997, is sponsored by the Boys & Girls Club of Greater New
    Bedford and educates youth about the risks of sexual activity and the
    use of drugs and alcohol. Changing Lives Through Literature, which
    received $2,400 in PHDEP funds in fiscal year 1997, emphasizes the joy
    of reading and is cosponsored by NBHA, the Third District Court of
    Bristol County, and the Mt. Pleasant School. The Purple Bus, an
    artmobile from the New Bedford Art Museum, received $5,200 in PHDEP
    funds in fiscal year 1997 and brings art classes to children in NBHA's
    public housing developments. Other activities draw from a wealth of
    community resources and have also been effective in the overall drug-
    prevention effort.
        For more information, contact: New Bedford Housing Authority, P.O.
    Box 2081, New Bedford, MA 02741, (508) 9974800, (508) 997-5338 (TDD).

    ------------------------------------------------------------------------
                                                    Fiscal year
                                               --------------------- Percent
                                                 1994   1995   1996   change
    ------------------------------------------------------------------------
    Rate of Violent Crime New Bedford.........     88     74     27      -69
    ------------------------------------------------------------------------

                  PHDEP Funding History: Fiscal Years 1991-1997

    1991....................................................................
    1992..........................................................  $250,000
    1993..........................................................   316,696
    1994..........................................................   412,500
    1995..........................................................   412,500
    1996..........................................................   401,750
    1997..........................................................   428,220
         employment assistance effectively combats drugs--newport news
                      redevelopment and housing authority
        The Newport News Redevelopment and Housing Authority (NNRHA) takes
    a multifaceted approach to support residents both in their transition
    from welfare to the workplace and independence and in avoiding the
    temptation to use drugs. NNRHA has forged ties with several area
    government, public service and religious organizations, and other
    community partners. The success of this program is evident in the 32-
    percent decrease in violent crime between 1995 and 1996.
        Virginia's Initiative for Employment not Welfare (VIEW) began on
    October 1, 1997, and a large portion of those enrolled in the program
    are residents of NNRHA neighborhoods. In support of this program, NNRHA
    assigned a caseworker to involve residents in welfare-to-work
    initiatives and assorted NNRHA-sponsored programs. NNRHA has also
    assigned a courier to provide transportation for residents enrolled in
    job-readiness programs.
        Funded by a $554,750 PHDEP grant in fiscal year 1995 and a 3-year,
    $770,700 Economic Development and Supportive Services (EDSS) grant in
    1996, the Job Training/Computer Education Program is intended to
    discourage drug use and its associated behaviors by teaching
    constructive training in alternative living habits and eventual self-
    suffficiency. Program offerings include computer skills, life skills,
    job readiness, personal development, communication and conflict
    resolution, parenting, stress management, financial management, home
    management, understanding welfare form, and job-search skills. Several
    of these programs are housed in the Family Investment Center (FIC),
    which opened its doors in 1997 and is funded by a 5-year, $1 million
    HUD Family Investment Center Grant. Located beside the local Head Start
    facility, FIC also provides space for childcare.
        NNRHA gives residents an incentive to utilize FIC programs; when
    they complete 80 hours of education and/or training and secure a job,
    they are awarded an 18-month rent freeze. Between 1995 and 1997, 79
    participants completed training and 48 of those have found work. One
    resident said, Computer and education classes are teaching me to be
    self-sufficient and a positive influence for my neighbors and family.
    Since this program costs nothing to attend, it allows me to get top-
    rate skills and lessens the pressures of finances in order for me to
    attend computer classes. I am now a confident and highly motivated
    person.''
        For more information, contact: Newport News Redevelopment and
    Housing Authority, P.O. Box 77, Newport News, VA 23607-0077, (757) 247-
    9701, (757) 247-6535 (TDD).

    ------------------------------------------------------------------------
                                                                 1995   1996
    ------------------------------------------------------------------------
    Rate of Violent Crime.....................................    131     89
    ------------------------------------------------------------------------

            Newport News PHDEP Funding History: Fiscal Year 1991-1997

    1991....................................................................
    1992..........................................................  $453,800
    1993..........................................................   457,800
    1994..........................................................   554,750
    1995..........................................................   554,750
    1996..........................................................   509,750
    1997..........................................................   556,140
     jobs prove successful alternative to drugs--housing authority of the
                          city of oakland, california
        The Housing Authority of the City of Oakland (OHA) is giving its
    residents a reason to stay off drugs: It is giving them jobs. Its
    resident employment programs have had a drastic impact on crime in the
    community, with a 59-percent drop in narcotics arrests between 1995 and
    1996.
        OHA started its resident employment program, in response to
    residents' need for job training and placement assistance. Now
    beginning its third year, the program receives $80,000 in comprehensive
    grant funds. OHA has united with the following HOPE VI partners to
    provide job training for residents: the Private Industry Council, the
    East Bay Conservation Corps, the Spanish Speaking Citizens' Foundation,
    East Bay Small Business Development, the Spanish Speaking Unity
    Council, and the East Oakland Youth Development Center. Assorted
    building contractors and architects also contract to work for OHA.
        OHA maintains the Job Skills Databank, which keeps the records of
    residents' skills so that they can be referred to employers and job-
    training programs suitable to their skill level. The Resident
    Internship Program, which in its second year employed several residents
    who were registered with the databank, gives residents the opportunity
    to learn and accumulate a year of on-the-job training and experience
    working at OHA. The success of the program in its first year allowed it
    to add several new positions in its second year. One first-year intern
    is now employed full-time with OHA's finance department and the other
    is working full-time with a private company.
        Two other employment programs are making a difference in the lives
    of residents. A 3-year, $250,000 HUD Apprenticeship Demonstration
    Program grant and a partnership with the United Brotherhood of
    Carpenters and the International Brotherhood of Painters and Allied
    Trades have given young public housing residents valuable trade
    training. Sixteen residents, ages 17 to 25, are currently receiving
    training in carpentry and construction while reviewing basic reading
    and math skills. As part of its fiscal year 1997 plan, OHA's community
    policing program, which is funded by a combination of PHDEP and
    comprehensive grant funds and money from OHA's operating budget, is
    hiring two residents, to work as public safety aides. These residents
    will assist PHDEP security officers with a variety of tasks and have
    access to information and guidance should they show interest in a law
    enforcement career.
        For more information, contact: Housing Authority of the City of
    Oakland, 1619 Harrison Street, Oakland, CA 94612, (510) 874-1500.

    ------------------------------------------------------------------------
                                                                     Percent
                                                        1995   1996   change
    ------------------------------------------------------------------------
    Narcotics........................................  \1\ 4  \1\ 2      -59
                                                           9      0
    ------------------------------------------------------------------------
    \1\ Per 1,000 people.

              Oakland PHDEP Funding History: Fiscal Year 1991-1997

    1991..........................................................  $620,000
    1992..........................................................   661,158
    1993..........................................................   660,098
    1994..........................................................   824,756
    1995..........................................................   824,987
    1996..........................................................   824,961
    1997..........................................................   858,000

                    reforming the public housing authorities

        Senator Lautenberg. In search of reform, do you have a
    general view of what is happening in public housing authorities
    across the country with whom HUD works? We have seen scandal
    after scandal over the years in my State and other States
    across the country. Is there a change in the audit or
    examination procedures now that gives you a degree of comfort
    in terms of the reliability of the performance, the management
    of these facilities that are under the public housing
    administrations that gives you a chance to intervene when
    things start to go awry there?
        Secretary Cuomo. Today, Senator, frankly no. In the next
    several months, I believe the answer will be different. We do
    not have at this time, in my opinion, an adequate assessment
    system of public housing in this Nation. Now keeping in mind
    the overall context which is there are 3,400 public housing
    authorities, and the vast majority of them are working very
    well and the troubled are a small relative number. But I am not
    confident in the system that we now have as an assessment
    system.
        We are moving to a new system which will be the first
    national evaluation of our portfolio. Physical inspection of
    all the properties by an independent party. Real estate
    management is fairly simple. What does the building look like
    and what do the finances look like? I cannot tell you that
    today. We do not have an independent physical evaluation of all
    the public housing projects. We will. We do not have an
    independent assessment of the finances of all the public
    housing authorities. We will, and we will then put those two
    elements together. We will be able to rank the portfolio and
    then focus on the troubled ones and give some flexibility to
    the high performers, which is what we are trying to get at
    here. Get the high performers, give them some flexibility. If
    they are working well, God bless them. Give them the tools. Let
    them do the job. If they are troubled or if there is fraud or
    if there is waste, let us get in there aggressively. We have to
    be able to tell the two apart to do that, and I do not think
    the system that we have today does that adequately.
        Senator Lautenberg. Thanks very much. Thanks, Mr. Chairman.
        Senator Bond. Thank you, Senator Lautenberg.
        Senator Craig.

                      emergency supplemental provided hud

        Senator Craig. Mr. Chairman, thank you.
        Mr. Secretary, let me come to an issue that is of great
    concern of mine, and you and I have had some conversation on it
    over the last several weeks. Now I find out that it is not just
    my concern. It has spread here in the committee. The clerk of
    the committee has requested information and the chairman this
    morning in his opening comments used the word red flag as it
    relates to the $500 million in emergency supplemental provided
    HUD in an emergency CDBG funding that really was unprecedented
    as it relates to the complement of the funding for disaster
    relief under FEMA and other disaster relief programs.
        Having said that and we know the template of which I am
    talking about, my State of Idaho last year had two
    presidentially declared disasters, for anybody's information
    who is interested, disaster 1154 and 1177. As a result of that,
    the State of Idaho made certain requests. Last fall, HUD
    demanded, and I am told on a 24-hour notice, a complete
    assessment of unmet needs for disasters that I have just
    mentioned. The State assessment included $8 million for the
    first disaster and $13 million for the second, for a total of
    $21 million.
        But the State very clearly said that of all of our
    priorities, the second disaster which included the replacing of
    a critical flowway of water under Milo Creek and two
    communities in north Idaho was the priority, the single most
    important priority. It is interesting that in response HUD
    released $2.8 million of disaster relief for the first disaster
    declared but not the second, not the State's priority, about 13
    percent of the request.
        Now, I could go on down through this, but I am curious
    about several things. I do not expect you to be able to answer
    all of them here today.
        But in looking at all of this, this was a tremendously high
    priority. It involves human health and sanitation, untreated
    sewage flowing down the main streets of a community, and it was
    a critical need. The State put money into it. They brought
    other Federal agencies in, and HUD's was the matching.
        Now, of that $4 million request, our conversations--and I
    appreciate that. You suggested the ability to release about
    $377,000 for that particular project.
        I guess my question is beyond the scope, the nature of the
    public health and the safety of the issue. Combined, these two
    HUD grants add up to about 15 percent of the unmet needs of my
    State, and I would like to know if this is the same formula,
    the 15 percent funds requested that HUD has applied to other
    States' requests because what I am finding out in letters that
    while it is argued that--and let me read a quote from a letter
    that has been received by the committee from Assistant
    Secretary DeCell.

        The Department has developed a web-based reporting system
    to simplify reporting by the guarantees on the use of CDBG
    disaster funds. HUD is in the process of seeking OMB approval
    for data collection and compliance with the Paperwork Reduction
    Requirements Act so that it can populate the system with data.
    All of the allocations for the 1997 CDBG emergency supplemental
    appropriation of $500 million have been announced.

        But it goes on to conclude that we do not really have an
    accounting of it. As of February 28, 1998, HUD had obligated
    $265.7 million and disbursed $58.3 million. I guess I can add
    up that there is close to a couple hundred million dollars of
    unobligated.
        And I am curious, as is the committee, of how that money
    got distributed and under what allocation formula and spread
    out amongst the States with designated Presidential disasters.
    Am I looking at something that is reasonable and right based on
    the State's ability to perform and its ability to match all
    these moneys coming together?
        Because without question, Mr. Secretary, of all of our
    difficulties in the last weather cycle of 1997, the Milo Creek
    problem in Kellogg and Wardner, ID, is the greatest of all. And
    the State offered that priority and somehow HUD appeared to
    ignore it and say, no, it will fund these but we will not fund
    this. Of course, the problem with that project is it is about
    an $11 million project, and you do not just start something
    like that and let it sit. You have got to have all of the money
    together before you launch a project of that nature.
        So, I have asked you several questions in combination, but
    I think the committee is obviously very concerned about the
    overall accountability of that emergency money and how it has
    been allocated.

                     disbursement of emergency supplemental

        Secretary Cuomo. Senator, there were a number of elements
    to the question that you asked. Let me touch on a few of them
    and then any that I do not touch on I will either follow up or
    get you information after this hearing.
        The way the program works is basically this. We had $500
    million at the beginning of the fiscal year, and we have a
    formula which takes into account what we call the unmet buyout
    need which is a FEMA calculation, the unmet housing loss, which
    is an SBA calculation, unmet business physical damage loss,
    which is another SBA calculation, and relative need to State
    gross product. So, we have a number of factors which are part
    of a formula that we used to allocate the $500 million to
    whatever that need is.
        Every disaster is a multiple of what we provided through
    CDBG. Every disaster.
        When we began the year, we were making those allocations
    out of the $500 million. When we ran that formula against the
    $500 million, the State got $2.8 million. That was in October
    1997. The second disaster happened for us at the end of the
    cycle. We only had $17 million left when the State made the
    second request, and we were allocating that $17 million to a
    much larger universe. Of that $17 million, the formulaic
    allocation was $377,000. That is as a Senator, a question of
    timing and the availability of resources.
        When we started the program year and the first request came
    in, we were allocating on a base of $500 million. Again, nobody
    got what they needed. They only got a fraction of what they
    needed, but we were running the formula against $500 million.
    When we got to the end of the year, the funding was basically
    all exhausted. There was just a $17 million amount left, and we
    did the allocation against the $17 million. And that is where
    the $377,000 came from.
        But I can get the committee all the allocations, the
    formula used. You will see that those disasters which were
    early in the cycle, which basically were the disasters which
    stimulated the $500 million in the first place, got the funding
    by a formula. Then, as the program was authorized to handle
    disasters as they came up through the year, at the end of the
    year we had a very small amount of money left, and that is what
    we were allocating.
        [The information follows:]

            Summary of HUD Disaster Recovery Allocation Calculation

        Under Public Law 105-18, signed by the President June 12, 1997,
    Congress appropriated:

              ``an additional amount for `Community development block
            grants fund' as authorized under title I of the Housing and
            Community Development Act of 1974, $500,000,000, of which
            $250,000,000 shall become available for obligation on October
            1, 1997, all of which shall remain available until September
            30, 2000, for use only for buyouts, relocation, long-term
            recovery, and mitigation in communities affected by the
            flooding in the upper Midwest and other disasters in fiscal
            year 1997 and such natural disasters designated 30 days prior
            to the start of fiscal year 1997, except those activities
            reimbursable or for which funds are made available by the
            Federal Emergency Management Agency, the Small Business
            Administration, or the Army Corps of Engineers * * * ''

        Using the legislation as its guide, the calculation used to
    allocate the supplemental CDBG disaster appropriation reflects the
    following three tenets:
        (1) Meet unmet buyout/mitigation need and other unmet housing and
    economic losses.
        (2) States with more recent disasters will require relatively more
    funding to recover than states with disasters at an earlier time.
        (3) The larger the amount of unmet need relative to an area's
    overall economy, the more Federal assistance it will need to recover.
        The allocation is a two step process. The first step allocates
    funds to states and the second step does a substate allocation to
    direct grantees.
        The state-level allocation uses the following calculation:
        Each state receives funding for buyout/mitigation need.
        Remaining funds are allocated by formula using the following
    method:
      --.40 (share of unmet economic loss) + .60 (share of unmet home loss)
            adjusted by the amount of time since the disaster ended
            adjusted by the relative impact the unmet loss has on the local
            economy
        Where,
      --unmet economic loss means unmet agricultural loss as reported by
            the U.S. Department of Agriculture (USDA) plus the total loss
            for businesses, rental properties, and nonprofit organizations
            denied Small Business Administration (SBA) disaster loans; and
      --unmet home loss means the total loss for homeowners denied SBA
            disaster loans less the amount of Individual and Family Grants
            provided to homeowners by FEMA.
        If a state would be allocated less than $250,000 under the
    calculation, it receives no allocation and the amount is redistributed
    to the remaining states.
        The local level allocation is as follows:
        Less data are available at the substate level than at the state
    level, so substate allocations are made using the following data:
      --Each local community's share of its state's unmet buyout need,
      --The local community's total unmet loss for homes and economic need,
      --Remaining need for Federal dollars and jurisdiction capacity.

                      1997 HUD DISASTER RECOVERY INITIATIVE
    ------------------------------------------------------------------------
                 Grantee                   County name         Allocation
    ------------------------------------------------------------------------
    MOBILE, AL.......................  MOBILE.............           679,777
    BALDWIN COUNTY, AL...............  BALDWIN............           981,301
    MOBILE COUNTY, AL................  MOBILE.............           935,102
                                                           -----------------
          STATE TOTAL, AL............  ...................         2,596,180
                                                           =================
    PULASKI COUNTY/COLLEGE STATION,    PULASKI............           687,989
     AR.
    STATE GRANT, AR..................  ...................           686,446
                                                           -----------------
          STATE TOTAL, AR............  ...................        $1,374,435
                                                           =================
    MODESTO, CA......................  STANISLAUS.........           650,426
    SACRAMENTO, CA...................  SACRAMENTO.........           320,780
    SACRAMENTO COUNTY, CA............  SACRAMENTO.........           400,704
    SAN JOAQUIN COUNTY, CA...........  SAN JOAQUIN........         1,174,098
    SONOMA COUNTY, CA................  SONOMA.............           547,804
    STANISLAUS COUNTY, CA............  STANISLAUS.........           575,921
    YUBA COUNTY, CA..................  YUBA...............         2,563,780
    STATE GRANT, CA..................  ...................         5,338,112
                                                           -----------------
          STATE TOTAL, CA............  ...................        11,571,625
                                                           =================
    FORT COLLINS, CO.................  LARIMER............           511,740
    STATE GRANT, CO..................  ...................           156,829
                                                           -----------------
          STATE TOTAL, CO............  ...................           668,569
                                                           =================
    STATE GRANT, FL..................  ...................           512,116
                                                           =================
    STATE GRANT, ID..................  ...................         3,219,750
                                                           =================
    CHICAGO, IL......................  COOK...............           900,000
    STATE GRANT, IL..................  ...................           607,052
                                                           -----------------
          STATE TOTAL, IL............  ...................         1,507,052
                                                           =================
    STATE GRANT, IN..................  ...................         6,511,863
                                                           =================
    HOPKINSVILLE, KY.................  CHRISTIAN..........           447,174
    JEFFERSON COUNTY, KY.............  JEFFERSON..........         2,068,840
    LOUISVILLE, KY...................  JEFFERSON..........         2,000,197
    OWENSBORO, KY....................  DAVIESS............           336,116
    FALMOUTH CITY, KY................  PENDELTON..........         2,186,005
    BOURBON COUNTY, KY...............  BOURBON............           587,852
    CYNTHIANA CITY/HARRISON COUNTY,    HARRISON...........           867,560
     KY.
    FRANKFORT CITY/FRANKLIN COUNTY,    FRANKLIN...........           717,760
     KY.
    PENDELTON COUNTY, KY.............  PENDELTON..........           567,439
    SHEPHERDSVILLE CITY/BULLITT        BULLITT............         1,488,753
     COUNTY, KY.
    STATE GRANT, KY..................  ...................         4,484,904
                                                           -----------------
          STATE TOTAL, KY............  ...................        15,752,600
                                                           =================
    BOSTON, MA.......................  SUFFOLK............           228,534
    LAWRENCE, MA.....................  ESSEX..............           333,300
    SALEM, MA........................  ESSEX..............           505,421
    STATE GRANT TARGETED TO ESSEX      ESSEX..............         3,491,075
     COUNTY, MA.
    STATE GRANT SUBTOTAL FOR OTHER     ...................           806,369
     AREAS, MA.
    STATE GRANT TOTAL, MA............  ...................         4,297,444
                                                           -----------------
          STATE TOTAL, MA............  ...................         5,364,699
                                                           =================
    STATE GRANT, MD..................  ...................           469,601
                                                           =================
    STATE GRANT, ME..................  ...................           782,332
                                                           =================
    DETROIT, MI......................  WAYNE..............         3,336,146
    WAYNE COUNTY, MI.................  WAYNE..............           975,582
    STATE GRANT, MI..................  ...................           415,552
                                                           -----------------
          STATE TOTAL, MI............  ...................         4,727,280
                                                           =================
    EAST GRAND FORKS CITY, MN........  POLK...............        20,469,522
    STATE GRANT, MN..................  ...................        71,567,909
                                                           -----------------
          STATE TOTAL, MN............  ...................        92,037,131
                                                           =================
    STATE GRANT, MT..................  ...................           863,522
                                                           =================
    CHAPEL HILL, NC..................  ORANGE.............           349,041
    DURHAM, NC.......................  DURHAM.............           342,902
    FAYETTEVILLE, NC.................  CUMBERLAND.........           320,093
    GOLDSBORO, NC....................  WAYNE..............           648,674
    JACKSONVILLE, NC.................  ONSLOW.............           308,188
    RALEIGH, NC......................  WAKE...............         3,002,052
    WAKE COUNTY, NC..................  WAKE...............         1,332,066
    WILMINGTON, NC...................  NEW HANOVER........           740,794
    BEAUFORT COUNTY, NC..............  BEAUFORT...........         1,421,128
    CRAVEN COUNTY, NC................  CRAVEN.............         1,338,999
    JOHNSTON COUNTY, NC..............  JOHNSTON...........         1,519,812
    KINSTON CITY/LENOIR COUNTY, NC...  LENOIR.............        10,922,932
    NEW HANOVER COUNTY/WRIGHTSVILLE    NEW HANOVER........         1,853,170
     BEACH TOWN, NC.
    ONSLOW COUNTY, NC................  ONSLOW.............         1,347,205
    PENDER COUNTY/SURF CITY, NC......  PENDER.............         3,670,386
    STATE GRANT, NC..................  ...................         6,569,270
                                                           -----------------
          STATE TOTAL, NC............  ...................        35,686,712
                                                           =================
    FARGO, ND........................  CASS...............         5,943,963
    GRAND FORKS, ND..................  GRAND FORKS........       171,567,707
    CASS COUNTY, ND..................  CASS...............         1,400,000
    GRAND FORKS COUNTY, ND...........  GRAND FORKS........         2,176,049
    MERCER COUNTY, ND................  MERCER.............           500,000
    PEMBINA COUNTY, ND...............  PEMBINA............         1,000,000
    DEVILS LAKE/RAMSEY COUNTY, ND....  RAMSEY.............         3,500,000
    RICHLAND COUNTY/WAHPETON, ND.....  RICHLAND...........         3,470,759
    TRAILL COUNTY, ND................  TRAILL.............         1,000,000
    WALSH COUNTY, ND.................  WALSH..............           504,504
    STATE GRANT, ND..................  BURLEIGH...........        10,200,140
                                                           -----------------
    STATE TOTAL, ND..................  ...................       201,263,122
                                                           =================
    STATE GRANT, NH..................  ...................           557,750
                                                           =================
    RENO, NV.........................  WASHOE.............           651,733
    SPARKS, NV.......................  WASHOE.............           988,442
    STATE GRANT, NV..................  ...................           386,714
                                                           -----------------
          STATE TOTAL, NV............  ...................         2,026,889
                                                           =================
    CINCINNATI, OH...................  HAMILTON...........           423,621
    CLERMONT COUNTY/NEW RICHMOND, OH.  CLERMONT...........           506,342
    SCIOTO COUNTY, OH................  SCIOTO.............           588,670
    STATE GRANT, OH..................  ...................         1,263,631
                                                           -----------------
          STATE TOTAL, OH............  ...................         2,782,264
                                                           =================
    ASHLAND, OR......................  JACKSON............           573,391
    STATE GRANT, OR..................  ...................         3,721,775
                                                           -----------------
          STATE TOTAL, OR............  ...................         4,295,166
                                                           =================
    MONTGOMERY COUNTY, PA............  MONTGOMERY.........           650,797
    STATE GRANT, PA..................  ...................           287,832
                                                           -----------------
          STATE TOTAL, PA............  ...................           938,629
                                                           =================
    BAYAMON MUNICIPIO, PR............  BAYAMON............         5,404,219
    CAGUAS MUNICIPIO, PR.............  CAGUAS.............           273,646
    CAYEY MUNICIPIO, PR..............  CAYEY..............         1,552,491
    HUMACAO MUNICIPIO, PR............  HUMACAO............           324,035
    PONCE MUNICIPIO, PR..............  PONCE..............         4,590,285
    SAN JUAN MUNICIPIO, PR...........  TRUJILLO ALTO......           315,218
    TOA ALTA MUNICIPIO, PR...........  TOA ALTA...........           397,906
    TOA BAJA MUNICIPIO, PR...........  TOA BAJA...........         1,478,336
    COMMONWEALTH GRANT SUBTOTAL, PR..  ...................        15,172,960
                                                           -----------------
          COMMONWEALTH TOTAL, PR.....  ...................        29,509,096
                                                           =================
    RAPID CITY, SD...................  PENNINGTON.........           642,102
    STATE GRANT, SD..................  ...................        57,794,124
                                                           -----------------
          STATE TOTAL, SD............  ...................        58,436,226
                                                           =================
    STATE GRANT, TX..................  ...................         2,223,138
                                                           =================
    STATE GRANT, VA..................  ...................           780,000
                                                           =================
    STATE GRANT, VT..................  ...................         1,219,587
                                                           =================
    KING COUNTY, WA..................  KING...............           613,353
    KITSAP COUNTY, WA................  KITSAP.............           387,225
    SEATTLE, WA......................  KING...............           601,694
    SNOHOMISH COUNTY, WA.............  SNOHOMISH..........           575,522
    YAKIMA, WA.......................  YAKIMA.............           204,646
    STATE GRANT, WA..................  ...................         2,420,113
                                                           -----------------
          STATE TOTAL, WA............  ...................         4,802,553
                                                           =================
    HAMPSHIRE COUNTY, WV.............  HAMPSHIRE..........           533,181
    KANAWHA COUNTY, WV...............  KANAWHA............           581,547
    STATE GRANT, WV..................  ...................         2,333,420
                                                           -----------------
          STATE TOTAL, WV............  ...................         3,448,148
                                                           =================
    MILWAUKEE, WI....................  MILWAUKEE..........         1,455,474
    MILWAUKEE COUNTY, WI.............  MILWAUKEE..........           936,469
    WAUWATOSA, WI....................  MILWAUKEE..........           831,325
    WAUKESHA COUNTY, WI..............  WAUKESHA...........           677,135
    STATE GRANT, WI..................  ...................           171,261
                                                           -----------------
          STATE TOTAL, WI............  ...................         4,071,664
                                                           =================
          TOTAL GRANT AWARDS.........  ...................       500,000,000
    ------------------------------------------------------------------------

        Senator Craig. Well, Mr. Secretary, I do appreciate that
    explanation and it certainly fits with the circumstances and
    the figures that have been applied. There is no dispute there.
    But I will say that I think by the request of the committee and
    the committee staff and the concern of the chairman and myself,
    that accounting and how all that money got allocated is
    something we are concerned about not just for Idaho but half a
    billion dollars happens to be quite a bit of money. It
    apparently has not been forthcoming. We would hope it could be.
        Senator Bond. Thank you, Senator Craig, for reemphasizing
    that point.
        Senator Mikulski. Is that a vote or what is that?
        Senator Bond. It looks like we are going into recess maybe.
        Senator Mikulski. Mr. Chairman, could we have a followup to
    Senator Craig about the public utility issue coming up?
        Senator Bond. Let me allow Senator Burns.
        Senator Mikulski. And then we will come back.
        Senator Bond. Because I think you and I may have a little
    more time.
        Senator Mikulski. OK. Very good.
        Senator Bond. If you can check and find out----
        Senator Mikulski. Yes, what could all that mean?
        Senator Bond. I think we are probably trying a new
    legislative day. I think it is one of those parliamentary
    tricks.
        Senator Mikulski. I think that is some of the Architect of
    the Capitol staff complaining about downsizing. [Laughter.]
        Secretary Cuomo. Well, there are more red lights flashing,
    whatever it is.
        Senator Bond. Senator Burns.
        Senator Burns. Thank you, Mr. Chairman. It will not take me
    very long. I have just got a couple of areas of concern.

                 forest services' moratorium on building roads

        First of all, Mr. Secretary, thank you for returning the
    phone call the other day. I appreciate that. We have talked
    about that one problem. We have got a couple of them in
    Montana, and I will not bring them up here because I do not
    think that would do anything to further the hearing here.
        I would like to make a comment, though. The Forest Service
    has put a moratorium on building roads out in our part of the
    country. It is costing us timber sales. They said they had to
    do that in order to reassess and do this.
        I cannot believe that you run a $25 billion outlay here and
    it does not have an accounting system to really monitor on what
    is going on just about everywhere. That is like a humongous
    undertaking, between you and I. I do not fault you in this
    because you are just the new kid on the block. I think it is
    incumbent on us, working with you, to come up with some way
    that we can account for this money. That is the reason I think
    that it has been so loosely run in HUD that it has opened up
    some activities that are a little on the unsavory side.

                        housing funds for indian country

        I do want to bring up this thing with our housing funds in
    Indian country. I do not know what the real answer to that is,
    but I understand that you have a report back from OMB. I have
    not seen that report. I would like to, if I possibly could. In
    a fair housing situation that we have in Montana, I want to
    just issue an invitation to come down to the office or I come
    to your office, one way or the other, and I think with the
    proper staff involved, maybe we can work out and get some
    answers to some of these problems. Would you accept an
    invitation like that?
        Secretary Cuomo. It would be my pleasure, Senator.
        Senator Burns. We could get a ways through this. But I am
    really concerned. This administration gives a lot of--we hear a
    lot of rhetoric coming out of there on what they are going to
    do for Indian country. Then the followthrough has not been very
    good. I have got some people--it is wintertime in my end of the
    world, and I am concerned for people who live on those
    reservations and I will continue to be, as I am with their
    education and their economic opportunity. I just do not want to
    see anything slow up that pipeline.
        So, that is the only question that I have. If we could get
    together in the next couple of weeks or so or at your
    convenience at your place or my place--it does not make any
    difference--or a coffee shop in between. [Laughter.]
        It does not make any difference. Or under a tree. I think
    we just need to have a sitdown and exchange some ideas and
    straighten some things out. There are some misunderstandings.
    Let us get by those misunderstandings and try to solve some
    problems.
        Thank you very much for coming this morning. I appreciate
    this opportunity. If we could work that out, I would be very
    appreciative.
        Secretary Cuomo. It would be my pleasure, Senator.

                         financial information systems

        First, if I might, on the financial information systems. We
    had a major problem on the financial systems and tracking the
    money. It is much better today than it was a year ago. We had
    89 separate financial systems in the Department. We are
    integrating them into one.
        Senator Burns. Unbelievable.
        Secretary Cuomo. Yes; it was not a good situation, let us
    put it that way.
        It is a much different situation today. I mentioned in my
    opening testimony, the first Federal Department to have its
    budget in on time this year to OMB was HUD which was unheard of
    a few years ago, and the numbers all added up. Not only were we
    first but we were accurate, which is always nice.
        Senator Burns. You got to remember that Senators only learn
    to count to 51. [Laughter.]

                                 indian country

        Secretary Cuomo. When the Senator called on the concern
    about the Indian funding, we got on that right away, Senator.
    You were correct. This was a very new approach. It was a new
    piece of legislation. It raised some problems with OMB. It
    raised some problems internally with some of the various
    offices in the Department that were trying to stop it.
        We cleared all that away. I am pleased to tell you that
    today, Senator, the funding will be available to Indian tribes
    who need it. Literally today the operating funds are available,
    and we are getting that word out. We are contacting the tribes
    by telephone as well as on the Internet and we have published a
    notice. So, that funding is out and is available.
        It would be my pleasure to meet with you, Senator, and it
    would be my pleasure to come to your office. I spend a lot of
    time in the HUD building and any excuse to get out I take. So,
    I am glad to come see you.
        Senator Burns. You ought to do that, but you are just
    moving from one barn to another.
        Thank you, Mr. Chairman, I appreciate that, and I
    appreciate the openness of the Secretary. We can work our way
    through these things.
        Senator Bond. Senator Craig, do you have any last comments
    that you would like to add, or Senator Burns, I would be happy
    to----
        Senator Burns. I am going to go vote and save the Nation.
    [Laughter.]
        Senator Bond. That makes me feel good all over. [Laughter.]
        We will adjourn the hearing. As you have noticed, Senator
    Mikulski has gone ahead. When she comes back, I will ask her to
    take over the gavel and to conduct questioning. I will return
    as quickly as I can. We thank our colleagues.
        Thank you, Mr. Chairman. You and the others here can rest
    for a few minutes. We stand in recess.
        [A brief recess was taken.]
        Senator Bond. The hearing will reconvene, if you will
    please take your seats.
        Thank you, Mr. Secretary. I apologize for the delay.

                            assisted grant programs

        Let me ask a couple questions. I mentioned the McKinney
    homeless program. Then we talked about some of the confusion
    and the complaints. What happened with the funding for these
    ongoing assisted grant programs? Can you tell us how these are
    supposed to work? What will I tell Sister Lorraine and the
    people who run Kitchens and their clients if they go out of
    business in the next coming months?
        Secretary Cuomo. Mr. Chairman, what you can say is, why did
    the local government, the city make the decision not to
    prioritize Kitchens as their No. 1 priority?
        What we have done with the homeless program is just what
    the chairman said should be the way we should go. We do not
    make these decisions in Washington anymore. We at one time did.
    Now we say to the local city, the State, whatever the case may
    be, you tell us what program you believe you need most. Put
    that at the top of your list and then we will bring a
    competition to bear because we want performance, not blank
    check government. We want to make sure we are funding the best
    programs out there, but you prioritize. We then run a
    competition and then we allocate the funds the best we can, but
    we are leaving the decisions to local government.
        Renewals mean we funded some programs last year, the year
    before, et cetera. Should they get funded again? We do not know
    here in Washington. We say to the local government, do you need
    that program more than any other program, and they literally
    give us a list of priorities. We just work our way down their
    list.
        Senator Bond. All right, and I assume that the increase in
    homeless grants would be utilized in the same manner.
        Secretary Cuomo. Same manner. In other words, we allocate
    based on the local government's priorities. The local
    government decides whether or not a renewal should be funded,
    not Washington. It is a major shift in the way we are doing
    business. It follows all the principles that the chairman laid
    out as the direction for HUD to follow, HUD using the
    devolution approach, deferral to local government.
        [The information follows:]

      Fiscal Year 1997 Continuum of Care Homeless Assistance Competition--
                               Summary of Results

                       the kitchen, inc., springfield, mo
        The results of the fiscal year 1997 national competition were
    announced on December 22, 1997. Subsequent to the announcements,
    several letters were received expressing support for The Kitchen, Inc.,
    located in Springfield, Missouri, and voicing concern over the decision
    not to renew funding for that organization. Two of the letters were
    from Senator Bond and Senator Ashcroft. A copy of the response to the
    Senators' letters is attached. A summary of the process that resulted
    in The Kitchen, Inc. not being funded follows.
        The City of Springfield, Missouri submitted an ``associated''
    application in the 1997 competition of which The Kitchen, Inc. project
    was a part along with Ozark Area Community Action Corporation (CAC).
    The project submitted by the Ozark Area CAC was given the first
    priority by the Springfield, Missouri Continuum of Care. The Kitchen,
    Inc. was identified as the second priority project in the same
    application. The requested amounts were $74,394 and $1,556,366,
    respectively.
        Both projects were assigned 35 points out of a maximum possible 60
    points on the Continuum of Care rating element. The project submitted
    by the Ozark Area CAC received 40 points on the ``need'' rating element
    out of 40 possible points. However, The Kitchen, Inc. received only 20
    need points for this factor.
        ``Need'' points were awarded based upon a applicant's relative need
    for homeless assistance compared to the extent of need nationwide. Need
    is calculated from generally available data on poverty, housing
    overcrowding, population, age of housing and growth lag. In the
    competition, those priority projects whose requested amounts fell fully
    within the applicant's Continuum of Care pro rata need amount (or
    ``first tier''), which in the case of Springfield totaled $520,597, or
    those where more than one-half the requested amount fell within this
    ``first tier'' received the full 40 points. Those projects where more
    than one-half of the requested amount fell outside of the ``first
    tier'' were assigned no more than 20 points. The Kitchen, Inc., fell
    outside of the ``first tier''. Consequently it received only 20 points
    under ``need''.
        The 20 ``need'' points were added to the 35 points received for the
    Continuum of Care rating element, bringing The Kitchen Inc.'s total
    score to 55, which was below the 73 points necessary for funding.
                                     ______

                         Letter From Hal C. DeCell, III

    Hon. Christopher S. Bond,
    Office of Constituent Services,
    Jefferson City, MO.
        Dear Senator Bond: Thank you for your letter of January 23, 1998,
    on behalf of your constituent, The Kitchen, Inc., Springfield, Missouri
    which applied for supportive services funding under HUD's 1997
    Continuum of Care homeless assistance competition.
        The Kitchen, Inc., project was a part of an associated application
    with Ozark Area Community Action Corporation. The project submitted by
    the Ozark Area Community Action Corporation was given the first
    priority by the Springfield, Missouri Continuum of Care. The Kitchen,
    Inc. was identified as the second priority project in the same
    application. The requested amounts were $74,394 and $1,556,366,
    respectively.
        Both projects were assigned 30 points out of a maximum possible 60
    points on the Continuum of Care rating element. Because of the order in
    which the two projects were prioritized, the project submitted by the
    Ozark Area Community Action Corporation received 40 points on the
    ``need'' rating element out of a 40 possible points. However, The
    Kitchen, Inc., received only 20 need points on this factor. Projects
    were funded based on the order of their ranking. While the Ozark Area
    Community Action Corporation project received a total score high enough
    to warrant selection, The Kitchen, Inc., did not score high enough to
    receive funding in the national competition.
        Thank you for your interest in the Department's programs. Please
    let us know if we can be of assistance in the future.
                Sincerely,
                                            Hal C. DeCell, III,
                                                   Assistant Secretary.

        Senator Bond. Well, there is a question about whether the
    local officials in this instance have told us that they
    supported this. We will work with you to find out where that
    decision was made. Obviously, we are hearing two different
    stories, which is the reason we have hearings.
        Secretary Cuomo. I understand, Mr. Chairman. My
    information--and I will work on it on my side--is it was not
    their top priority.
        Senator Bond. All right.

                               affordable housing

        Let me jump to a totally new subject. We have talked a good
    deal about the real problems that we have in the cities, but I
    have to tell you that as I have traveled through rural
    Missouri, I find a crying need for affordable housing, and in
    many, many rural areas, the people who are moving from welfare
    to work cannot find the jobs. We have a strong economy in the
    rural areas, but people who are starting to work and coming in
    at above minimum wage, but still a very modest wage, cannot
    afford housing.
        What are you doing in rural areas? What can we do to meet
    these needs as well?
        Secretary Cuomo. We have, Mr. Chairman, as you know,
    actually several rural specific programs from last year's bill
    where we are now actually running programs in rural parts of
    the country directly from HUD. But the two main programs, CDBG
    and HOME, operate in rural America also. We tend to think of
    them as urban programs, but under CDBG, community development
    block grant, in which a large portion of that program goes to
    housing rehabilitation, the State administers in rural areas.
    And we are doing housing work through CDBG in rural areas. The
    HOME program also is used extensively in rural areas.
        We have a new software technology at HUD where we literally
    have mapped every HUD project in the Nation, and I will send
    the chairman the map for your State just to give you an idea of
    what is happening in the rural areas, much more than people
    think.
        Senator Bond. Well, and we know but we also hear that there
    is a much greater need. I agree with you that HOME and CDBG are
    available. They are available in the cities. They are available
    in the rural areas. We focused on the HUD programs directly in
    the cities and the things that you are doing above and beyond
    that minimum, and I need to know what it is that we could do
    specifically in the rural areas. We need to work with you.
        I will impose so I can finish up this round of questioning
    and then turn it over to Senator Mikulski for as long as she
    wishes.

                        economic development initiative

        The economic development initiative, community empowerment
    fund. It is stated that the $400 million grant funds will
    leverage an estimated $2 billion in private sector loans. How
    did you determine that that $400 million in grants would result
    in $2 billion in loan guarantee commitments, and how can you
    ensure that the funds would not be used simply to lure jobs
    from one area of the country to another area, something that is
    of great concern?
        Secretary Cuomo. This is not going to be a case of first
    impression, Mr. Chairman. We now run the EDI program, economic
    development initiative, which the chairman knows well, and the
    108 loan program, which the chairman also knows well, which are
    proven programs with proven track records. They are producing
    jobs. They are working well. There is a tremendous demand by
    cities all across this Nation and rural areas for this kind of
    tool, and we are banking on the experience. These are not
    estimates. We have experience from past EDI loans and 108 loans
    that we have been doing now for years, literally 4 or 5 years.
        Senator Bond. Senator Mikulski.
        Senator Mikulski. Thank you, Mr. Chairman.

                            housing for the elderly

        Secretary Cuomo, I want to now go to my questions on
    elderly housing. Of course, I think one of the exciting things
    about housing for the elderly was that it was partnerships
    often with nonprofits and faith-based groups.
        By the way, I would like to thank you for your effort to
    reach out to faith-based groups and for the establishment on
    the--I believe you have a Center for Community and Interfaith
    Partnerships. We have already connected some of our faith-based
    groups to that center, and I believe it is working because they
    do not have golden Rolodexes to know how to apply for Federal
    funds and so on.
        But let us go to the housing for the elderly. In President
    Clinton's budget, there was a cut of $498 million in housing
    for the elderly, and this gave us a tremendous concern. Last
    year Senator Bond really took the leadership and I worked very
    closely with him to restore a $300 million and something
    reduction in housing for the elderly. I think you would agree
    that this is the one program that everybody likes.
        So, my question is twofold. One, do you really want us to
    cut this, or was it just a way to balance the budget, assuming
    Bond and Mikulski would rescue it? And if so, in our allocation
    where would you suggest we get it? Because it will come out of
    other HUD programs.
        Secretary Cuomo. Senator, three quick elements in response.
        No. 1, on the not-for-profit center, I could not agree with
    you more. That center is working well. It is the first
    institutional input for not-for-profits at HUD. Historically,
    HUD does business with public housing authorities and State and
    local governments, but not-for-profits do not really have a
    home at HUD if you will. Not-for-profits have gotten so much
    more sophisticated over the past decade where they are really a
    proven service delivery mechanism now. The Senator knows you
    have Enterprise, et cetera in your State. So, the center is
    working very well. Father Joe Hacala who ran CHD has come in
    and is doing it for us, and we are very excited about it.
        On the senior citizen housing, Senator, first as an
    approach, listening to what the chairman said in his opening
    comments, we currently run the 202 and 811 program in
    Washington where we make the decisions on what programs should
    win, in what city and where they should be cited literally
    because when they give us an application, it has an address. We
    do it without consulting the local government, without asking
    the Governor, without asking the Senator. We make the decision.
        If we believe in devolution and getting resources to the
    Governors, why not take the 202/811 funding, put it in the HOME
    program, and say here you go, Governor. Here is the block grant
    for affordable housing. You decide between seniors and disabled
    and public housing needs, et cetera, and the resources are now
    within your own control. If you want to come up with a
    comprehensive----
        Senator Mikulski. You are recommending we take the housing
    for the elderly and convert it into a block grant out of HOME?
        Secretary Cuomo. We say roll the 202 into HOME with a fire
    wall which would wall off the 202 so the seniors would have
    that guarantee of a certain amount within the HOME block grant.
        Senator Mikulski. Well, then why have any--I do not want to
    get into an argument here, but why then have any programs at
    HUD? Why not just convert everything into a block grant?
        Secretary Cuomo. And that is the tension I think, Senator,
    between----
        Senator Mikulski. It is more than a tension. If you go down
    this road, once you get on this road, you will pick up a lot of
    other traffic.
        Secretary Cuomo. I understand that point. The truth is
    somewhere in the middle. With the block grants, you would lose
    control, but if you had a block grant where you said, but x
    must go to seniors----
        Senator Mikulski. Even if you block grant it or whatever,
    it is still a $498 million shortfall.
        Secretary Cuomo. Senator, the GAO offers testimony today
    where they say there is $439 million in the HUD budget that is
    in addition to the savings that HUD has previously found within
    the budget. This committee asked GAO to go in and take a look
    at the books and GAO found $439 million. We have done a scrub
    of the books. We concur with GAO and we concur on the $439
    million. The $439 million would bring this committee a long way
    back to restoring that whole 202/811 program.
        Senator Mikulski. So, you are saying look to the GAO
    report, which your new Chief Financial Officer has concurred
    with, that this be the source of the $400?
        Secretary Cuomo. I am saying, Senator, yes, the GAO has
    found $439 million. We would concur that there is $439 million
    there. We would be pleased to work with the committee on any
    other budget nuances that we would have to come up with to make
    it work.

                new and innovated approaches to elderly housing

        Senator Mikulski. Well, let me then go to a report that we
    had in fiscal year 1998. We asked for a report on what HUD
    could do to encourage new and innovative approaches to elderly
    housing that may reduce costs, increase efficiency, which
    really means the delivery of services. Could you tell me the
    status of that report and what leadership you are providing for
    new thinking and new approaches on housing for the elderly?
        Secretary Cuomo. We are doing a lot of work in the
    Department, Senator, on senior citizen housing, assisted living
    housing, working with the not-for-profits on design standards,
    et cetera. The specific report--I do not know where the report
    is in development. I could either find out now--I am sure we
    have the appropriate person here, given the number of HUD
    officials--or I could get it at a later date and get it back to
    you.
        Senator Mikulski. Well, what about the ideas? Is there
    really a driving force with the population aging, with this---
    AARP tells me that for every one section 8 unit, there are
    eight people on a waiting list. The aging in place of both the
    population, the aging in place in senior housing, the whole
    issue of how services are provided.
        Secretary Cuomo. Senator, I think we have probably one of
    the most sophisticated service delivery mechanisms and advanced
    design and operation concepts in the area of senior citizen
    housing. There is a great depth to the infrastructure of
    delivery there. The Catholic Charities, the B'nai B'riths of
    the world have been doing this for years. The 202 program has
    been in existence, and we have learned a ton. Capturing it,
    disseminating it, proliferating it is now the challenge that
    the Department is working on.
        Again, I have to find out where the report is, but it is an
    area that we are very concerned with getting the word out.
        Senator Mikulski. Mr. Chairman, I could pursue this line of
    questioning, but let me just say this, Mr. Secretary. We just
    had a conversation where we could find the $400 million plus.
    That is very heartening.
        Second, you are saying you want, though, this to be block-
    granted into HOME leaving devolution and all these nice new
    words that are out there with decentralized decisionmaking. To
    be decentralized to whom? OK, that is No. 1.

                         home block grant plus vouchers

        And then No. 2, if this depth of knowledge within the
    nonprofit and often faith-based groups, then what are their
    ideas in terms of the new approaches we need to do rather than
    just building housing, providing the subsidy, and so on? Just
    exactly what you said, assisted living, continuing care. You
    are going to devolve that.
        Secretary Cuomo. When we put our budget together, we had to
    make some tough choices, we wanted to do the community
    empowerment fund, the economic development. We wanted to do the
    100,000 new vouchers because it is critical that we get back to
    building housing in this Nation. We then had the dilemma of how
    to provide the senior citizen housing. Our solution was the
    HOME block grant plus vouchers. We also have vouchers for
    senior citizens there.
        The Senator poses a different scenario saying if you had
    the additional $439 million, how would you run the program? The
    Senator's point is that the 202 program and the 811 program,
    work very well. If you had the funding, why would you not
    retain the 202/811 programs, keep that infrastructure going and
    do more hard construction rather than vouchers. That is a very
    persuasive case.
        That is not the choice that we had when we put the budget
    together. Ours was a conundrum of lack of resources. If we had
    the additional funding, we may very well have made a different
    choice, Senator.
        Senator Mikulski. Let me just say this. I do not go for the
    voucher idea for the elderly. Old people need safety, security,
    and community. They do not want to be out there with a voucher
    shopping for housing. They want to be in an environment that is
    safe, secure, reliable, provides a sense of community and some
    sense of continuity of services. So, they do not want to be out
    there with a voucher foraging for someone.
        Then there are all kinds of other issues from rails in the
    bathrooms, et cetera. So, I think the pursuit of vouchers for
    the elderly is not an idea that I will support. So, just know
    that.
        Second, we really do need energy and focus on how we are
    going to meet the needs of the elderly and not just view this
    as a set of budget decisions. I know of your deep commitment to
    this area and I am going to count on you to do that.

                         old inner beltway communities

        Now, Mr. Chairman, I have one other issue about aging and
    that is communities that are aging in place, which is the old
    inner beltway communities, meaning the first generation out of
    the city into the suburbs. These communities are now 50 years
    old themselves. We see them in Maryland. We see them I am sure
    in Missouri and outside St. Louis. They might be within the
    city limits. They might be just outside the city limits. We
    have one in Prince Georges County, Silver Spring in Maryland.
        Could you tell me what you are thinking about in that area?
    Because these are neighborhoods that were once really kind of
    new housing and, by the way, often were the first integrated
    housing because of the GI Bill of Rights and VA providing loans
    in my own State often to the first black home ownership
    neighborhoods. They are now very stressed and we want to deal
    with them while they are stressful before they go into siege.

                            housing for the elderly

        Secretary Cuomo. Senator, two points.
        Just to conclude on the senior citizen housing, if I might
    backtrack for half a moment. Our decision was to use vouchers
    and the HOME program in a situation where we did not have
    enough resources to do everything we wanted to do. The
    situation the Senator poses is different. If we had an
    additional $400 million, how would we provide senior citizen
    housing? The answer may very well have been 202/811 as opposed
    to vouchers and the HOME program. So, we had a different
    reality that we were dealing with, and that is why we came to
    the conclusion we did.
        But I would be the first to speak about the strength of the
    202 program and the infrastructure and the need for
    construction, especially for senior citizens. Unfortunately, we
    did not have the resources to do everything we needed to do at
    that time. Today, it sounds like we do, and that is very
    encouraging that we could do the senior housing and the
    vouchers----
        Senator Mikulski. You are now repeating yourself.
        Secretary Cuomo. OK. I just wanted to make sure I made
    myself clear the first time, Senator. I am glad I did.

                         old inner beltway communities

        Second of all, on the communities aging in place, we want
    to offer them basically two aspects. What I hear from the
    county executives and the mayors is they want more home
    ownership. If they have public housing that is troubled, they
    want HOPE VI to redo that; or they want more home ownership,
    even more than rental housing, because home ownership gets them
    taxpayers, gets them communities, et cetera. Help me with home
    ownership. That is home ownership zones. That is FHA loan
    limits. And help me get and keep businesses and jobs because I
    am losing them to the suburbs. That would be our economic
    development grant and empowerment zones. Those two main pieces
    on the menu: the housing/home ownership piece and the jobs/
    economic development piece.
        Senator Mikulski. Well, I am heartened by that. Mr.
    Chairman, I am done and will turn this over to you. I know we
    have other business.
        If I could share with the chairman and you, Mr. Cuomo. We
    have a community called Suitland. It is a wonderful community.
    It is a fight-back community from drugs that invaded. A dynamic
    county executive. But guess what we have in Suitland? We have
    the Federal Government contributing to the deterioration of the
    community.
        One, we have a Federal complex that employs 9,000 people.
    It should be a cornucopia of opportunity for economic
    development. They have a barbed wire fence around it. They have
    a barbed wire fence around the Federal facility and we do not
    have one around the Federal prison in Allegany County.
        So, when I threatened to take down the barbed wire, I got
    GSA's attention, but GSA and the way they run the Suitland
    complex contributes. If you see it, it is a dump. It is a
    Federal dump. The Federal employees have every right to
    complain. We have a Berlin Wall where they cannot do shopping
    in the community and then, because it is an older community, we
    have a whole set of housing and businesses, that actually HUD
    is involved with, that are deteriorating.
        I would like to just one day either you and I and the
    county executive, even if we did a windshield tour because I
    think Suitland is a cameo of two things, one, where the Federal
    Government has contributed to the deterioration of the
    community, but No. 2, where the Federal Government could be an
    impetus really for empowerment without a whole new lot of
    stuff. I would like you to look at this and look at some of the
    other communities because I do not want stressed communities to
    go to siege communities. And I thank you for that.
        Secretary Cuomo. It would be my pleasure, Senator. I would
    love to take you up on the invitation and get the county
    executive and we could go out and take a look.
        Senator Mikulski. Great.
        Senator Bond. Thank you, Senator Mikulski. If possible, I
    would like to join you on that windshield tour because that is
    precisely the kind of thing that we do not want to see Federal
    policies doing. That is a real concern to the committee, and I
    assure you we will work with you on that.
        I want to make it clear to everyone here that it is my
    intention--and I might say our intention--to fund fully the
    section 202 and the section 811 programs. We believe they are
    vitally important. I have visited too many senior citizen
    developments, and when you tell these people on walkers, in
    wheelchairs, with canes we are going to send them out shopping
    with a voucher, they regard that with a minimum amount of high
    enthusiasm. This is not something they want to hear and Senator
    Mikulski is correct.
        Well, I very much appreciate it. I have, as you might
    guess, a significant number of additional questions, but the
    morning is late. Thank you, Mr. Secretary. We will submit those
    for the record and continue to work with you. Thank you for
    your testimony.
        Now I would like to call on the Under Secretary of the
    Treasury for Domestic Finance, Mr. John Hawke, to be joined by
    Director Ellen Lazar of the Community Development Financial
    Institutions Fund.
        Secretary Cuomo. Thank you. Thank you very much, Mr.
    Chairman.
        Senator Bond. Thank you, Mr. Secretary.
                           DEPARTMENT OF THE TREASURY

               Community Development Financial Institutions Fund

    STATEMENT OF JOHN D. HAWKS, UNDER SECRETARY FOR
                DOMESTIC FINANCE
    ACCOMPANIED BY ELLEN W. LAZAR, DIRECTOR

                                opening remarks

        Senator Bond. The committee will come to order. If you are
    still moving, do so quietly please. If there is anybody left,
    we would invite you to come up to the front. It looks like we
    are going to have to pass the collection plate from the rear.
    [Laughter.]
        We still have some and we are delighted to have you here.
    We have Mr. John Hawke, and I call on my colleague for an
    introduction of Ms. Lazar.
        Senator Mikulski. Mr. Chairman, I would like to just
    introduce to you Ms. Lazar who really comes with a great
    background in nonprofit management and understanding that it is
    not only housing that builds a community, it is a whole set of
    really working with those who make the community worthwhile.
        Her training specifically even at the Enterprise Foundation
    which took the best practices of the private sector with the
    mission-driven of the nonprofit sector are there. So, we look
    forward to hearing her testimony, and I am sure that with CDFI
    they will have a new leadership and, therefore, I think a more
    reliable outcome.
        Senator Bond. Mr. Hawke, you can proceed please.

                           statement of john d. hawke

        Mr. Hawke. Thank you, Mr. Chairman, Senator Mikulski. I
    would like to submit my prepared statement for the record and
    just make a very few----
        Senator Bond. The full statements will be made a part of
    the record.
        Mr. Hawke. Just a couple of brief opening remarks before I
    turn it over to Director Lazar.

                        cdfi is a high priority program

        First, CDFI is a high priority program for the
    administration to which the President and the Secretary of the
    Treasury are both strongly committed. CDFI's are helping to
    create jobs and revitalize neighborhoods across the country.
        Second, with Director Lazar and the people she has brought
    in, we have in place a strong management team. They have our
    full confidence and support.

                                 fund in review

        Third, we frankly recognize that prior to this new team
    coming on board, the Fund had some growing pains. The
    congressional oversight process helped to focus our attention
    on problem areas and we think that process has worked well.
        A measure of our success in this regard is that the Fund's
    financial statements for its first 3 fiscal years recently
    received a clean, unqualified audit from Peat Marwick. Both our
    new management and the outside auditors, identified process
    weaknesses that existed as of the end of the last fiscal year,
    but all of these have either been addressed and cured or are in
    the process of being cured. The Fund is confident that its next
    audit will show no material weaknesses in internal processes.
        Finally, I am afraid that there are some misperceptions
    about certain aspects of the Fund that have gained currency and
    I urge the committee to look at the facts rather than
    unsupported allegations. In particular, I cannot state too
    emphatically that from the outset of this program, we have gone
    to great lengths to assure that the Fund's decisionmaking
    processes are fair, objective, and untainted by outside
    influence. We have insisted that funding decisions be made only
    by the Fund, and I have the highest degree of confidence that
    the Fund's decisions have been made solely on the merits.
        Thank you very much.
        [The statement follows:]

                    Prepared Statement of John D. Hawke, Jr.

        Mr. Chairman, members of the Subcommittee, it is a pleasure to
    speak with you today about our fiscal year 1999 budget request for the
    Community Development Financial Institutions Fund. I am pleased to be
    joined today by Ellen Lazar, the new Director of the CDFI Fund.
        The President's budget for fiscal year 1999 includes $125 million
    for the CDFI Fund. This funding is a critical component of our strategy
    to promote private sector-led economic growth in economically
    distressed areas.
        As Secretary Rubin has often said, this is an issue of vital
    importance to all of us--no matter where we live or what our incomes
    may be. It is a fundamental national economic issue, because our
    country will never reach its full economic potential, unless we succeed
    in bringing all Americans into the economic mainstream.
        The Administration's strategy has three components: investing in
    people, through education and training; strengthening public safety;
    and encouraging business investment with improved access to capital to
    create jobs and foster growth. At Treasury, we are energetically
    involved in this effort by bringing our broad expertise in financial
    institutions and tax policy to bear on these issues, from tax
    incentives for investment to strengthened regulations under the
    Community Reinvestment Act. One of the most important components of our
    strategy is the CDFI Fund.
        The CDFI Fund's aim is to expand access to credit and financial
    services in lower income urban, rural, and Native American communities,
    areas where one of the biggest obstacles to economic growth is a lack
    of access to private sector capital. With CDFI, I believe we have a
    new, more market-driven approach to community development. CDFI's
    around the country, with the Fund's support, are helping to open up new
    markets, demonstrate the viability of lending to low income
    communities, partner with mainstream financial institutions in
    innovative ways, and mentor and grow small businesses. By filling
    market niches and drawing mainstream financial institutions into low
    income communities through partnerships, CDFI's help to make our
    financial system work for more Americans. In many respects, we are
    witnessing a quiet revolution in the approach taken to community
    development, with CDFI's helping to prime the pump.
        The CDFI Fund has two main programs: the CDFI program, which is
    designed to assist specialized community development financial
    institutions, and the Bank Enterprise Award program, which rewards
    financial institutions that are increasing their lending and providing
    more financial services in distressed communities. The two programs are
    complementary, and both pursue strategies designed to meet unique local
    needs, whether it is helping families to buy a house, or a budding
    entrepreneur to start a business, or a community to provide the child
    care facilities working families need.
        The program is still young, but we are already seeing signs of
    success. Thus far, the Fund has awarded $75 million to nearly 80 CDFI's
    around the country. These dollars are required to be matched at least
    one-to-one with non-Federal dollars by CDFI award recipients. Moreover,
    the Fund's investments become part of the capital base of the CDFI's,
    further leveraging federal dollars. Finally, the federal dollars are
    leveraged again, as the CDFI's, often with other financial
    participants, make investments or loans for individual projects.
        These investments are making a difference. For example, Bethex
    Federal Credit Union in the South Bronx, a small financial institution
    originally founded in 1970 by former welfare recipients, received a
    $100,000 grant from the CDFI Fund to expand its financial services and
    increase its business lending. Over the past 18 months, Bethex's
    membership has grown from 1,270 to 3,000 and its assets have increased
    from $1.6 million to $3 million. In addition, Bethex has launched
    ``School Banking,'' to encourage savings among students.
        Let me describe the impact that the Fund had on one individual.
    Andrew Fuentes of San Antonio was too ill to return to his construction
    job. At his wife's suggestion, he made a table and set of chairs for
    their empty kitchen out of some old wood. Soon afterward, Mr. Fuentes
    was selling his rustic furniture to friends, and he began making
    furniture full time. Fuentes approached several banks for a loan to
    expand his business, but was turned down because of his credit history.
    He eventually applied for and obtained a $3,000 loan from ACCION Texas,
    a local 1996 CDFI awardee. This loan has already allowed him to expand
    his inventory and double his sales.
        With respect to the BEA program, more banks and thrifts than ever
    before are reaching out to their communities and are investing in
    CDFI's. This year, the Fund received 104 applications, a 40 percent
    increase over last year's applications. The Fund's $30 million in BEA
    investments have already leveraged $273 million in bank activities.
    Moreover, many of the awardees are choosing to reinvest the awards they
    receive for past performance back into community development projects.
    In this way, the CDFI Fund is getting increased private sector leverage
    for federal dollars.
        Central Bank of Kansas City, Missouri, for example, was awarded
    $99,869 for increasing its loans and services in distressed
    neighborhoods by more than $8.3 million during the first half of 1996.
    In addition to loans for housing and other purposes, the bank made a
    significant loan to help a major manufacturer and employer remain in
    the community.
        As with any new organization, there have been some growing pains.
    Let me emphasize that congressional oversight has been useful in
    helping the Fund strengthen its internal controls and procedures. I
    believe that we have dealt with those problems effectively, and we will
    continue to improve procedures as this program grows and matures. In
    fact, the Fund was recently given an unqualified audit for its
    activities since inception. The audit also confirmed the findings of
    the Fund's management that material weaknesses had existed in the past,
    and that the Fund had corrected or was in the process of correcting
    each of those weaknesses. We are moving this program forward with the
    new leadership of Ellen Lazar, who I believe brings to the job the
    dedication, the many years of experience in community development, and
    the energy needed to implement the CDFI Fund's important work in the
    years ahead.
        Mr. Chairman, the Fund's vision makes sense, it has strengthened
    its internal controls, and the Fund's investments are beginning to make
    a difference in people's lives. Since its inception, CDFI has enjoyed
    bipartisan support. I look forward to working with all of you to secure
    the President's request for $125 million in funding for fiscal year
    1999, so that CDFI can help more local communities across the country
    rebuild neighborhoods, create jobs, and restore hope. CDFI is a solid
    investment in the long-term economic well being of not only those
    communities, but all of us. Thank you very much.

                          Statement OF ELLEN W. LAZAR

        Senator Bond. Ms. Lazar.
        Ms. Lazar. Chairman Bond, Ranking Member Mikulski, it is a
    distinct pleasure to be before you today representing the
    Community Development Financial Institutions Fund. I would like
    to begin by thanking the committee for your continued support
    of the fund. The funding you provide is making a difference in
    the lives of people that are often left out of the economic
    mainstream.
        The Department's and my top priorities will continue to be
    strengthening management and internal procedures of the Fund
    and to expand the Fund's impact in communities. I wish to
    assure you that I and the Department are committed to
    developing and implementing the necessary improvements to the
    Fund's financial and program management, reporting systems,
    internal controls, operating procedures, and awards monitoring.

                        cdfi making significant strides

        We have already made significant strides. In our first
    financial statement audit covering fiscal years 1995, 1996, and
    1997, we received a clean opinion from KPMG Peat Marwick. As we
    expected, the audit also confirmed material weaknesses that we
    had previously identified. Our corrective action plans will
    eliminate these conditions during fiscal year 1998.
        The Fund is taking critical steps to strengthen and build
    its management structure and staff. Furthermore, we will reduce
    our reliance on outside contractors and enhance our in-house
    capacity.
        During the Fund's 1996 and 1997 round, the Fund awarded a
    total of $75.5 million in assistance to 75 CDFI's serving
    urban, rural, and Native American communities.
        The CDFI program requires that all financial assistance be
    matched on at least a one-to-one basis from non-Federal
    sources.
        Collectively, 1996 and 1997 CDFI program awardees are
    located in 30 States and the District of Columbia. These
    organizations finance affordable housing, small businesses,
    micro-enterprises, and community facilities.

                          stimulating private markets

        The Bank Enterprise Award Program provides incentives for
    banks and thrifts to invest in CDFI's and to increase their
    lending, investment, and services to distressed communities. In
    1996 and 1997, the CDFI fund made 92 awards totaling $30
    million under the BEA Program. BEA awardees in turn provided
    $130 million in financial and technical assistance to CDFI's
    and invested $140 million in communities. The program has
    served awardees in 24 States and the District of Columbia.
        The Fund requires all CDFI awardees to enter into
    performance agreements with measurable goals. In the BEA
    Program, the Fund requires awardees to fully complete their
    projected activities before their awards will be disbursed.
        The Fund also promotes best practices throughout the
    industry. The Fund's presidential awards for excellence in
    micro-enterprise development is a nonmonetary program that
    recognizes organizations that have demonstrated excellence in
    promoting entrepreneurship.
        We are beginning to see the impact that the Fund can make
    in underserved communities and among people that are often left
    out of the economic mainstream. This year the Fund will be
    launching an analysis of how the Fund's investments have
    created benefits for distressed communities.
        In fiscal year 1998, the Fund was appropriated $80 million.
    The Fund will use these funds on the core component of the CDFI
    program, the intermediary component of the CDFI Fund, the BEA
    Program, a new technical assistance program, and a new training
    program. The Fund expects to use $5.5 million for its
    operation.

                        fiscal year 1999 budget request

        Our request for fiscal year 1999 is $125 million. This
    funding level will allow the Fund to increase the number of
    CDFI's receiving financial and technical assistance and to
    expand our other activities.
        Mr. Chairman, members of the committee, thank you for
    giving me this opportunity to provide an overview of the Fund's
    mission, its accomplishments, and plans for the future. As a
    new initiative, we are now beginning to see the first glimmer
    of what the Fund can accomplish by assisting communities to
    realize their potential. I look forward to working with you
    over the course of this year's appropriations process.
        [The statement follows:]

                      Prepared Statement of Ellen W. Lazar

        Chairman Bond, Senator Mikulski and distinguished members of the
    Subcommittee, it is a distinct pleasure to be before you today and
    represent the Community Development Financial Institutions Fund. I am
    Ellen Lazar and I have been the Director of the Fund for two months.
    Before I begin my testimony, I would like to introduce you to other
    members of the Fund who are with me: Paul Gentille, Deputy Director for
    Management/Chief Financial Officer of the Fund and Maurice Jones,
    Deputy Director for Policy and Programs at the Fund.
        I would like to begin by thanking Chairman Bond, Ranking Member
    Mikulski and other members of the Committee for your continued support
    for the Community Development Financial Institutions Fund. For your
    efforts, the Treasury Department and I are deeply grateful. The funding
    you provide is making a difference in the lives of people that are
    often left out of the economic mainstream.
        The CDFI Fund, which was authorized by the Community Development
    and Regulatory Improvement Act of 1994, was created to address the
    critical problems of urban, rural and Native American communities that
    often lack adequate access to capital. Access to capital is an
    essential ingredient for creating and retaining jobs, developing
    affordable housing, revitalizing and maintaining neighborhoods,
    building local economies, and enabling people to realize their hopes
    and dreams. There are significant capital gaps in distressed
    communities, and this market niche is not often recognized or well
    understood. This makes it difficult for conventional sources of capital
    to effectively serve low income people.
        Despite the great strides that have been made as a result of a
    strengthened Community Reinvestment Act in promoting access to credit
    in underserved neighborhoods, market imperfections still keep capital
    out of these communities. Today, low income communities are faced with
    many challenges--such as moving families from welfare to work,
    providing basic financial literacy skills, and training unskilled
    workers to become job ready.
        For example, there is the single mother of three in Charlotte,
    North Carolina who recently moved to escape an abusive spouse but found
    it impossible to service the debts caused by one of her children's past
    medical expenses on her modest salary as a teacher's aide. The School
    Workers Federal Credit Union was able to arrange a debt consolidation
    loan and help her not only better manage her debts but also begin a
    savings program. She has now been able to make a $1,500 down payment on
    a house. Thanks to the $150,000 grant from the CDFI Fund it received
    last year, this Credit Union is now poised to help many others work
    their way out of debt and into asset building for their future.
        The CDFI Fund represents a new direction in community development.
    The Fund's programs leverage limited public dollars to build the
    capacity of private sector institutions to finance community
    development needs, and the programs help forge partnerships between
    communities and mainstream financial institutions. The Fund's efforts
    are designed to turn dysfunctional markets into well functioning local
    economies. The President and Congress working in partnership created
    the Fund in 1994. The Fund's vision, and its approach represent a true
    innovation as a Federal initiative. We are now beginning to see the
    first glimmer of what the Fund can accomplish by assisting communities
    to realize their potential.
                building strong and effective management systems
        The Department's and my top priorities will continue to be
    strengthening management and internal systems and procedures of the
    Fund. Understanding the importance of a sound management and program
    infrastructure, I wish to assure you that I and the Department are
    committed to developing and implementing the necessary improvements to
    the Fund's financial and program management, reporting systems,
    internal controls, operating procedures, and awards monitoring. The
    Fund's new leadership is committed to improving financial management
    and awards monitoring by ensuring strong program and financial
    structure, effective internal controls, and increasing the use of
    information technology.
        To date, we have already made significant strides toward achieving
    these objectives. I am very pleased to report to the Subcommittee that
    in the Fund's first financial audit for fiscal years 1995 through 1997,
    it received an unqualified opinion which means that our auditors opined
    that our financial statements fairly and accurately present the
    financial position of the Fund. As expected, the audit confirmed our
    own findings that the Fund had material weaknesses in prior fiscal
    years. Using the Fund's FMFIA and audit processes and corrective action
    plans, we will correct all material weaknesses and findings during
    fiscal year 1998. As noted in our Annual Report, the Fund is taking
    critical steps to strengthen and build its management structure and
    staff. In the first quarter of 1998, a Deputy Director for Management/
    Chief Financial Officer, with significant financial management
    experience in government, was appointed. The Fund has also moved
    swiftly to fill other management positions that are critical for
    ensuring proper internal controls and accountability including an
    awards manager, an accountant, a Deputy Director for Policy and
    Programs and program managers for each program.
        A priority for the Fund during fiscal year 1998 and fiscal year
    1999 will be to recruit, develop and retain high caliber staff. The
    Fund requires a highly trained staff due to the complexities and
    diversity of the community development finance industry. We will reduce
    our reliance on outside contractors and enhance our in-house capacity
    and expertise to meet the needs of the community development field.
    Special emphasis is being placed on the recruitment and hiring of
    additional Fund staff and the dramatic reduction of the utilization of
    outside contractors.
        The Fund is committed to managing for results and I am planning to
    lead our management in a rigorous review of the Fund's current 5 year
    strategic plan, goals and performance measures within the next couple
    of months. If appropriate, I will revise our 5 year strategic plan and
    goals. I intend to show an important linkage between the Fund's goals
    and measures and those goals and measures we require from our awardees.
    Our strategic plan will be accomplished with appropriate Congressional
    consultation, as required by GPRA, and I look forward to working with
    the Committee on this important planning process.
                        program overview and principles
        The Fund seeks to promote economic revitalization and community
    development through investment in and assistance to community
    development financial institutions (CDFI's) and through encouraging
    insured depository institutions to invest in CDFI's and increase
    lending, investment and services within distressed communities. The
    Fund's programs are built on several key principles. First, stimulation
    of private markets is critical for rebuilding economically distressed
    areas. Second, building the capacity of community based institutions is
    critical for providing localities with the tools necessary to serve
    many underserved communities. And third, an initiative that promotes
    private sector strategies to achieve public policy goals must be based
    on performance and maximizing impact. The Fund has five programs that
    collectively address these principles: Its two main programs--the
    Community Development Financial Institutions (CDFI) Program and the
    Bank Enterprise Award (BEA) Program; and its other initiatives, the
    Training Program, Technical Assistance Program, and the Presidential
    Awards for Excellence in Microenterprise Development.
    Stimulating Private Markets
        The CDFI Program seeks to stimulate markets and spark economic
    activity by funding organizations that emphasize private sector market
    discipline. The Fund makes investments in, and provides technical
    assistance to, CDFI's. CDFI's are private for-profit and nonprofit
    financial institutions with community development as their primary
    mission. CDFI's include community development banks, community
    development credit unions, non-profit loan funds, micro-enterprise loan
    funds, and community development venture capital funds.
        During its 1996 and 1997 rounds, the Fund awarded a total of $75.5
    million in assistance to nearly 75 CDFI's serving urban, rural and
    Native American communities. These investments will leverage new
    capital and generate new community development activity over the next
    several years.
        The CDFI Program also stimulates private investment by requiring
    that all financial assistance be matched on at least a one-to-one basis
    from sources other than the Federal government. As a result, the vast
    majority of all matching funds are raised from private sector sources.
    For example, during the 1996 funding round, nearly three-quarters of
    our awardees derived all of their matching funds from private sources
    including banks, corporations, foundations and individuals.
        Collectively, 1996 and 1997 CDFI Program awardees are located in 30
    states and the District of Columbia. Half of the awardees serve
    predominantly urban areas, one-third serve predominantly rural areas,
    and the balance serve a combination of the two. These organizations
    provide a wide range of lending products, investments and services
    within their communities. They finance affordable housing projects,
    small businesses, microenterprises, and community facilities. Awardees
    are selected based on factors including potential community development
    impact, financial strength, organizational capacity, and quality of
    their business plan.
        The Fund's 1996 investment in Northeast Ventures of Duluth,
    Minnesota illustrates how the Fund sparks economic activity. Larry Van
    Iseghem is a chemist with an environmental mission. Larry's company,
    located in a rural and declining region of eastern Minnesota, developed
    and brought to market an environmentally benign, water based coating
    for heating and cooling equipment which adds energy efficiency to
    furnaces and air conditioners while preventing corrosion. An early
    investment by Northeast Ventures allowed Mr. Iseghem to start his
    company and to expand and move into development of new products. ``Some
    potential investors were wary of my ideas, because they weren't sure
    environmental benefits and economic viability could go together,''
    Larry explains, ``Northeast Ventures Corporation didn't consider this a
    liability, but a plus. Environmental responsibility is one of their
    criteria.''
        In addition to CDFI's, traditional financial institutions play a
    key role in community development lending and investing. The Bank
    Enterprise Award (BEA) Program stimulates private markets by providing
    incentives for banks and thrifts to invest in CDFI's and to increase
    their community development lending, investment and service activities
    within distressed communities. In 1996 and 1997, the CDFI Fund made 92
    awards totaling $30 million under the BEA Program. During these rounds,
    BEA awardees collectively provided $130 million in financial and
    technical assistance to CDFI's and generated $140 million in loans,
    investments and services within high poverty neighborhoods. The Program
    has served awardees in 24 states and the District of Columbia. The
    Program has awarded funds to banks and thrifts as small as $21 million
    in total assets to as large as $320 billion in total assets. Program
    participants represent a broad spectrum of the industry including
    national banks, state chartered commercial banks, Federal savings banks
    and thrifts, mutual savings banks and credit card banks.
        The Bank of America Community Development Bank (B of A) was awarded
    $1.6 million in the 1996 funding round for increasing its multifamily
    housing, commercial real estate and business loans in distressed
    communities across California. The Bank made nearly $25 million in
    loans in targeted neighborhoods meeting the BEA Program's distress
    criteria, including $9.5 million in commercial real estate loans, $13.2
    million in multifamily loans, and $2.2 million in business loans. The
    Bank projects that these loans will generate more than 185 units of
    affordable housing and 300 jobs. B of A's increased multifamily lending
    activity has helped provide a vital source of affordable housing for
    low-income families in targeted neighborhoods in San Francisco,
    Modesto, and Los Angeles, including the projects described below:
      --a $2.6 million construction loan to support the acquisition and
            rehabilitation of a deteriorated residential hotel in San
            Francisco's Tenderloin neighborhood into 58 units of quality
            affordable housing for formerly homeless individuals; and
      --a $6.8 million loan to support construction of a new 79-unit
            apartment building located in Downtown Los Angeles. The
            building serves households earning less than 60 percent of Los
            Angeles County's median income.
        In addition to significantly increasing its lending activity in
    eligible distressed neighborhoods--activity that qualified it for its
    award--B of A, together with Bank of America, F.S.B., has invested its
    entire combined Bank Enterprise Award back into the community. $1.1
    million of the award money has been used to established the Bank of
    America Leadership Academy, a nine-month program that provides training
    for senior management of community development organizations. The B of
    A Leadership Academy is funded jointly by Bank of America Community
    Development Bank, Bank of America, F.S.B., and the Local Initiatives
    Support Corporation (a certified CDFI and a 1996 CDFI Program awardee);
    and is conducted by the Development Training Institute. The B of A
    Leadership Academy is funded for three nine-month programs. Each
    session trains 35 executive directors or senior staff of community-
    based development organizations that are at least five years old and
    have completed at least three projects.
        An additional 20 percent of the combined awards will go to the Low
    Income Housing Fund, a certified CDFI and a 1996 CDFI Program awardee
    which provides loans for very low-income housing development across the
    country.
    Capacity Building
        The Fund builds the financial capacity of CDFI's by providing
    financial assistance in the form of equity investments, grants, loans
    or deposits to enhance the capital base--or the financial muscle--of
    these organizations to make loans, investments, provide technical
    assistance or otherwise address unmet community development needs.
    Unlike programs in which resources are provided for specific projects,
    under the CDFI Program the Fund invests in CDFI's as institutions in
    order to promote their long-term viability and ability to serve
    distressed communities.
        Appalbanc, a multifaceted CDFI that serves 85 extremely distressed
    counties in West Virginia, Kentucky, Tennessee, and Virginia, has
    developed an effective strategy to promote housing development and
    homeownership. Since its inception, Appalbanc and its affiliates have
    financed the development or rehabilitation of more than 20,000 homes.
    The $1.33 million in assistance provided by the CDFI Fund will be used
    to expand Appalbanc's activities in this very needy region.
        The Fund builds the organizational capacity of CDFI's through
    several mechanisms. First, as part of the CDFI Program funding rounds,
    the Fund conducts ``debriefings'' with each applicant that was turned
    down for funding. Through this debriefing, applicants are given
    valuable feedback about the strengths and weaknesses of their
    organizations as observed by those involved in reviewing their requests
    for funding. Many of these organizations have used the information from
    these debriefings to address their weaknesses, build on the strengths
    of their operations and improve performance.
        Second, the Fund provided assistance to two national intermediaries
    in 1997 who will provide intensive financial and technical assistance
    to small, nascent and growing CDFI's. CDFI Intermediaries are
    organizations that focus their financing activities primarily on other
    CDFI's. By providing financial assistance to specialized
    intermediaries, the Fund strengthens its capacity to support the
    development and enhancement of the CDFI industry. Together, the two
    national intermediaries selected by the Fund in 1997 are expected to
    serve nearly 200 CDFI's over the next five years.
        Finally, this year the Fund will launch two new initiatives to
    build the organizational capacity of CDFI's and other organizations
    engaged in community development finance activities. The first
    initiative is a $5 million technical assistance program that will
    provide grant monies to CDFI's for capacity building activities. The
    second initiative is a new training program that will enhance skill
    development among CDFI's and other members of the financial services
    industry that are engaged in community development finance activities.
    The Fund expects to provide up to $15 million for this program.
        The Fund expects to publish a Notice of Funds Availability
    regarding the first round of the technical assistance program this
    month. Later in 1998, the Fund will launch the second prong of this
    strategy. It will select organizations to provide, on the Fund's
    behalf, training to CDFI's and other members of the financial services
    industry.
        By building the capacity of CDFI's, the Fund helps these
    organizations to enhance the economic well being of people in their
    communities.
    Promoting Performance and Impact
        The Fund's investments are making a difference in communities. For
    example, one 1996 CDFI Program Awardee, Cascadia Revolving Fund, made a
    loan to Nancy Stratton of Port Haddock, WA to open a day care center in
    her home. Nancy knew that her previous credit problems and lack of
    business experience would prevent her from obtaining financing through
    traditional sources. Cascadia worked with Nancy to refine her business
    plan and make a loan to help her start a now successful business. A
    1996 BEA Program Awardee, Central Bank of Kansas City, was awarded
    $99,869 for increasing its deposit-taking activities and consumer and
    commercial real estate, housing, and business loans in distressed
    neighborhoods. During the first six months of 1996, this bank provided
    more than $8.3 million in loans and services. In addition to
    facilitating neighborhood redevelopment through its single- and multi-
    family housing activities, the bank made a significant loan to help a
    major manufacturer and employer remain in the community.
        The Fund also promotes performance and impact by requiring all
    CDFI's selected to receive assistance to enter into an agreement to
    meet performance goals. These performance goals are tailored to each
    CDFI based on its Comprehensive Business Plan. Performance goals may be
    based on the amount of lending or investment activity projected, the
    number of people to receive technical assistance, or other measures of
    a CDFI's success in meeting its community development objectives. The
    performance levels for each CDFI are intended to be challenging and are
    based on the projections made in an Awardee's application for funding,
    the amount of assistance provided by the Fund, and the CDFI's financial
    and organizational capacity.
        In the Fund's Bank Enterprise Award Program, the Fund encourages
    performance by requiring awardees to fully complete their projected
    activities before their awards will be disbursed. Thus, each Federal
    dollar disbursed has already made an impact within a local community
    before it is received by an Awardee.
        The Fund also encourages performance within the CDFI industry by
    promoting best practices. For example, the Fund's Presidential Awards
    for Excellence in Microenterprise Development is a non-monetary program
    that recognizes and seeks to bring attention to organizations that have
    demonstrated excellence in promoting micro entrepreneurship. By
    recognizing outstanding microenterprise organizations, the Presidential
    Awards seek to promote sound lending practices and bring wider public
    attention to the important role and successes of microenterprise
    development especially in enhancing economic opportunities among women,
    low income people, and minorities who have historically lacked access
    to traditional sources of credit.
        We are beginning to see the impact that the Fund can make in
    underserved communities and among people that are often left out of the
    economic mainstream. This year, the Fund will be launching an impact
    analysis project that will provide valuable information on how the
    Fund's investments have created benefits within communities. As part of
    demonstrating impact, the Fund will continue to expand its
    communication tools, including development of a web site and
    publication of regular newsletters designed to publicize information
    about community development finance industry trends and best practices,
    as well as the Fund's activities.
        In fiscal year 1998, the Fund was appropriated $80 million. The
    Fund intends to use these funds on the Core Component of the CDFI
    Program, the Intermediary Component of the CDFI Program, the BEA
    Program, a new Technical Assistance Program and a new Training Program.
    The Fund expects to use $5.5 million for its operations.
        The Fund has established key goals with respect to its program
    activities. Under the CDFI Program, the Fund will seek to increase the
    cumulative number of CDFI's receiving financial and technical
    assistance under the CDFI Program. For this purpose, the Fund has
    requested a budget increase in fiscal year 1999 to $125,000,000.
        Increased funding will allow the Fund to increase the cumulative
    number of CDFI's receiving financial and technical assistance under the
    CDFI program. Financial assistance to CDFI's enhances private sector
    capacity, directly addresses community development financing needs in
    distressed communities, and strengthens CDFI's long term capacity to
    help restore healthy private market activity. The increased funding
    will also be used to expand the BEA Program, training program and
    technical assistance program and in part to help accelerate the
    development of a secondary market for community development loans.
                                    summary
        Mr. Chairman, members of the Committee, thank you for giving me
    this opportunity to provide an overview of the Fund's mission, its
    accomplishments and plans for the future. I also look forward to
    working with you over the course of this year's appropriations process.
    I would be very pleased to respond to any questions you may have about
    my testimony or about the Fund and its activities.

        Senator Mikulski. Mr. Chairman, I am just going to submit
    my questions for the record.
        Senator Bond. I would be happy to take those for the
    record.
        I express my appreciation to Mr. Hawke and Ms. Lazar.

                            success of cdfi program

        Mr. Hawke, when you say the program has had growing pains,
    that is certainly putting the best face on it. That is what we
    might call meteor census.
        I do recognize and I congratulate you on finding someone of
    Ms. Lazar's caliber to come in to run the program. You bring
    new hope and new promise, but I am still very much concerned
    about the track record of the program and the problems
    associated with overfunding a problem like this before we have
    capacity, before we know how it is working, when we do not know
    how the resources can be expended. This is where being from
    Missouri people believe me when I say, ``Show me.'' I know many
    of these problems are problems that are being remedied.
        But I would like to know what yardsticks, briefly just what
    yardsticks are used to determine whether a grant application
    can leverage other funds successfully, and what can you give us
    in terms of hard data that will confirm the promised success of
    the CDFI program.
        Ms. Lazar. Senator, the program has had a 2-year track
    record, and during that 2-year track record, all our decisions
    have been based on merit. We have a very detailed and thorough
    process for evaluating our applications. We look at the track
    record, financial strength, and current operations of the
    CDFI's that we are evaluating. We look at their capacity,
    skills, and experience of the management team. We look at the
    quality of their comprehensive business plan. We look at their
    ability to raise the required matching funds and the expected
    community development impact.
        When we measure that impact, we enter into an assistance
    agreement with our awardees. Those assistance agreements
    contain performance goals that are structured over 5 years. We
    negotiate them with the awardees. An example of a performance
    goal for the particular institution might be to increase the
    number of loans each year to low-income individuals, to provide
    financial counseling to low-income borrowers, to increase
    investments in businesses in distressed areas.
        For nonregulated institutions, we also negotiate financial
    covenants.
        Our awardees are required to submit quarterly reports to us
    and annual reports. This year in 1997 we have also developed an
    impact report that they will be required to submit to us on an
    annual basis. It is a very, very rigorous process that will
    allow us to understand the impact of these organizations at the
    community level and their capacity to sustain themselves over
    time.

                          assuring the awards process

        To address your issue about what has been fixed, for our
    1997 round we put specific procedures in place that have proved
    effective in ensuring the integrity of the awards process. We
    developed specific CDFI program reviewer selection criteria. We
    developed a conflict of interest policy for CDFI reviewers. We
    developed conflict of interest certifications. We developed a
    2-day training program for our reviewers. We crafted an initial
    review form to ensure consistency and fairness, and then a
    numeric scoring system to complement that qualitative process.
    We have put together an interview guide for CDFI reviewers and
    written policies and procedures for our core and intermediary
    funding rounds.
        Senator Bond. We would look forward to seeing the
    information that you have developed. I was going to ask a
    question on the conflicts of interest. I will have the staff
    look at that.

                          cdfi program achieves goals

        But you are telling me that these are procedures in the
    future, and is it too early to demonstrate results? Have you
    had confirmed successes which you can provide us for the record
    of where the CDFI program has achieved goals that you set out
    and have they been confirmed, not just reported, but confirmed
    by adequate independent, objective assessors of the program?
        Ms. Lazar. Thus far, Senator, we have put together
    anecdotal stories that we can share with you and provide them
    to you for the record. We also do, as I said earlier, require
    monthly and annual reports from our awardees, and over the
    course of the next year, we will be compiling that data in a
    way that it can tell our story in a way that shows that the
    dollars have been effectively used.
        Senator Bond. Mr. Hawke, you look like you are ready to say
    something.
        Mr. Hawke. Just one short addition to that, Mr. Chairman,
    and that is that the real success stories in this program are
    at the street level. When the money is advanced by the CDFI,
    whom we fund, to the ultimate user, whether it is somebody who
    is starting a new business or getting a working capital loan,
    that is where the real proof of the program is, and those are
    not the people that we deal with directly in the CDFI program.
    But we have a number of anecdotal instances.
        Senator Bond. We do not need the anecdotes, but I would
    like to have the independent objective assessment which shows
    the street level successes. We want to see that the program has
    been having the impact and we want it from an independent,
    objective assessment. I realize that you do not control it
    directly. We need to find out does it work. That is the key
    thing.

                     unable to meet management requirements

        Let me ask two quick questions. I understand that the CDFI
    Fund as yet has been unable to meet the management requirements
    of the Federal Managers Financial Integrity Act. Are you taking
    steps to meet the requirements, and at what point do you expect
    to meet them?
        Ms. Lazar. I am happy to answer that question, Senator. We
    take this issue very seriously, and we are going through an
    FMFIA process as we speak. There were certain material
    weaknesses that had been pointed out in our audit, including a
    lack of delineation of responsibilities within the
    organization. We have put together an organization plan and
    have begun staffing under it. I was hired in January. We hired
    a Deputy Director for Management and CFO in November, and we
    selected a Deputy Director for Program and Policy in February.
    We have also hired managers for all the programmatic areas. So,
    we are working very diligently on staffing up and getting that
    organization plan in place.
        One area that was identified that was of concern was that
    we did not have a CFO or an awards manager, an awards
    management process. We have hired a CFO and an awards manager
    came on board at the end of January. We have begun developing a
    structured system and putting the awards oversight rules in
    place within the organization.
        Senator Bond. When can we expect to have the system working
    and providing results on, as I said, the independent, objective
    evaluation or assessment?
        Ms. Lazar. I think we will have that material by the end of
    the fiscal year. We will have gotten all our systems in place
    and we will have responded to all the material weaknesses that
    have been identified.

                                     goals

        Senator Bond. Well, we will want to see that. The promise
    sounds great. We are looking for demonstrated performance.
        You have selected a wide variety of CDFI's and you have
    mentioned a number of criteria. We would like fuller
    description of the selection criteria for the record, and I
    would also like a listing of the weaknesses you see in the
    applications which result in denying CDFI assistance. But just
    for my edification at this hearing, would you give us a brief
    summary of what you look for that works and what you most
    commonly find when you deny something?
        Ms. Lazar. I have not gone through an awards process, but I
    will tell you what we have seen. We really look to see that
    these organizations can sustain themselves over time and that
    they are going to provide impact in the communities in which
    they are working. We look at a very, very thorough,
    comprehensive business plan that we ask our applicants to
    submit. We ask for documentation of their track record, their
    financial strength. We want to see their financials. We want to
    understand that they have the ability to raise matching funds
    from the private sector and their communities. Keep in mind
    that the matching funds have to be non-Federal dollars. We want
    to make sure that they have a strong management team.
        Often, from what I understand, awardees have been turned
    down because one of those pieces was not in place. The business
    plan did not seem logical or accurate or the management team
    was not strong enough or the financials reflected a less than
    consistent growth pattern within the organization.
        Mr. Hawke. Senator, if I could just add one thing to that.
    In the budget for the coming year, we have got a total of $20
    million allocated to training and technical assistance. One of
    the objectives of the training and technical assistance program
    is to help applicants meet deficiencies that might have come up
    in the applications process, to train them how better to
    establish financial controls and qualify under the kinds of
    standards that Ms. Lazar is talking about.
        Ms. Lazar. Senator, I would like to add that we also do
    debriefings of our applicants if they have been turned down for
    an award so that we could work with them and explain what the
    problems have been so that they might in the future work on
    their growth and development through the advice we have
    provided them.
        Senator Bond. I thank you for that information. Twenty
    million dollars sounds like a very generous amount to apply to
    a $125 million program.
        But we look forward to working with you and having the
    further information on how well this is working. Basically, let
    me tell you I am skeptical about putting significant funds into
    a program until I see that it is working. We want to see the
    program continues so that we have an opportunity to evaluate it
    and see what kinds of benefits we are getting from the program
    because, as you can well appreciate, if you sit through all
    these hearings--I certainly do not wish that on anybody other
    than Senator Mikulski and our staffs and myself--you will find
    that we have some very compelling competing priorities which we
    have to fund from what is always too small a 602(b) allocation.

                              subcommittee recess

        Thank you very much and we will keep the record open for
    other members of the committee who want to ask specific
    questions. We will be submitting questions to you. Please feel
    free, if you wish, to submit additional information for the
    committee above and beyond your full written statements and the
    answers to the questions that we ask you to fill out. We would
    be pleased to have such submissions.
        With that and with thanks to all who participated, this
    hearing is recessed.
        [Whereupon, at 12:05 p.m., Thursday, March 12, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

     DEPARTMENT OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
            INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1999

                                  ----------

                            THURSDAY, MARCH 19, 1998

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 9:33 a.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Christopher S. Bond (chairman)
    presiding.
        Present: Senators Bond, Burns, Campbell, Craig, and
    Mikulski.
        Also present: Senator Domenici.

                         DEPARTMENT OF VETERANS AFFAIRS

    STATEMENT OF TOGO D. WEST, JR., ACTING SECRETARY
    ACCOMPANIED BY:
            D. MARK CATLETT, ACTING ASSISTANT SECRETARY FOR MANAGEMENT
            KENNETH W. KIZER, M.D., M.P.H., UNDER SECRETARY FOR HEALTH,
                VETERANS HEALTH ADMINISTRATION
            JOSEPH THOMPSON, UNDER SECRETARY FOR BENEFITS, VETERANS
                BENEFITS ADMINISTRATION
            JERRY W. BOWEN, DIRECTOR, NATIONAL CEMETERY SYSTEM

                    OPENING STATEMENT OF CHRISTOPHER S. BOND

        Senator Bond. Good morning. The Subcommittee on Veterans
    Affairs, HUD, and Independent Agencies will come to order.
        This morning we meet to take testimony from the Department
    of Veterans Affairs on its fiscal year 1999 budget proposal,
    and later we will hear from officials representing the
    Arlington National Cemetery. We welcome VA's Acting Secretary
    Togo West this morning and other VA officials.
        Mr. West, you are taking over the helm at a time of
    tremendous change at the VA. On the health care side, VA has
    undertaken a reorganization within the past few years,
    dramatically reduced its staffing, revamped its resource
    allocation system, and has begun implementing numerous
    efficiencies and improvements aimed at improving quality and
    cost effectiveness of care.
        I believe the Veterans Health Administration is on the
    right track, thanks in large part to the VA's Under Secretary
    for Health, Dr. Ken Kizer. I will have other things to say
    about that, but Dr. Kizer, we appreciate the excellent
    direction you have given. His efforts to reorganize and retool
    VA's massive health care system are beginning to show results.
        A recent GAO report, which I requested, confirmed that
    medical centers are operating more efficiently, increasing the
    number of patients assigned to primary care, decreasing waiting
    time for appointments, and increasing the number of high
    priority patients. But there are still many challenges.
        Last year Congress gave VA the authority to retain
    collections from third parties. VA is heavily dependent on such
    funds to operate the medical system and is struggling to
    improve its collections capability. Serious questions remain as
    to whether VA will be able to meet its goals in this area, as
    we will discuss later.
        In addition, currently VA is embarking on creating an
    enrollment system and making available for the first time a
    complete health care benefits package to veterans who come to
    the VA for health care services. There appears to be confusion
    as to what the enrollment system will mean to veterans, and
    questions remain as to what will be included in the benefits
    package.
        In addition, in certain networks there are concerns about
    the impacts of the new allocation system, VERA, and questions
    about quality of care.
        Critical to VHA's success is adequate monitoring of the
    networks to ensure that veterans are consistently receiving
    quality health care services and that VA policy is being
    implemented uniformly in its hundreds of health care
    facilities.
        No less important are the challenges facing the Veterans
    Benefits Administration. Over the past several years, numerous
    studies have been commissioned to determine how to fix the
    abysmal service veterans receive when they make claims for
    benefits, primarily in the disability compensation program.
        There have been GAO reports, congressionally mandated
    commissions, business process reengineering efforts, and
    countless studies, resulting in voluminous recommendations. I
    suggest now is the time for action. We have done enough of the
    studying. We have thought about it. We have looked at it. We
    have got the consultation. It is time we get it done. Veterans
    just cannot wait any longer.
        Previous efforts to make changes to the Veterans Benefits
    Administration seemed to have resulted in little or no
    improvement. Last year in my opening statement for the VA
    appropriation hearing, I noted I was pleased to see VBA's plans
    for business process reengineering efforts, but at the time I
    noted my skepticism as to whether VBA could meet its goals.
        Unfortunately, in the past year performance seems to have
    gotten no better. In fact, we are learning that it may be worse
    than we thought because of inaccurate reporting from regional
    offices.
        The key conclusion of the National Academy of Public
    Administration report, which this committee commissioned and
    which was released last year, was that VA has not met the
    challenge of achieving long-term improvement in services for
    veterans because it has not had consistent leadership and the
    strategic planning and management capacities needed to plan and
    rigorously implement such improvements.
        I am encouraged that at long last VBA has new leadership.
    The new Under Secretary for Benefits, Joe Thompson, appears
    committed to making the changes, including organizational
    restructuring, and has noted the importance of disciplined
    strategic planning and management capacity.
        Mr. Thompson, I sincerely hope--and more importantly, the
    veterans hope--that you can provide the real leadership that
    NAPA has called for. You have a great opportunity because you
    go into a situation which needs real leadership, and this is
    going to be an exciting test of your abilities to see whether
    you can provide the improvements that have been recommended and
    that are vitally needed.
        I would remind the Department this committee has directed
    VA to provide by the end of March a comprehensive reform plan
    for the Veterans Benefits Administration, including an improved
    accountability system, the creation of a strategic management
    process, and a 5-year restructuring plan, among other things.
    We will look forward anxiously to receiving the report.

                        fiscal year 1999 budget request

        Turning to the budget request, VA's fiscal year 1999 budget
    request totals $42 billion, of which about $19 billion
    represents discretionary spending. The budget proposal includes
    $17 billion for VA medical care, which would be augmented by an
    estimated $677 million in receipts. Together with receipts, the
    medical care account would drop $40 million in fiscal year
    1999.
        VA's proposal is consistent with its plans announced a year
    ago to decrease patient cost by 30 percent by 2002, increase
    the number of users by 20 percent, and increase the amount of
    nonappropriated revenues to 10 percent of total funding.
    However, the administration's proposal to cut VA below the
    current level raises real concerns, and we wonder very
    truthfully whether we are cutting to close to the bone.
        As I mentioned previously, VA is depending heavily on its
    ability to collect almost $700 million in third party payments
    to accommodate increased payroll and other inflationary
    requirements. Unfortunately, the Department's track record on
    collections is somewhat less than stellar. VA currently is
    lagging its fiscal year 1998 estimate by 10 percent, and GAO
    has been very skeptical of the Department's ability to
    significantly improve collections.
        In addition, the Department is banking on enactment of
    legislation authorizing VA to bill Medicare for certain
    Medicare-eligible veterans to meet its 30-20-10 goal by the
    year 2002. Yet, it appears that this proposal continues to
    encounter opposition, and its enactment is far from certain.
        With respect to VA's research program, I was pleased to see
    that the administration at last recognizing the value of this
    program by requesting a 10-percent increase, for a total of
    $300 million. Last year the administration called for an almost
    11 percent decrease to this important program. So, we are
    delighted finally to see administration support for a program
    which has resulted in improved quality of care, as well as
    incentives for topnotch doctors to work in VA hospitals. We
    think the two go hand in hand and must be taken as a whole.
        However, the research budget has been packaged by the
    administration as part of its Research Fund for America which
    is proposed to be offset in part by tobacco settlement
    legislation. The administration's budget request is replete
    with phony or unrealistic assumptions, and this is an example.
    The administration's budget raises expectations which the
    Congress simply will not fulfill. That dog will not hunt.
        Given that there is far less room under the discretionary
    budget caps than the administration's budget would spend, it is
    not clear whether we will be able to meet the President's
    request for a $28 million increase for VA research. But if
    funds are available, this will certainly be one of our
    priorities.
        According to VA's budget, there will be a proposal
    forthcoming for a new smoking cessation program for veterans,
    to be accompanied by an $87 million budget amendment. We have
    seen no details on this program nor how we would find the
    resources to fund it.
        It is interesting that the amount proposed for this program
    would bring total discretionary spending for the VA exactly
    even with the fiscal year 1998 level. In any event, we would
    urge the Department to provide information to the committee as
    soon as possible on this proposed new program.
        For general operating expenses, VA is requesting $850
    million, an increase of $63.5 million. The increase would go in
    part to a number of VBA initiatives such as computer-based
    training, which are intended to streamline and improve service
    to veterans. While we support this, we want to be sure the
    initiatives are the highest priorities and the most effective
    means to improve service delivery to veterans.
        In the area of construction, VA's budget would cut
    construction programs by 36 percent, including an unacceptable
    reduction to the State home program of 54 percent. This program
    is an example of a strong Federal-State partnership in
    providing much-needed nursing home care to veterans, and there
    is a backlog of $125 million in priority projects which were
    not funded this year due to inadequate funds.
        Just by way of example, to select one State, Missouri,
    nursing homes in St. Louis and Mt. Vernon applied for fiscal
    year 1998 funds and were denied. I fully expect that they will
    seek funds next year, and under the President's request, they
    likely would be rejected.
        In terms of the major construction budget, I am also very
    disappointed that a project which has been in the pipeline for
    some time to expand the St. Louis National Cemetery has not
    been included in the budget. I have been told that this project
    was originally requested in VA's submission to OMB, but the
    green eye shade types at OMB rejected VA's request.
        If additional grave sites are not developed, Jefferson
    Barracks National Cemetery will deplete its current inventory
    of full casket grave sites in 2005, and veterans will be denied
    access to burial in a national cemetery in relatively close
    proximity to their place of residence. OMB's decision to strike
    this important project from the budget is troublesome.
        That concludes my opening statement and it is now my
    pleasure to turn to my ranking member, Senator Mikulski.

                        STATEMENT OF BARBARA S. MIKULSKI

        Senator Mikulski. Thank you very much, Mr. Chairman.
        This morning I would welcome to his first hearing before
    this subcommittee the Acting Secretary of the Department of
    Veterans Affairs, Mr. Togo West. Mr. West, we look forward to
    working with you, as we did when you held your post as
    Secretary of the Army, and we look forward to helping you
    expedite your confirmation. But whether you are acting or you
    are confirmed, I think we are all confirmed in the belief that
    you are going to be an outstanding Secretary of the Veterans
    Administration.
        Also, I would like to welcome from the Department of the
    Army who will testify during the second panel, the National
    Cemetery, John Zirschky, the Acting Secretary----
        Senator Bond. Zirschky.
        Senator Mikulski. Zirschky. You know, Polish names are in
    the news these days. I should get this straight. [Laughter.]
        Mr. Chairman, I look forward to hearing the testimony. I
    just wanted to let you know that I am going to be leaving about
    10:20 a.m. to join the First Lady in the introduction of the
    reauthorization of national service. I am not marked absent.
        First, let me begin by thanking the VA for its support of
    several facilities in my State that are providing essential
    care for the veterans of Maryland. I would like to particularly
    thank them for taking a model that we developed in western
    Maryland for outpatient services and then really being able to
    move those services throughout the State of Maryland in a way
    that meets the Vision 5 procedure.
        Also, I know that we are going to be opening construction
    of an 80-bed acute psychiatric building at Perry Point. That
    building that it is replacing is one that goes back before
    World War I in which mentally ill people were in buildings that
    had difficulties with the air conditioning and so on.
        I want to thank the VA for also working with me and other
    officials to ensure that we have access to quality care.
        Mr. Chairman, since the VA was founded, we have fought
    three wars: a World War II, a cold war, and a gulf war. And
    from Korea, Vietnam, Persian Gulf, each conflict produces a new
    generation of veterans each with a unique set of needs.
        Also acknowledging the wonderful role that women played--
    and, of course, Arlington is this fantastic memorial--it is
    really since Vietnam that the role of women and the women
    making use of veterans health care has really been increasing,
    and we thank you for your focus on this.
        The particular needs of veterans may vary somewhat from
    veterans of different eras, but one thing should never change.
    That is the commitment we make to our veterans, particularly to
    make sure the quality health care is available to them and that
    effective services, including the timely processing of
    benefits, is our No. 1 priority.
        I am going to commend Secretary West today for some of the
    budget recommendations that they are making. I am particularly
    heartened with the $28 million increase for VA medical
    research. We know that many of the games in being able to
    control cost comes from the use of better--the new smart
    weapons against disease, just like the smart weapons of war
    helped us be able to be more efficient. We also know that VA
    medical research has a unique role to play because it is about
    hands-on clinical practice working also with the best of NIH.
        We want to work with the chairman to ensure that VA medical
    research continues to be a priority within the VA budget and to
    make sure that they have the resources they need.
        I also would like to commend Dr. Kizer for the improvements
    that he has made in reducing patient cost. We might not be
    where we ultimately want to be, but I know since last year, I
    note that patient cost have been reduced by 9 percent and 23
    percent since 1993. I think that this is really something to be
    commended and also then see how further gains can be made
    without skimping on care. We do not want to shortchange the
    veterans themselves.
        Also we know that the veterans' demands are increasing.
        There are some yellow flashing lights that I have in the
    budget. For the second year in a row, I am concerned about the
    fact that there has been--what I am concerned about is the VA's
    slow progress in collecting paybacks from private insurance. If
    we are going to have reliable revenue streams both in Congress,
    you as the CEO and our clinical director, which is what Dr.
    Kizer is, needs to be sure what are the revenue streams that
    really are reliable. I think from what I note, the first
    quarter of fiscal year 1998, VA's collections were running
    behind projections by $9 million. So, we look forward to
    hearing about that.
        The other thing that we are concerned about is the
    continual problem of how long it takes to process a VA claim. I
    know that we have recommendations here, but really it is
    getting worse rather than better. Even when I chaired the
    committee, and with the support then of Senator Garn, Senator
    Gramm, now Senator Bond has this stewardship of the committee,
    the processing time actually seems to be increasing, and I
    think that is unacceptable. So, we look forward to hearing
    about that.
        We also know that there are new challenges facing the aging
    veteran, and we look forward to how we will meet those needs
    within our fiscal parameters.
        The other thing that I want to comment on is two things.
        One, the progress we need to make on the year 2000 computer
    problem, and I understand gains have been made there.
        Then another. I raised it, Mr. Secretary, with your
    predecessor, and that is the GI educational benefit. The GI who
    now uses the educational benefit is very different than the
    World War II guy who came home which enabled many of our men to
    leapfrog really to be solid members of the middle class. It was
    the largest single upgrade of male educational levels I think
    anywhere in the world.
        Now I think we believe in lifetime learning. No. 2, when
    you go to school, you do not go to school with a little parka
    and sing boola-boola and Ivy League songs. Many will be in
    community colleges. Many will be in continuing education. Many
    might be stretching out their education. Many might have had
    one but would like to use the GI bill to retrain so they can
    keep ready.
        I would like for the VA to look at where does the
    educational benefit fit through with the idea of lifetime
    learning and also the opportunity for many of our older
    veterans, who might have not ever used the educational benefit,
    for them to have a chance to upgrade where they are in the work
    force. For many of the guys and gals that came out, they had
    training in the military. It put them in the work force. The
    electronic technician, the people you would be familiar with,
    Mr. West, particularly the minority population. But now the new
    world order needs whole new technological skills, and I wonder
    where the VA would fit into that. That is new thinking. We need
    to do homework. We do not want to create a whole new
    unrealistic set of entitlements, but I do think since our
    military helped us be ready for the new world order, I want to
    be sure that we back them when they are home to make sure they
    can participate in the new economic world order.
        So, I thank you and I look forward to hearing your remarks
    and working with you.
        Senator Bond. Thank you very much, Senator Mikulski.
        Senator Campbell.

                 Prepared STATEMENT OF BEN NIGHTHORSE CAMPBELL

        Senator Campbell. Mr. Chairman, since I have to run to
    another committee, I would ask unanimous consent to have my
    complete opening statement put in the record.
        Senator Bond. We would be delighted.
        [The statement follows:]

                     Prepared Statement of Senator Campbell

        Good morning, Mr. Chairman. It is a pleasure to be here this
    morning and I welcome Acting Secretary West and his colleagues who have
    come before us today to testify on the 1999 VA budget request. I am
    aware of the time constraints today, so I will only say a few words.
        Thus far, the 105th Congress has proven to be exceptionally active
    for veterans' issues as we continue to face many challenges. Like my
    colleagues here on the Committee, I am pleased that we can begin to put
    behind us, a deficit that has routinely inhibited our ability to
    maintain worthwhile veterans programs and forced us to place a monetary
    value on the service to our veterans. It is a pleasure to be operating
    on the road to a balanced budget and we will do so with our nation's
    veterans at the forefront of concern.
        I recognize the efforts that VA has made in producing a fiscally
    responsible budget and I commend your work in this respect. I am
    greatly concerned, however, by any proposal that provides less than
    adequate funding for VA health care spending.
        Over the next five years, the VA aims to reduce its per-patient
    cost by 30 percent, increase the number of patients served by 20
    percent, and finance 10 percent of its own expenditures using
    nonappropriated funds. This is certainly an admirable list of goals but
    I do have concerns with VA's ability to deliver these promises. Like
    the fiscal year 1998 request, funding for the VA Health Care will
    remain unchanged for 5 years but would be supplemented by the
    collection of third-party reimbursements. Like all veterans, I would
    love to see this plan work, but I am pretty uncomfortable with such a
    gamble being taken with veteran health care.
        I am also very concerned with the VA's proposal to bar compensation
    for veterans suffering from smoking-related illnesses. While serving in
    the Air Force during the Korean War, I can remember personnel being
    permitted, and even encouraged to use tobacco. I have great concern for
    such a proposal that turns our veterans out into the cold. Until a
    clear understanding is reached on the history of this policy, I do not
    see this to be a fair plan.
        I remain eager to continue working with my colleagues on this
    subcommittee and the VA Committee to address the many issues presented
    by an ambitious health care plan, a staggering backlog of veterans
    claims, and the mysteries of Persian Gulf War illness. Over the past
    weeks, we have been plainly reminded of the potential conflict with
    which U.S. military forces can so readily be faced. As there is still
    so much work to be done in caring for the veterans from the Persian
    Gulf war, it is vitally important that this reminder reinforces our
    commitment to this group of veterans.
        I thank the chair and look forward to this morning's testimony.

        Senator Campbell. Just to welcome Secretary West and
    associate myself with your comments on the so-called 30-20-10
    program. That is a great goal and I hope it can be done, but I
    do have some worries about it. I am a little uncomfortable that
    we might be taking a gamble, and I am looking forward to
    reading your testimony in detail.
        I am also concerned about the VA's proposal to bar
    compensations for veterans suffering from smoking related
    illnesses. I was in the service myself, as you were. I do not
    know about your age group. In my age group, everybody was
    encouraged to smoke. At virtually every stop, if you have them,
    smoke them, they would say to us. It just seems to me when we
    have encouraged soldiers to smoke and we now have many of them
    that are retired and have lung problems, that we should not
    just abandon them. So, I hope we are going to be able to deal
    with that.
        Then, finally, I have to say, Mr. Chairman, that everybody
    is talking about the tobacco settlement, where we are going to
    put the money from the so-called settlement. I do not know if
    we are even going to have that much to divide up after we look
    at all the requests from different people. But the amount of
    money that is going to be doled out is made by these economic
    assumptions, and from my perspective, an economic assumption is
    a prediction made by learned, scholarly types in Washington,
    DC. But if you go out where Senator Burns comes from and ask
    the people at the sale barn what is an economic assumption,
    they will tell you it is a wild-eyed guess or something like
    that because they have not got a crystal ball anymore than
    these experts here have. So, I really worry a little bit about
    all the talk we hear now about where are we going to put all
    this money from the so-called settlement before we have it.
        But I do look forward to reading your testimony and welcome
    the committee. Thank you, Mr. Chairman.
        Senator Bond. Thank you, Senator Campbell.
        Senator Burns.

                           STATEMENT OF CONRAD BURNS

        Senator Burns. Thank you, Mr. Chairman, and thank you, Mr.
    West, for coming this morning. I just want to mention a couple
    of things.
        First of all, I want to compliment you and your staff and
    the hospitals. I just had a daughter that graduated from
    medical school out in Seattle at the University of Washington,
    and she did some rotations at veterans hospitals out there. As
    a physician now that she is, those experiences were pretty
    positive. The reason I mentioned that, I talked to her last
    night and she said, well, just tell them that all the
    experience I had was very positive.
        I want to mention a couple other positive things that are
    happening too. Sure, we all have our misgivings and maybe we
    have a different way of approaching things, but I think we have
    done a major step whenever we start talking about where Senator
    Campbell comes from, Senator Craig, and yes, and even in my old
    home State of Montana. We are getting some rural clinics on
    line. We are looking into and trying to take advantage of
    benefits of telemedicine in the areas of psychiatry and
    consultation, evaluations, those type things, and that is going
    to have to be if our rural clinics are going to have any kind
    of success at all. We have counties that have no doctors at
    all, and the travel to a VA installation becomes a challenge to
    some of our older veterans.
        I guess I was really made aware that we have the technology
    to do a lot of things when I was on the U.S.S. George
    Washington, and I went through their hospital there and saw how
    they use telemedicine and providing health care for 4,500
    sailors in a very confined area and a long way from home. I
    want to help you in that area.
        I think I just have one little problem with this. I looked
    at research. In here you added about $28 million to that, or is
    it $28,000? I do not know what it is. Probably $28,000,
    something like that.
        Mr. West. $28 million.
        Senator Burns. $28 million?
        I think whenever we start talking about research in this
    area, I think there is some redundancy here that we could
    probably take advantage of the research that is going on at NIH
    and a host of other places. I would sincerely think that maybe
    you could get a memorandum of understanding or something to
    work with these research centers and we could probably save a
    little money there.
        I cannot stay for your statement, but I will read it
    because I have got to go to a tobacco hearing. I have the same
    concerns about that as Senator Campbell does.
        Again, I want to thank you.
        In the area of the gulf war, some of the things that is
    coming out of the gulf war, those veterans. So far I think we
    need to accelerate of handling those cases, accelerate that a
    little bit better because I have heard a little grumblings out
    there.
        But welcome aboard and we look forward in working with you,
    especially in that area of telemedicine. Of course, I think we
    have to explore one of these days of giving our veterans a card
    like a credit card and allow them to get their health care in
    their own communities. I think we have to explore that one of
    these days. Now, I realize that the bureaucracy shudders at
    that thought, but nonetheless, I think we should be moving in
    that area where we can serve our people better, and people just
    kind of like to go to doctors and get in hospitals at home, if
    they can. So, I think we ought to continue to explore that idea
    but understanding the powers that be, I also understand that
    too. So, thank you very much and thank you, Mr. Chairman.
        Senator Bond. Thank you, Senator Burns.
        Senator Craig.

                            STATEMENT OF LARRY CRAIG

        Senator Craig. Thank you, Mr. Chairman.
        Welcome, Mr. West and all of you from the Veterans
    Administration.
        Let me ask unanimous consent, Mr. Chairman, that my full
    statement become a part of the record.
        Two observations. First of all, I am pleased that there is
    support for the demonstration program test for feasibility of
    Medicare subvention. I think that is clearly a step in the
    right direction. It speaks to a need to serve all veterans
    instead of squeezing, squeezing, squeezing the budget down and
    developing and tightening categories of those who may receive
    assistance in health care from our system.
        Also, I am frustrated by this year's construction budget,
    down 45 percent from last year and, of course, last year was
    down from the year before. While I realize construction needs
    will change over the years, I have concern that the $285
    million is drastically inefficient to cover essential,
    necessary projects that the VA lists as priorities. And in
    that, I am speaking primarily of the construction and
    maintenance of extended care facilities. That has been cut
    almost one-half from the request of $80 million of 1998 to $37
    million, as I mentioned in 1999.
        The substantial decrease brings to mind questions about the
    VA's commitment to meeting its construction requirements.
    Currently there are $237 million in category 1 projects for
    which the States have come up with the 35 percent of the cost
    and are waiting for the Federal Government to meet its
    obligations. Now, that is a clear signal, that if the States
    have come up with some money, they have assessed the need and
    determined that it is worth their money to match the
    obligation, and the obligation is, of course, the 65 percent on
    the Federal Government.

                               prepared statement

        So, it concerns when we look at our largest aging veteran
    population in history. You estimate the number of veterans age
    75 and older will increase by approximately 2.6 million from
    1995 to 4 million by the year 2000. That is exactly what those
    extended care facilities are needed for. I am surprised that
    this budget is that small compared with what the States are
    ready to do.
        Thank you, Mr. Chairman. I look forward to your testimony.
        [The statement follows:]

                      Prepared Statement of Senator Craig

        Mr. Chairman, thank you for holding this hearing regarding the
    Veterans Affairs budget for fiscal year 1999. The Veterans
    Administration has the tremendous task of administering benefits and
    services to more than 25 million veterans and approximately 44 million
    members of their families.
        As a fiscal conservative, I often find it a difficult task to weigh
    the decision between program funding and keeping a budget balanced.
    However, in the long run, a balanced budget will serve all Americans,
    including our veterans. With limited dollars to allocate, it is more
    important than ever that we make certain we effectively prioritize
    programs and projects.
        Medical care.--I am very pleased about the Administration's support
    for the demonstration program to test the feasibility of Medicare
    Subvention. I have long been a supporter of this concept, and was glad
    that Congress finally authorized the DOD to establish a limited
    Medicare Subvention program. Subvention will help provide greater, and
    much needed access to VA facilities for those veterans who do not have
    service-connected disabilities. I, like other Idahoans, am very eager
    to find ways to increase access to medical care for our veterans.
        Construction budget request.--This year's construction budget is
    down 45 percent from last year, and down even more from fiscal year
    1997. While I realize construction needs will change over the years, I
    am concerned that $285 million is drastically insufficient to cover
    essential necessary projects that the VA lists as priority.
        For example, the request for construction and maintenance of
    extended care facilities has been almost cut in half from a request of
    $80 million (fiscal year 1998) to a request of a $37 million (fiscal
    year 1999). This substantial decrease brings to mind questions about
    the VA's commitment to meeting its construction requirements.
    Currently, there are $237 million in ``Category One'' projects for
    which the States have come up with 35 percent of the costs, and are
    waiting for the Federal Government to meet its obligation to provide
    the other 65 percent. $37 million will barely cover the costs of five
    projects.
        Currently, our nation is faced with the largest aging veteran
    population in its history. The VA estimates that the number of veterans
    aged 75 and older will increase from approximately 2.6 million in 1995
    to 4.0 million in 2000. We must make certain we have the facilities to
    meet a growing need. If we don't we will fail to meet our obligation
    now, our nation's veterans could suffer the consequences very soon.

        Senator Bond. Thank you very much, Senator Craig.
        Secretary West, as always, we will include your statement
    in full with any additional information you wish, as well as
    leaving the record open for a number of days for other
    questions from members of the panel. Now I invite you to
    proceed and summarize, to the extent that you think it would be
    helpful to the committee, your testimony.

                         statement of togo d. west, jr.

        Mr. West. Thank you, Mr. Chairman. I have only a few
    comments. I appreciate your including the full written
    statement.
        Mr. Chairman, Senator Mikulski, members of the
    subcommittee, I appear before you today to present the
    President's fiscal year 1999 budget for the Department of
    Veterans Affairs. It is a pleasure to do so on this, I guess,
    my maiden voyage. I am the only person of the folks sitting at
    the table before you who is not an employee of the Department
    of Veterans Affairs. I am still on the rolls of the Department
    of the Army. So, it is good to see my former and, I guess for
    the moment, current colleagues here in the back there.
        You already noted the presence at the table of the Under
    Secretary for Health, Dr. Ken Kizer, to my immediate left and
    your right. To my immediate right, the Under Secretary for
    Benefits, Joe Thompson. Also to my immediate right is the
    Acting Assistant Secretary for Management, Mark Catlett, and to
    the far left, the Director of the National Cemetery System,
    Jerry Bowen. Those are the five of us who are at the table.
        Mr. Chairman and members of the committee, in the 5 years
    of this administration, the Department of Veterans Affairs has
    embarked on a course of change, a course I think was outlined
    by you fairly in some of your opening comments. These changes
    have resulted, I believe in my observance during my brief 10
    weeks or so in this position as Acting Secretary, some
    improvement in the time it takes to process benefits claims by
    veterans. Although several members of the subcommittee referred
    to an increase in the time to process claims, in fact, even
    with I think what all of us will acknowledge are unsatisfactory
    results to date, claims are being processed faster than they
    were 5 years ago. In 1994 the average processing time for an
    original claim was 213 days. In 1997 that was down to 133 days
    to process. It is true, as you pointed out, that that number
    has risen, but happily not back to the 1994 figure.
        As you will hear from our Under Secretary for Benefits, our
    goal is to continue to improve processing timeliness even as we
    devote some attention to improving processing accuracy. It is
    important not just to be timely in the processing of claims,
    but to get them right the first time, otherwise the delay to
    our veterans is doubled, even tripled.
        We are, as you pointed out, in the fourth year of a massive
    transformation of the health care system at VA. That has
    resulted in more outpatient care, less inpatient care, as was
    referred to by several members of the subcommittee, more
    outpatient clinics, and yes, even the closing of unused and
    unneeded hospital beds.
        The fiscal year 1999 budget request will permit us to
    provide health care to even more veterans, and Mr. Chairman and
    members of the subcommittee, to take that health care to where
    the veterans are.
        We continue to integrate organizational elements within the
    VA to become more efficient, more cost effective, more
    vigilant, but also to continue the increase in quality.
        As we move into the next millennium, I look forward to
    working with you, with this committee, on behalf of veterans
    and their families. I will expect, if confirmed, and am
    prepared to demand of this Department several things: first,
    that we improve the timeliness and the accuracy of our delivery
    of benefits to our veterans; second, that we continue the
    transformation of health care in this Department, emphasizing
    quality, compassion, and effectiveness; third, that we master
    the challenges of information technology and make it available
    to serve our veterans better, including the looming issues of
    year 2000 which, as you have acknowledged, I think we have a
    pretty good handle on, certainly as compared with our
    colleagues elsewhere in the executive branch, although that may
    be a low standard of comparison. [Laughter.]
        Senator Bond. Do not set the bar too high. [Laughter.]
        Mr. West. That we assure that our employees in this
    Department have a work environment that is conducive to their
    best efforts in order that they can better serve our veterans
    since it is the team that delivers the benefits, that delivers
    the care to those whom we are here to serve.
        And finally, that we continue the efforts begun by my
    predecessor, Jesse Brown, to integrate more fully the
    Department's organizational elements and the process known as
    ensuring ``One-VA.''
        Mr. Chairman, in this budget, as you have noted, we are
    requesting $42.8 billion for both mandatory and discretionary
    programs, and as you have also observed, quickly I will
    confirm, yes, $17.7 billion for medical care, $21.9 billion for
    compensation and pension payments, $92 million for the National
    Cemetery System.
        We are also requesting a 10-percent increase in funding for
    medical research, and I will also point out in response to the
    one observation that was made that we do indeed seek to take
    advantage of the ability to cooperate with other agencies. If
    you consider over $400 million in NIH and other grants, the
    $300 million appropriation, and funding the Department provides
    for doctors' salaries--we are looking at a total investment by
    this Department of over $1 billion in research. That I think is
    a good effort and an important effort in terms of what it
    portends for our veterans in the years ahead.
        Mr. Chairman, with this budget, we will be able to open 71
    new outpatient clinics. We will treat an additional 134,000
    veterans over the ones we treated in 1998. That is a 4-percent
    increase. With this budget, we will provide quality health care
    for more than 3.4 million individual patients, an increase of
    about 134,500. This level of funding in this budget should
    support almost 695,000 inpatient episodes, 37 million visits to
    our outpatient clinics.
        Mr. Chairman, with this budget, we will expand, we will
    improve the health care delivery, and we will do it, as you
    have noted, without an increase in appropriated funds above the
    1998 enacted level if we can receive the requests we are
    seeking in certain elements of this plan. Some of this is
    within our own capability, as you noted, to realize the success
    that we have tried to build in our third party collections. At
    the same time, some of it is in the hands of the Congress. We
    are pleased that there is movement on the Medicare subvention
    front. We still support it, but more importantly, as you have
    noted, our plans rely on it.
        Mr. Chairman, there are some new initiatives in this
    budget. There is $87 million for a new smoking cessation
    program, as you have noted. There is an increase of $191
    million for the Montgomery GI bill. That is a 20-percent
    increase, the largest in its history, and there is an increase
    of $100 million for the VA's readjustment benefits accounts
    which reimburses the Department of Labor for its programs that
    assist veterans to find employment.
        The budget contains funding and personnel to continue the
    activation of four new cemeteries during the next 2 years. They
    will serve the metropolitan areas of Chicago, IL; Dallas, TX;
    Saratoga, NY; and Cleveland, OH. This is the largest new
    program in cemetery construction I think since the Civil War.
        In summary, this is a sound budget. This is a realistic
    budget. It is a budget that puts our veterans and their
    families first, but as you have noted, it is a budget that
    depends on success in several important areas. Our job then,
    Mr. Chairman, in this Department and mine as its acting head
    is, yes, to be a part of the administration's program but to
    keep foremost in our minds that we have a unique mission to
    serve veterans and that we are here to do right by those who
    have done right by our country.
        Mr. Chairman, the comments by the members of the
    subcommittee and my comments demonstrate I think that VA is
    undergoing significant change in a number of areas. We are
    changing the way we do business. Some years ago in the early
    1960's, a young American President commented to an audience in
    Germany that change is the law of life. He said we should not
    be afraid of change, but embrace it. He said that those who
    stand with their eyes too firmly fixed on the past or
    concentrating solely on the present are sure to miss out on the
    opportunities of the future. He was talking about global
    security.
        Today you and I are talking about the protections that we
    owe our veterans, but in either case, the message is the same:
    We must not be afraid of change. We must embrace it, and the
    signal effort in this budget is to continue the change you have
    noted in VHA, the changes that are underway in the Veterans
    Benefits Administration for the simple purpose of improving and
    assuring the delivery and continuation of services and benefits
    to our veterans in the future.

                               prepared statement

        It is a significant undertaking. We cannot do it alone. We
    need all the help we can get, and that is why we are here
    today.
        Mr. Chairman, we are available for your questions.
        [The statement follows:]

                    Prepared Statement of Togo D. West, Jr.

        Mr. Chairman, members of this committee, I am pleased to present
    the President's fiscal year 1999 budget request for the Department of
    Veterans Affairs (VA). We are requesting $42.8 billion in new budget
    authority for veterans' programs.
        Throughout my professional life, I have witnessed the unique
    contributions of our men and women in uniform. Their sacrifices have
    kept this Nation free and secure. I am privileged to have been asked to
    help keep the Nation's promise to the veterans of many different eras
    for their very special contributions to the United States.
        Working with Congress over the past 5 years, VA has torn down
    bureaucratic barriers between veterans and their health care and
    compensation benefits, has reorganized its health care system, and has
    revised eligibility rules to best meet the needs of our veterans. VA
    right-sized, cut back, did more with less, and reallocated resources to
    accommodate the changing needs of those we serve. VA is keeping
    America's promise to the Nation's veterans.
        My goal will be to keep VA on this aggressive course. We are
    working to ensure the improved delivery and accuracy of compensation
    and pension benefits, continue improving our health care system, and
    fully integrate the Department's organizational elements into ``One
    VA.'' Our systems must operate in unison and our focus must be on the
    veterans and improving their quality of life. VA has the talent and the
    will to accomplish these goals. A vital element for our success must be
    providing a workplace free of discrimination and harassment in all
    forms. We must recognize our employees for their innovation and provide
    the appropriate tools for their work.
        Our budget request builds on our previous accomplishments and
    positions us for the future. Highlights of our proposal by major
    component are:
        Medical care.--The budget provides $17.7 billion (includes $677
    million in medical collections), to provide medical care to eligible
    veterans. By continuing to improve the delivery and access of
    outpatient care, the Department will open 71 new outpatient clinics and
    treat 134,000 more veterans in 1999 than in 1998, a four percent
    increase. The Medicare subvention demonstration program will again be
    recommended by the Administration.
        Montgomery GI bill and readjustment benefits.--The budget proposes
    to increase mandatory Montgomery GI bill education benefits by 20
    percent, or $191 million, in 1999--the most significant increase in
    benefits since the program's inception. The budget also proposes an
    increase of $100 million ($500 million over 5 years) in VA's
    readjustment benefits account to reimburse Department of Labor (DOL)
    programs to train, retrain, and assist Vietnam-era veterans to find
    employment. The proposed funding would enable the development of a
    national program that would target dislocated veteran workers, giving
    emphasis to the needs of individuals from 40 to 65 years of age, large
    numbers of who are Vietnam-era veterans, and those receiving public
    assistance.
        Medical research.--The $300 million request includes a ten percent
    increase over the 1998 enacted level for research into illnesses
    affecting veterans and the general population. This program is included
    in ``The Research Fund for America.''
        Veterans Benefits Administration.--The budget provides $806
    million, $52 million over the 1998 enacted level, a seven percent
    increase, to ensure the smooth delivery of compensation, housing,
    education, pension and insurance benefits to veterans.
        National Cemetery System.--The budget requests $92 million, $8
    million above the 1998 enacted level, to operate the National Cemetery
    System. At this level, the Department will open four new cemeteries
    during the next 2 years--a number unprecedented since the end of the
    Civil War.
        Smoking Cessation.--The budget proposes to establish a $87 million
    smoking cessation program for veterans who began to smoke during
    military service.
        Further details on our fiscal year 1999 request are as follows.
                          provide quality health care
        Dramatic change has occurred in the veterans health care system in
    the past 3 years. Our primary consideration is providing quality health
    care to as many patients as possible. We also must continue to
    emphasize our goals of achieving greater value for the expenditure of
    health care dollars, and we are committed to reaching our other
    strategic goals. Some of our strategies may be similar in principle, or
    practice, to what other health care organizations are doing to become
    more efficient and effective. Our efforts, however, must be understood
    within the context of VA's special mission of serving veterans, many of
    whom have unique medical conditions not well suited to ``market-based''
    strategies. We are also dedicated to educating the next generation of
    health care providers and researching solutions to some of health
    care's most perplexing problems.
        One of VA's key strategic objectives is the enhancement and system-
    wide standardization of quality. Through the integration of strategic
    planning, performance management and financial goals and targets, VA
    has organized a system of coordinated health care delivery focused on
    continuous quality improvement that is patient-oriented, ambulatory
    care-based and results driven. Better care management is one of the
    major strategies that will transform the health care delivery system to
    treat patients in the most appropriate setting. Use of primary care
    providers/teams to coordinate health services is already enhancing
    quality and the cost-effectiveness of care. As we continue to perfect
    functional performance measures, management and patients will be able
    to assess whether or not high quality health care has been achieved. We
    continue to emphasize the importance of employing new technology,
    education and research capabilities to increase efficiencies, reduce
    costs, and enhance quality of health care provided to veterans. We
    believe this strategy will preserve the viability of the health care
    system well into the next century and prepare VA to continue to meet
    the diverse health care needs of the veteran population, especially the
    special needs of those groups of veterans for whom VA is the hallmark
    provider or who cannot afford other health care options. The reinvented
    VA system is on its way to becoming a model for future integrated
    health care systems, public and private.
               emphasize a business-like approach to health care
        VA will continue the course set in 1998, emphasizing and supporting
    a dynamic business-minded approach to health care delivery within a
    framework of quality. Retention of all medical collections and user
    fees will add tangible incentives for our employees to enhance customer
    service. The opportunity for additional patients to choose VA has the
    potential to improve the return on the VA infrastructure investment
    made by the taxpayer and to maintain the health of the VA health care
    system. We will continue to distribute medical care resources under the
    Veterans Equitable Resource Allocation (VERA) system. The financing of
    additional workload in 1999 reflects our ability to serve more veterans
    with their care financed by a system-wide unit cost reduction achieved
    by increased emphasis on primary care services.
        VA will expand and improve health care delivery without any
    increase in appropriated funds above the current 1998 enacted level for
    Medical Care. Resources include the Medical Care account's annual
    appropriation ($17 billion), sharing and other reimbursements ($147
    million), and the Medical Care Collections Fund ($677 million). We
    expect to provide quality health care to more than 3.4 million unique
    patients, including 3.0 million veterans, an increase of approximately
    134,500 unique patients. The new funding level should support almost
    695,000 inpatient episodes and 37 million outpatient visits.
        Starting in 1998, VA committed to the goals of reducing per-patient
    cost for health care by 30 percent, serving 20 percent more veterans,
    and increasing alternative revenue sources to 10 percent of all Medical
    Care funding by 2002. This five-year projection assumes fiscal year
    1998 authorization of Medicare subvention, successful pilot testing,
    and expansion nationwide. It is important to emphasize that the per
    unique patient price reduction of 30 percent is dependent upon the
    workload increase of 20 percent. This dynamic allows VA to spread its
    fixed cost across an expanded workload base.
                          improving benefits delivery
        We have made a strong commitment to improving the quality and
    timeliness of processing compensation and pension claims through better
    management and development of a Balanced Scorecard for measuring
    progress. Using five core measures--customer satisfaction, speed,
    accuracy, unit cost, and employee development and satisfaction--
    Veterans Benefit Administration (VBA) will upgrade the delivery of
    benefits and services to veterans and their families. In pursuing the
    Balanced Scorecard, VBA will establish new management information
    systems and revise existing ones. This will be accomplished in a manner
    that is consistent with our departmental efforts to generally improve
    information content management. Some current performance measures and
    targets will change as new systems are implemented with new data
    consistent with the Balanced Scorecard. Eventually, VBA will use a
    data-driven Balanced Scorecard to link effective strategic planning and
    performance management with annual budget requests and truly become a
    data-driven organization. The real measurement of services will be
    improved satisfaction of our veterans.
        This budget requests $22.6 million to continue VBA's Business
    Process Reengineering (BPR) initiatives aimed at producing significant
    improvements in processing compensation and pension claims over the
    next few years. We are also requesting additional funds to fully
    automate our education assistance payments for veterans and their
    dependents, making it much more convenient for them and less costly to
    the taxpayer. We are requesting increases for other program
    enhancements aimed at providing better service for veterans at reduced
    cost, including creative use of information technology and expanded
    training opportunities.
            ensure a lasting tribute for veterans and family members
        We project that annual veteran deaths in the United States will
    increase over 14 percent, from 525,000 in 1996 to 601,200 in 2003.
    Annual veteran deaths are expected to peak at 620,000 in 2008. As the
    number of deaths increase, the National Cemetery System (NCS) projects
    increases in the number of annual interments from 71,786 in 1996 to
    104,900 in 2008.
        Our request for the NCS continues to position VA to meet these
    future requirements. The budget includes funding and personnel to
    continue the activation of four new cemeteries during the next 2
    years--an increase unprecedented since the end of the Civil War.
        State veterans cemeteries are a complement to VA's system of
    national cemeteries and have an important role in meeting future burial
    demand. To foster an enhanced partnership with the States, as proposed
    last year, legislation is under consideration to amend 38 U.S.C. 2408
    to encourage the establishment, expansion, and improvement of State
    veterans cemeteries by increasing the maximum Federal share of the
    costs of construction from 50 percent to 100 percent. The legislation
    would also permit Federal funding for up to 100 percent of the cost of
    initial equipment for cemetery operations. States would be responsible
    for providing the land and paying all costs related to the operation of
    the State cemeteries and for subsequent equipment purchases.
                      improve performance-based budgeting
        The Government Performance and Results Act is the primary vehicle
    through which we are developing more complete and refined strategic
    goals and performance information. This will allow us to better
    determine how well VA programs are meeting their intended objectives.
    We are continuing to move our focus away from program inputs and toward
    program results.
        During fiscal year 1997, we published our initial strategic plan
    under the Results Act. This plan covers fiscal year 1998 through fiscal
    year 2003 and was submitted to the Congress in September 1997. The
    strategic plan is structured around two themes--Honor, Care and
    Compensate Veterans in Recognition of their Sacrifices for America; and
    Management Strategies. The first theme addresses the strategic goals
    for VA programs that provide benefits and services to veterans and
    their families. The second presents process-oriented strategies that
    will help VA operate as ``One-VA''--a unified organization delivering
    seamless service to veterans with a focus on providing world-class
    customer service, ensuring a high performing workforce to serve
    veterans, and providing the taxpayer maximum return on investment. The
    Departmental goals and objectives in the strategic plan are the driving
    forces for budget formulation and performance planning.
        We have completed our first performance plan under the Results Act.
    This plan contains specific performance goals, performance measures,
    and target levels of performance within each program supporting the
    broader general goals in the strategic plan. We have integrated the
    fiscal year 1999 performance plan into our budget request to begin
    drawing a closer relationship between resources and performance.
        We continue to strengthen our strategic management process and to
    respond to Congressional and GAO criticism of selected management
    problems in the Department. The prominent criticisms are the need for
    VA to: (1) identify the purposes and effectiveness of our programs, (2)
    integrate our information technology investments, and (3) validate our
    performance measurement data. We have a number of key initiatives
    ongoing. First, we are developing a list of programs and a schedule of
    program evaluations that will assist us in determining how well our
    programs are meeting their intended objectives. These evaluations will
    begin in fiscal year 1998. Second, we are establishing an Office of the
    Actuary which, among other areas of responsibility, will be involved in
    developing and providing information to be used in assessing
    performance measures and in gauging progress toward achieving our
    organizational goals and objectives. Third, we have launched a project
    to bring about a greater degree of integration of our various customer
    service activities, a project that will focus on how information
    technology can enhance the Department's customer service. And finally,
    the Office of the Inspector General is conducting a study to review the
    validity and reliability of VA's performance data. The initial part of
    this study focuses on timeliness data for compensation and pension
    claims, but during fiscal year 1998 this effort will be expanded to
    include measures covering the medical care program.
        I will now briefly summarize our 1999 budget request by program.
                                medical programs
                                  medical care
        The 1999 request recognizes that dramatic changes have occurred in
    the veterans health care system over the past 3 years. Commitment to
    improving the quality of health care and to maintaining a standard of
    quality is a key strategic objective. VA has implemented a new national
    network management structure. Duplicative administrative functions and
    clinical services are being consolidated and geographically proximate
    facilities are being integrated. Resources are being shifted from
    inpatient care, which was specialty focused, to primary care delivered
    on an outpatient basis. It is the continuation of aggressive business-
    minded approaches coupled with a clear understanding of health care
    priorities that has allowed VHA to come so far so quickly and which
    will allow continued progress in 1999. In the 4 years to follow, VA is
    committed to its 2002 targets of reducing per-patient health care costs
    by 30 percent, providing quality health care to 20 percent more
    veterans and increasing the portion of the operating budget obtained
    from third party medical collections and other alternative revenue
    sources to 10 percent.
        The allocation of medical care resources under the Veterans
    Equitable Resource Allocation (VERA) complies with Public Law 104-204,
    ensuring that veterans across the country have fair and equal access to
    VA health care. The Eligibility Reform Act, Public Law 104-262, affords
    a great opportunity to provide improved health care value to current
    users; expand the number of users; attract new revenue generating
    customers who bring insurance or Medicare payments with them; and,
    provide value to taxpayers.
        This budget is a continuation of the Administration's policy,
    established last year to straight-line appropriation requirements
    through 2002 along with retention of expanded medical collections,
    anticipated passage of Medicare subvention, increased sharing revenues,
    and anticipated improved management efficiencies.
        The Balanced Budget Act of 1997, Public Law 105-33, allows VA to
    retain all collections from third parties, copayments, per diems, and
    certain torts after June 30, 1997. These collections are deposited in
    the new Medical Care Collections Fund (MCCF) and beginning, October 1,
    1997, were available for transfer to the Medical Care appropriation to
    remain available until expended. As estimated from individual network
    plans, MCCF will transfer collections of $677 million to the Medical
    Care account in 1999 to support veterans' health care, an increase of
    13 percent.
        VA is enhancing its customer focus. The department is measuring
    customer satisfaction and timeliness of services, and comparing our
    quality measures to community standards. VA is committed to the
    enhancement and system-wide standardization of quality. This commitment
    to improve health care quality in VA facilities is evident by moving
    additional staff to the Office of the Medical Inspector. This staff
    will conduct investigations, site visits, reviews, and other
    evaluations of quality of care issues.
        The Administration supports enactment of a demonstration program in
    1998 to test the feasibility of ``Medicare subvention.'' This
    demonstration would permit VA to collect from Medicare for health care
    services provided to Medicare eligible, higher income veterans who do
    not have compensable disabilities. The advantages of this initiative
    are that: veterans will have more options in selecting a quality health
    care provider closer to where they reside; Medicare will be billed at
    costs that will be lower than the private sector; and VA will be able
    to employ underutilized capacity to provide health care to Medicare-
    eligible veterans. The Administration will work with Congress to seek
    passage of the Medicare subvention pilots this year.
        To promote more efficient management of resources, VA proposes a
    change in the appropriation language that provides for a 2-year
    spending availability for up to 8.3 percent of resources made
    available. This percentage is equivalent to approximately 1 month of
    spending authority. This proposal promotes more rational spending
    aligned with business-type decisions, recognizes the need for
    management flexibility during this period of significant change, and
    reflects the GPRA concept of integrating budget decisions with
    planning.
                               smoking cessation
        The Administration is requesting authorization of a 5-year smoking-
    cessation program for any honorably discharged veteran who began
    smoking in the military. Private providers, on a per capita basis, will
    deliver the program to the extent that resources are available. Once
    this program is authorized, the Administration will submit a budget
    amendment requesting an appropriation of $87 million for this new
    activity. A legislative proposal to authorize this program will be
    transmitted in the near future by the Administration. It is estimated
    that between 1.3 million and 2.6 million veterans would avail
    themselves of this valuable program over the next 5 years.
                        medical and prosthetic research
        Funding for Medical and Prosthetic Research is proposed as part of
    the Research Fund for America. This proposal highlights the
    Administration's priority to support needed and sustained investments
    in important Federal research programs on a deficit neutral basis. A
    total of $300 million will support over 1,795 high priority projects
    and VA research's general goal to meet the needs of the veterans and
    contribute to the Nation's knowledge about disease and disability. VA
    research will continue to focus on designated research areas that are
    of particular importance to our veteran patients including: Gulf War
    illnesses, aging, chronic disease, mental illness, substance abuse, and
    sensory loss.
        The additional $28 million requested will allow continuation of
    ongoing programs and the start of major research initiatives that take
    advantage of VA's unique assets in clinical outcomes and rehabilitation
    research and our large integrated health care system. The first of the
    initiatives will establish a new Quality Enhancement Research
    Initiative (QUERI) to accomplish unprecedented collaboration between
    research, policy and performance, patient care and informatics (medical
    data). Target areas for this initiative include prevalent conditions,
    such as, cancer, prostate disease, depression and consequences of
    chronic spinal cord injury. Other initiatives will focus on medical
    therapy and surgical treatments of Parkinson's Disease; rehabilitative
    research in the areas of vision and hearing, aging with a disability,
    and prosthetics; and prevention of complications of Type II Diabetes
    Mellitus. In these areas, no other federally supported clinical or
    research entity can initiate or complete such critical and ambitious
    research activities on behalf of America's veterans.
                         medical care collections fund
        The enactment of Public Law 105-33 established the Medical Care
    Collections Fund (MCCF) and enabled VA to retain third party recoveries
    and other copayments from the provision of health care services and to
    use those resources to provide additional care to veterans. In an era
    of government efficiency, where fewer Federal dollars are being spent
    to provide more services effectively, MCCF will allow the VA to have
    the necessary flexibility to produce more funding through user fees
    while maintaining no increase in appropriated funds.
        In 1999, VA expects to increase collections by 13 percent from the
    previous year to a total of $677 million. To improve recoveries, MCCF
    is focusing on consistent utilization of existing billing and
    collection software; better documentation of detailed clinical and cost
    data on insurance bills; implementation of billing rates based on
    reasonable charges; and continued development of automated recovery
    processes.
                               benefits programs
        VA benefits programs provide assistance to veterans in recognition
    of their military service to their country and to aid their transition
    to civilian life. We provide compensation payments to veterans who
    suffered disabling illnesses or injuries as a result of military
    service and to survivors of those who died from service-connected
    causes; pension payments to needy disabled wartime veterans and the
    needy survivors of wartime veterans; education and training assistance
    to active duty personnel and to veterans to help them readjust to
    civilian life; vocational rehabilitation and counseling assistance to
    help disabled veterans obtain employment; credit assistance to enable
    veterans and active duty personnel to purchase and retain homes; and
    life insurance. Delivery of these benefits must put veterans first,
    foster partnerships between VA and veterans and their service
    representatives, exploit advances in information technology and
    training, and place management focus on desired customer service
    improvement as well as efficiency.
        The Administration is requesting $21.9 billion to support fiscal
    year 1999 compensation payments to 2.4 million veterans, 305,000
    survivors and 2,000 children of Vietnam veterans who were born with
    spina bifida, and to support pension payments to 390,000 veterans and
    283,000 survivors. The mandatory appropriation request includes the
    estimated cost of providing compensation for disabilities and deaths
    attributable to tobacco usage during military service estimated at
    about $17 billion over 5 years. VA's General Counsel has determined
    that under current law, service connection of a disability or death may
    be established if injury or disease resulted from tobacco use in the
    active military service. VA already has received and begun to
    adjudicate tobacco-related disability and death claims. The budget
    proposes legislation to disallow benefits for these disabilities or
    deaths attributable to diseases which began after military service and
    after any applicable presumptive period, and based solely on tobacco
    use during military service. Discretionary resources in the budget
    assume enactment of this legislation.
        We are also proposing in this budget a 2.2 percent cost-of-living
    adjustment (COLA) to be paid to compensation beneficiaries, including
    spouses and children receiving Dependency and Indemnity (DIC) at an
    estimated cost of $287 million in fiscal year 1999. The COLA is based
    on the projected change in the Consumer Price Index. Proposed
    legislation is included to pay full disability compensation benefits to
    Filipino veterans and DIC to their survivors residing in the United
    States currently receiving these benefits at half the level that U.S.
    veteran counterparts receive. The cost of the proposal will be
    approximately $5 million a year, for a total of $25 million over 5
    years.
        This budget request also reflects a need for an additional $550
    million for the fiscal year 1998 Compensation programs. The COLA that
    took effect December 1, 1997, is responsible for $303.4 million of this
    increase. The remainder is primarily attributable to higher than
    expected increases in average benefits, with an increase of veteran
    cases as well as the inception of compensation benefits and vocational
    training for children of Vietnam veterans who were born with spina
    bifida. Several factors contribute to the increase in the average
    benefit payments. Among them are (1) the processing of older cases as
    emphasis on reducing backlogs continues, which generates significant
    retroactive benefit payments; (2) increases in the number of service-
    connected disabilities claimed and granted to veterans; and (3) higher
    than expected average benefit payments to Vietnam and Gulf War
    veterans. These changes, along with estimated tobacco-related claims,
    result in the increase over the original budget estimate.
        An appropriation of $1.2 billion is requested for the Readjustment
    Benefits program to provide education opportunities to veterans and
    eligible dependents and for various special assistance programs for
    disabled veterans. Education benefits will be provided for about
    482,000 trainees in 1999, including 310,000 training under the
    Montgomery GI Bill. This request includes funds for the annual Consumer
    Price Index adjustment (estimated to be 2.0 percent effective October
    1, 1998) for education programs. Legislation is proposed in this budget
    that will provide a 20 percent rate increase for the Montgomery GI Bill
    education program as well as for survivors' and dependents' education
    programs. This legislation will also propose additional funds in the
    amount of $100 million to be used for veterans training programs
    administered by the Department of Labor (DOL) under Part C of the Job
    Training Partnership Act. The estimated 5-year cost of the rate
    increase and the reimbursement for DOL training programs is $1.5
    billion.
        This budget proposes legislation to eliminate authority to finance
    the sale of acquired properties (establish vendee loans) to the public.
    VA acquires properties incident to the foreclosure of guaranteed loans.
    Properties can be sold for cash (borrowers obtain their own financing),
    but in 80 percent of the cases VA finances the sale by establishing a
    mortgage loan receivable. The establishment of vendee loans and their
    subsequent sale extends VA's liability for many years. By selling all
    properties on a cash basis, future expenses due to foreclosure of
    pooled vendee loans will be eliminated. If enacted, this proposal is
    estimated to save a total of $42.2 million over 5 years.
        VA is also proposing legislation to charge lenders a fee of $25 for
    each VA loan that is guaranteed. The fees would be earmarked for use in
    developing, maintaining, and enhancing a VA Loan Information System
    that would interact with the information systems used by lenders to
    make and service VA-guaranteed loans. Amounts collected will be
    deposited in the Supply Fund. VA may charge this fee for 4 years, not
    to exceed a total of $15 million.
        Legislation is proposed as well to establish a reserve, from
    appropriated funds, to fully fund the ``H'' program (certain disabled
    veterans within the National Service Life Insurance program) and allow
    for the payments of future dividends. This legislation will require an
    initial transfer to the National Service Life Insurance fund of $4.5
    million in 1999. The $4.5 million appropriation will be offset to the
    extent that annual appropriations to the Veterans Insurance and
    Indemnities appropriation to cover the costs associated with the ``H''
    program will no longer be necessary.
                           general operating expenses
        A total of $849.7 million is requested for the General Operating
    Expenses (GOE) appropriation in 1999. This funding level, combined with
    $160.2 million of administrative costs associated with VA's credit
    programs (funded in the loan program accounts under credit reform
    provisions), $11.3 million in reimbursements from the Compensation and
    Pensions account for costs associated with the implementation of the
    Omnibus Budget Reconciliation Act of 1990 as amended, and $38.9 million
    from insurance funds' excess revenues, together with other reimbursable
    authority, will provide $1.224 billion to support operations funded in
    the GOE account.
                        veterans benefits administration
        The 1999 budget request for the Veterans Benefits Administration
    (VBA) of $651 million will support an average employment level of
    11,221, which is 125 FTE's below the 1998 level. Much of the FTE
    decrease, however, relates to moving 80 FTE to the Franchise Fund for
    the Debt Collection Activity, and to reductions in the overhead,
    administrative support areas. Employment for direct processing of
    compensation and pensions claims increases by 140 FTE over 1998 within
    this total. This request, combined with $155.5 million associated with
    credit reform funding, will result in an increase of $52.5 million in
    appropriated discretionary funding over the 1998 level.
        This budget reflects VBA's progress in implementing the
    requirements of the Government Performance and Results Act (GPRA). The
    integration of plans, resources and performance measures is constantly
    being improved. The 1999 budget reflects improvements over last year
    and will change further as our new team revises indicators and goals
    and establishes new ones.
        There are several initiatives which, taken as a whole, comprise our
    new vision for processing compensation and pension (C&P) claims. Among
    those included in this request are the conversion to service centers,
    or the organizational and physical combination of Adjudication and
    Veterans Services Divisions at each of the 57 regional offices. Once
    completed, enhanced customer satisfaction as well as improved
    processing will follow. Funds are requested for the pre-discharge exam
    initiative that provides an outreach effort prior to separation from
    the service at major sites across the United States. This is a critical
    element of the reengineered C&P vision for the performance of claims
    development, disability examination, and preparation of rating
    decisions for service persons awaiting discharge from active duty.
        This budget also reflects funding for finalization of the ongoing
    geographical consolidation of loan processing and loan service and
    claims functions from 45 offices to nine Regional Loan Centers (RLC's).
    Consolidation will result in improved services to veterans at reduced
    costs through greater efficiency and economies of scale. Service to
    lenders will improve through greater consistency and responsiveness.
    This consolidation is expected to generate nearly $43 million in
    savings through 2003. Funds are also included to deploy a new Property
    Management Local Area Network (PLAN) System. Real property acquired by
    VA as a result of guaranteed loans requires management and disposal.
    Automated information support will be provided to promote the rapid
    acquisition and sale of properties in order to maximize recovery of the
    government's expenditures.
        Other funds are included to continue information technology
    initiatives that will support the needs of a reengineered environment.
    Education processing will benefit from completing installation of
    imaging technology into the VBA environment, reducing the dependency on
    paper documents and improving timeliness and accuracy of claims
    processing. Additionally, education systems will be modified to take
    full advantage of the efficiencies gained from recent technological
    advantages. Development of the payment processing system for the
    Montgomery GI Bill--Selected Reserve program will continue in 1999 and
    serve as the foundation for all future education redesign efforts. VBA
    will also replace the current system of manual processing with an
    expert system and replace the current system of delivering monthly
    benefit checks to veterans by mail with either a voucher to be drawn
    through electronic benefits transfer or electronic transfer of funds
    directly into their bank accounts.
        Another initiative will improve timeliness and quality of service
    while reducing costs for the insurance program. Paperless processing in
    this business line will require installation of an imaging system to
    provide electronic storage of insurance records and on-line access.
    Creation of a large database of imaged beneficiary forms will allow the
    retirement of almost 2.5 million insurance folders.
                            national cemetery system
        The National Cemetery System (NCS) proposes a budget of $92
    million. This represents an increase of $7.8 million over the 1998
    level. The funding increase over last year's level is for: (1) workload
    increases at the Tahoma National Cemetery in the Seattle, Washington,
    area; (2) the continued activation of three new national cemeteries in
    Chicago, IL; Dallas, TX; and Saratoga, NY; (3) the partial activation
    of a new national cemetery in the Cleveland, OH area; (4) the increased
    cost of the Integrated Data Communication Utility (IDCU) system
    conversion; and (5) for inflation and employee payroll costs.
                             general administration
        A total of $199 million is requested for the Office of the
    Secretary, five Assistant Secretaries and three staff offices. This
    request, combined with $4.7 million associated with credit reform
    funding, will result in a total resource level of $203.8 million.
                          equal employment opportunity
        During 1998, VA has restructured its Equal Employment Opportunity
    (EEO) complaint process. The 1999 budget reflects the creation of two
    new offices to handle processing and adjudication of EEO complaints.
    The Office of Resolution Management (ORM) was created within the Office
    of Human Resources and Administration. In addition, the Office of
    Employment Discrimination Complaint Adjudication (OEDCA) was formed.
    This function will be located in the Office of the Secretary.
        For 1999, funding for the new offices will be handled entirely on a
    reimbursable basis except for that portion of their operations
    performed for staff offices within the General Administration activity
    of the GOE appropriation in which ORM and OEDCA operate. General
    Administration funds that supported the previous Equal Employment
    Opportunity process for VHA, VBA, NCS and the Office of the Inspector
    General have been moved to their respective budgets for 1999.
    Reimbursements are calculated on a per case basis.
                             shared service center
        The 1999 budget reflects the phased expansion of the Shared Service
    Center (SSC) to encompass additional VA employees and sites. The SSC
    will centralize payroll processing and personnel information. For 1999,
    the SSC is requesting $26.6 million in reimbursement authority from
    other VA organizations.
                           board of veterans' appeals
        The Board of Veterans' Appeals (BVA) will continue administrative
    productivity enhancement initiatives involving both automated and
    manual procedural changes. In 1998 and continuing into 1999, BVA
    expects to increase electronic exchanges of information with VBA and
    thus improve data currency and decrease administrative handling. BVA
    continues to work to reduce the time it takes veterans to receive
    decisions on appeals. A total of $40 million is requested for the Board
    in 1999.
                              policy and planning
        The Office of Policy and Planning is requesting $11 million in
    1999. Funding is provided for program evaluations ($2 million in 1999),
    establishment of an Office of the Chief Actuary ($2 million in 1999),
    and the National Survey of Veterans II ($1 million in 1999). This
    request builds upon funds provided by Congress in 1998 for these
    activities.
                           office of general counsel
        The Office of General Counsel (OGC) is requesting $38.8 million in
    budget authority to support its operations in 1999. The 1999 request is
    $2.2 million above the 1998 current estimate. These additional funds
    will allow the General Counsel to maintain its current level of
    operations plus allow it to address the growing backlog at the Court of
    Veterans Appeals and field offices.
                              office of management
        The Assistant Secretary for Management is requesting $49.4 million
    in budget authority in 1999. This request includes $900 thousand to
    develop a replacement strategy for the VACO Campus LAN. This strategy
    will focus on immediate short-term solutions to keep the system viable
    and long-term solutions that will allow the VACO community to have a
    dependable, reliable, and fully functional LAN network.
                          office of inspector general
        The 1999 request of $32.7 million includes funding for the
    Inspector General to continue to focus its efforts on high pay-off
    areas deemed most vulnerable to fraud, waste, inefficiency, and
    mandatory coverage areas such as audits of VA's financial statements.
                                capital planning
        With the recognition of the need to improve its capital planning
    process, VA has initiated a process to ensure that major capital
    investments are based on good business decisions, tie to Departmental
    strategies and goals, and represent the best return to the taxpayer.
    Representatives from top management, in the form of the Capital
    Investment Board (CIB), make strategic decisions about capital
    expenditures. This is an evolving process that also fosters a ``One-
    VA'' approach to the use of capital funds by facilitating dialogue
    about major construction projects, leases, information technology, and
    major equipment purchases across VA management.
                          construction, major projects
        A total of $97 million is requested for the Major Construction
    program. The Major Construction request would fund a clinical
    consolidation/seismic project at Long Beach, CA, a seismic corrections
    project at San Juan, PR, and columbarium projects at Ft. Rosecrans
    (California) and Florida National Cemeteries. Additional funds are
    requested to remove asbestos from VA-owned buildings and to support
    advanced planning and design activities.
                          construction, minor projects
        A total of $141 million is requested for the fiscal year 1999 Minor
    Construction program. The request includes $123 million for Veterans
    Health Administration projects. Of this amount, $68.9 million is
    targeted for the outpatient care and support category. This will enable
    VA to continue its commitment to provide primary and preventive care.
    Additionally, $32.5 million is for inpatient care and support. This
    category includes projects that improve the patient environment, such
    as providing private and semi-private rooms. A total of $14 million is
    also included for the National Cemetery System. Funds in the amount of
    $2.4 million are requested for the Veterans Benefits Administration.
    Staff Office and Emergency projects are provided $1.6 million.
                             parking revolving fund
        VA is requesting authorization of $13 million for a parking garage
    in Denver, CO. No additional funding is required as this project would
    be funded from unobligated balances currently available.
         grants for the construction of state extended care facilities
        The fiscal year 1999 request of $37 million for the Grants for the
    Construction of State Extended Care Facilities will provide funding to
    assist States to establish new, or renovate existing nursing homes and
    domiciliaries.
            grants for the construction of state veterans cemeteries
        The fiscal year 1999 request of $10 million for the Grants for the
    Construction of State Veterans Cemeteries will provide funding to
    assist States to establish, expand, or improve State veterans
    cemeteries. Legislation is again proposed to increase the maximum
    Federal share of the costs of construction from 50 to 100 percent.
                                    closing
        Mr. Chairman, the challenges before us are great but our dedication
    and commitment to ensuring the best possible care and service to our
    Nation's veterans are greater. We owe our veterans the best service we
    can provide. I look forward to working with you and the members of this
    Committee to meet these challenges.

                              medical collections

        Senator Bond. Thank you very much, Mr. Secretary.
        Since Senator Mikulski is on a tight time schedule, I will
    defer my questions and allow her to take up such time as you
    need.
        Senator Mikulski. Thank you, Mr. Chairman. I am happy to go
    by the 5-minute rule.
        Mr. West, let us start off with the question about the
    medical care cost and the collections in the Medicare
    subvention because really one of the anchor services of the VA
    is its medical care, and then the need to have reliable revenue
    streams both from appropriations, but also the private
    collections.
        Could you tell us what are your plans and what are the
    strategies and the methodologies to use to increase the
    collections from private insurance? Do you have a specific
    plan, specific benchmarks, and what are your thoughts on
    increasing those collections?
        Mr. West. I think we do and I will ask Dr. Kizer, the Under
    Secretary for Health, to provide some specifics about it.
        I would observe before that, if I might, Senator, there has
    been some concern expressed over the rate of collections. I
    think it is a little early to make that judgment. The only
    numbers we have available to us are for the first quarter of
    the fiscal year. We are just about to end the second quarter.
    So, I think next month sometime, we will have one-half a year.
    I think that Dr. Kizer would be more comfortable to see where
    we are at the end of the third quarter. But I am not so sure
    that there is reason to be pessimistic just yet. There is
    reason to be careful, to pay attention, and as you said, to
    examine exactly what we are doing to ensure our collections.
        I think our experience on collections in just that first
    quarter runs roughly like last year's. I think I heard a few
    days ago Dr. Kizer say----
        Senator Mikulski. I am going to have to leave really very
    quickly. Could we hear the methodology? I appreciate those
    comments, sir.
        Dr. Kizer. Senator Mikulski, as you know, this year we are
    looking at about 4.4 percent of our operating budget to come
    from nonappropriated funds and next year increasing that to
    about 4.6 percent.
        As you note, and I think understand as well, before this
    year the importance placed on collection and having the
    infrastructure in place was not there. There are one-half a
    dozen generic things that are specifically being done, and each
    of those have parts to them. We are focusing particularly on
    better insurance identification, on better collection
    processes, better claims processing, better utilization
    management, also on setting of reasonable rates, a new
    authorization that was provided that will help in this regard
    as well.
        Now, we have recently disseminated a document that provides
    more specific guidance in this regard, and I think that it
    would be helpful to perhaps provide you with a copy of that and
    you can see in much more detail some of the specific things
    that are going to be done in this regard.
        [The information follows:]

                               Executive Summary

                                   background
        The Department of Veterans Affairs (VA) faces the same challenges
    in the administration of its healthcare system of 170 hospitals and 400
    clinics as do other Federal agencies on the journey to reinvention.
    Private sector health systems, both for-profit and not-for-profit, face
    similar challenges in trying to manage the industry's formidable
    changes precipitated by managed care, cost containment, and new
    patterns of care. An abundance of dilemmas confront everyone: declining
    revenues, cost controls, eroding customer bases, quality mandates,
    reorganizations, mergers and outsourcing, and demands for adopting best
    business practices. All of these challenges coincide with stakeholder
    imperatives for these organizations to become more business-like and
    perform using measurable industry standards.
        In the face of increasing pressures to reduce costs, enhance
    quality and implement managed care, VA has developed a five-year plan
    called 30/20/10. This calls for a reduction in per-patient cost by 30
    percent; an increase in unique patients served by 20 percent; and an
    increase in nonappropriated revenues by 10 percent of total operations.
    VA intends to achieve the latter goal through its revenue cycle
    program, formerly known as Medical Care Cost Recovery (MCCR).
        The Omnibus Budget and Reconciliation Act of 1990 established and
    funded the MCCR program as a special apparatus to identify, bill and
    collect for the cost of providing non-service connected care (NSC) to
    veterans. Collections, minus the expenses charged back to MCCR, were
    returned to the U.S. Treasury. Through subsequent legislation relating
    to program coverage and scope, MCCR has expanded to a nationwide force
    of 2,700 personnel. Despite MCCR's investments in technology, program
    policy and procedure, software development, and training, hospitals
    have not achieved the performance levels anticipated. After growing to
    a peak of $581 million in 1995, collections have declined to $563
    million in 1996 and $524 million in 1997. Much of this decline can be
    attributed to a decrease in the VA's inpatient workload, changes in
    insurance membership (HMO & PPO penetration), and changes in insurance
    companies' payment methods.
                               study requirements
        Concern about the erosion of MCCR performance, as well as anxiety
    about VA's ability to generate a 10 percent non-appropriated revenue
    stream, crested in September 1997. At this time the VHA CFO determined
    the need for and contracted with Coopers & Lybrand, LLP (C&L), a
    subcontractor to Abt Associates, to conduct a major management review
    of MCCR. The scope of this review called for C&L to document actual
    performance, account for the way MCCR funds were expended, and
    benchmark VA performance with best practices in the private sector
    (both for-profit and not-for-profit hospital systems) and in high-
    performing VA hospitals. VA requested C&L to identify better ways to
    allocate resources, perform work processes, deploy technology and
    collect money due to the VA. Finally, it asked C&L to determine if
    there were meaningful opportunities to contract elements of the revenue
    cycle.
        The request for this study came during a landmark period. With the
    passage of the Balanced Budget Act in mid 1997, Congress gave VA
    permission for VISN's to retain MCCR collections for enhancing the
    quality of care to veterans. This new incentive has spurred a great
    deal of interest in the program and many VA officials and staff
    contacted during the course of this study stated that they will use its
    findings and best practices as guides for their reengineering plans.
                          study scope and methodology
    Extensive Review of VA Operations
        Coopers & Lybrand conducted the study from September 1997 to
    January 1998. We followed an intensive schedule during which study
    teams conducted MCCR program reviews at 24 VA medical centers. The
    teams investigated all aspects of facility operations. Specifically,
    we: interviewed key hospital staff, performed process mapping to obtain
    work volumes, cycle times and process costs, reviewed internal MCCR
    diagnostic reports, observed veteran registration interviews,
    administered surveys to MCCR staff, reviewed accounting records, and
    presented our observations to directors, chiefs of staff, chief
    financial officers and MCCR coordinators. We also conducted numerous
    interviews with Veteran Integrated Service Network (VISN) directors and
    their staffs, VA central office officials associated with MCCR
    operations, regional counsel, field directors supporting operations
    (e.g., Austin Automation Center, St. Paul Debt Collection Center) and
    VA system development contractors.
    Private Sector Benchmarking
        Concurrently, C&L conducted a thorough benchmarking study of nearly
    25 private sector organizations. These included private, multi-hospital
    hospital systems, national hospital chains, and academic medical
    centers, some of which are affiliated with VA hospitals. We collected
    data from industry associations, such as the Hospital Accounts
    Receivable Association (HARA) and the Hospital Financial Management
    Association (HFMA). Finally, we visited with and interviewed numerous
    private sector firms in the hospital billing and collections industry,
    such as Medaphis, NEIC and PAYCO.
    Characteristics Unique to the VA
        Although the steps of the revenue cycle process are generally the
    same in both the private sector and VA, many unique VA characteristics
    must be considered when making performance comparisons because they
    inhibit performance in the revenue cycle. While some of these
    characteristics exist as a matter of national preference and VA's
    mission, other characteristics appear to exist as a matter of VA
    internal policy. Many of these inhibitors can and should be changed if
    national decision makers, veterans, and the public are asking VA to
    perform more like a business in both clinical and administrative areas.
        Patient Mix and Demographics.--Many patients are high-risk and
    elderly. This, coupled with the fact that VA has a myriad of rules
    concerning eligibility for services, makes patient processing more
    time-consuming and error-prone than in the private sector.
        Inappropriate Care.--As a paternalistic provider of care, much of
    VA's healthcare is inappropriate and overlooked by utilization review
    (UR). In a 1996 internal study, nearly 40 percent of inpatient care
    exceeds Interqual's length-of-stay or care setting criteria. According
    to policy terms, third party payers do not reimburse for such care.
        Lack of Incentives.--Neither veterans, clinicians or administrative
    staff have strong incentives to cooperate in the 1st or 3rd party
    billing processes because VA's future did not depend on it. The revenue
    cycle has generally been a low priority operation, despite the efforts
    of many dedicated staff.
        Current Operations.--Since VA has historically not had to bill for
    its services, it lacks the complete infrastructure and procedures for
    doing so. Although improvements are being made, the current system of
    per diem billing does not comply with industry standards and is often a
    basis for out-of-hand denials by insurance companies.
        Payer Mix.--Two major payers, Medicare and Medicaid, account for
    about 54 percent of most private hospital revenues. Thus, hospitals
    have standardized processes that keep costs down and increase
    collection effectiveness because these payers meet their obligations
    and pay on time. In contrast, VA hospitals have no predominant, large
    payers and must bill hundreds of different insurance companies.
        Medicare Reimbursement.--By law VA cannot bill Medicare for care
    provided to veterans. This deprives VA of revenue and also complicates
    the billing process because it must bill ``medigap'' policies without
    the benefit of an explanation of benefits (EOB) from Medicare. VA thus
    often bills for the entire amount, distorting the residual liability of
    medigap payers, who typically only pay a maximum of 20 percent of the
    total bill. Therefore, these payers often refuse to pay, and sometimes
    sue, VA over this issue.
        Investment Costs.--VA is a relative newcomer to the billing and
    collections business and is still making large investments in program
    design, information systems and training. This accounts for about 20
    percent of current operational costs.
                                    findings
        By most industry standards, as well as VA's internal standards, VA
    hospitals fall short of the optimum performance demonstrated by for-
    profit and not-for-profit hospitals. Based on VA's fiscal year 1997
    collection levels, effectiveness and productivity data, program costs,
    and management practices, only a few hospitals succeed. Even these,
    however, have inconsistent performance across all billing and
    collections processes. We measured VA's performance using primary and
    secondary benchmarks.
    Primary Benchmarks
        Primary benchmarks are indicators of how well the revenue cycle
    supports the basic mission of the organization. The primary revenue
    cycle benchmarks used in this study capture the private sector's
    fundamental precepts: they measure outcomes of revenue processes
    critical to organizational success and survival in the healthcare
    industry. For the VA, they measure how well it bills for NSC care and
    recovers its costs. Success depends on the performance of all hospital
    departments, not just the MCCR unit. Other factors critically impact
    success, such as VA-wide policies and procedures concerning veteran's
    rights, appropriateness of care, performance incentives and fee
    schedules.
        Collections.--The $525m in collections is 3 percent of the VA's
    hospital operating budget. This is low considering that 85 percent of
    the workload is for NSC care; also, this is a third of the 30/20/10
    revenue goal. Although we recognize that the VA only bills a percentage
    of its total workload, we found individual university hospitals and
    small, multi-hospital systems in Louisiana, Missouri and Virginia that
    collect more that $525m.
        Days in Accounts Receivable (AR).--The most prevalent revenue
    measure used by the healthcare industry is days in AR. The industry
    average is 60 days, while VA has its money tied up for 244 days. Much
    of this is due to lack of aggressive follow-up on denial or partial
    payments, as well as the fact that many claims are tied up in
    litigation with some major payers.
        AR>90 Days.--The secondary revenue measure used by the healthcare
    industry is the percentage of AR older than 90 days. Industry limits
    this to 28 percent while VA is at 92 percent. Again, some of the VA's
    outstanding AR is currently tied up in litigation.
        Net Collections.--This measures collections as a percentage of
    total hospital accumulated charges, which are different from billed
    amounts because of managed care and other discounts. Industry averages
    62 percent while VA is at 33 percent, partially because it has
    routinely overbilled medigap payers, as explained below.
    Secondary Benchmarks
        Secondary benchmarks are indicators of how well the revenue cycle
    performs at the process level. For the VA, they measure how well the
    hospital performs intake, coding, billing and collections activities.
    The MCCR unit is responsible for performance, but success is modulated
    by the quality of data provided by hospital registration and clinical
    departments. Most of these measures are unique to VA and are not widely
    used in the private sector because of its bottom-line emphasis on days
    in AR.
        Insurance Identified.--Systemwide, VA identifies 16 percent of its
    new patients as having billable insurance, with a range from 8 percent
    to 36 percent. The percent for all patients is lower. This severely
    limits collections potential at the very beginning of the revenue cycle
    and is one of the most serious process breakdowns in the program.
        Bill Lag Time.--It takes the industry an average of 9 days from the
    date of care to send a bill to payers, while this process takes the VA
    83 days.
        Patient File Closeout.--Clinicians and medical staff in the private
    sector close patient treatment files within 5 days while VA takes 41
    days.
        Collections/FTE.--Industry collects $2-3 million per FTE associated
    with the revenue cycle, while VA collects between $150-200 thousand.
    Cost Effectiveness
        The cost of operating the revenue cycle program in VA is presently
    quite high. It costs industry $.023 to collect one dollar of revenue
    while VA's fully loaded cost is $.34. Further analysis shows the
    variation in cost-to-collect:

    Inpatient Bills:
        Means Test....................................................  $.10
        Per Diem......................................................   .41
        Third Party...................................................   .07
    Outpatient Bills:
        Means Test....................................................   .62
        Rx Copay......................................................  1.35
        Third Party...................................................   .48

        VA's cost ratio is high due to process inefficiencies, significant
    errors and rework, diseconomies of scale (some units have as few as 10
    FTE's assigned to MCCR), and ineffective use of available automation.
    Of course, the average amount collected per bill also greatly impacts
    the cost-to-collect ratio.
                            summary and conclusions
        All of the study's quantitative and qualitative findings point to
    the conclusion that there are certain, critical attributes that
    distinguish thriving, high performing organizations from the
    stragglers. We found recurring characteristics in successful revenue
    operations in both the private sector and VA, which are categorized
    into five critical success factors (CSF).
    1. Leadership
        Top management of successful organizations lead the process and are
    a source of vision, innovation and culture change. Revenue directors
    are hired for their new ideas and leadership traits, and are often
    major players in helping health care organizations maintain cash flow
    in today's turbulent and competitive market. In the VA fewer than 40
    percent of senior executives were involved in or appeared committed to
    revenue cycle operations. We believe this should improve because of the
    new incentives provided by the Balanced Budget Act.
    2. Organization Structure
        Successful operations have cross-functional, centrally managed
    organizations (called the ``business model'') that enhance quality
    results by integrating sub processes into seamless operations. These
    organizations have a single reporting structure across the hospital
    that reduces instances of re-work, reduces fragmentation, and increases
    effective communication. A single reporting organization was in place
    at only 25 percent of the VA sites we visited, thereby hindering
    performance (e.g., 20 percent rework in handoffs between departments)
    and clouding accountability.
    3. Accountability
        High-performing operations track and measure the people, activities
    and results of revenue processes through systems of internal control.
    Revenue is everyone's responsibility, as measured via frequent reports
    and benchmarks. In VA, the revenue cycle is viewed as MCCR's
    responsibility only, there is limited compliance with standards outside
    the MCCR unit, and few others in the hospital are held accountable. The
    Diagnostic Measurement System is used effectively by only 50 percent of
    the 24 sites we visited.
    4. Human Resource Management
        Best practice revenue cycle organizations significantly leverage
    human resources through intensive training, averaging 3-4 training
    sessions yearly, and placing a priority on professional certifications
    such as from the American Guild of Patient Accounting Managers (AGPAM).
    Nearly 25 percent have incentive compensation programs for employees.
    Aside from periodic nationally-sponsored training, VA follows few of
    these practices.
    5. Technology
        Technology drives the private sector's exemplary revenue cycle
    programs. It reduces costs, errors and cycle times, and also helps
    increase collections through better communications and data exchange
    with payers. Today, healthcare success depends on the quality of
    information systems. Many private sector organizations have
    consolidated revenue organizations just to take advantage of integrated
    information systems. Only about 60 percent of VA hospitals are taking
    full advantage of available revenue cycle technology. VA has made major
    investments in software, however, these tools must be better utilized.
    Furthermore, the VA must continue the integration of separate systems
    and the development of the Universal Billing System.
                           compelling case for change
    Transformational (Leadership) Changes
        We believe that there is compelling evidence for VA to make major,
    transformational changes to its revenue cycle program. These changes
    are required in leadership, organization structure, compliance,
    attitudes toward revenue collection, and outsourcing of certain
    functions. Responsibility for these transformational changes lies
    equally with the VHA Chief of Staff and Chief Financial Officer,
    network directors and hospital directors.
    Transactional (Process) Changes
        Concurrent with the transformational changes, VA needs to adopt
    best business practices at the transactional, or process, level of
    revenue cycle operations. VA recognizes several of these requirements
    and has launched improvement initiatives, such as universal billing,
    ambulatory data capture, veterans enrollment system and the Medicare
    remittance advice project. Other initiatives need to focus on new
    techniques for insurance identification and aggressive AR management.
    Responsibility for these transactional changes lies with the Revenue
    Cycle Program Office, VHA CIO, VISN directors, and hospital directors.
                          most efficient organization
    Year 2000 Features
        This report describes a most efficient organization (MEO) that will
    affect the above changes by the year 2000. Major features of the MEO
    consist of:
      --Adoption of a business model organization structure at each
            hospital
      --Process ownership across medical, administrative and business units
      --VISN-wide consolidation and quality control to strengthen crucial
            ``front end'' processes, such as preregistration, insurance
            verification and elements of utilization review (UR)
      --Centralization, internal franchising or contracting of many ``back
            end'' processes, such as electronic billing, third party
            follow-up and collections enforcement
      --Leverage of process improvements currently underway
      --Transition from a cost recovery to a revenue generation concept of
            operations
    Costs and Benefits
        We conducted a cost-benefit analysis to determine the benefits and
    risks associated with the Year 2000 MEO. The transformational changes
    will have a positive, wholesale impact on the way VA operates its
    business and serves the health needs of veterans. For example, the
    capture of clinical data for billing purposes also provides valuable
    information on treatment patterns and medical outcomes. Over the next
    three years these changes will help VA achieve the 30/20/10 goal for
    its healthcare system.
        Transactional changes will generate benefits through reductions in
    process costs, cycle times and rework, as well as lead to improved
    levels of accuracy and customer satisfaction. We determined the
    benefits of focusing on key ``leverage points,'' such as (1)
    identifying billable insurance; (2) producing accurate bills; and (3)
    reducing days AR outstanding. From improvements in these three areas
    alone, VA can dramatically improve its collections nationwide by nearly
    $200 million.
        As with all major change, there are some risks of implementation,
    such as those associated with restructuring, technology development,
    and timing. However, given the magnitude of the revenues at stake, as
    well as VA's lukewarm performance in the process, the potential risks
    are vastly outweighed by the rewards. VA can mitigate these risks
    through the proper resolve to succeed.
                                recommendations
        Coopers & Lybrand recommends that VA pursue a three-phased program
    to remedy its lagging revenue cycle process. Known as CPR, the program
    is an effective approach for prioritizing corrective actions,
    leveraging resources and addressing all aspects of the revenue cycle
    process.
        1. Cash.--With VISN sponsorship, immediately launch at each
    hospital a 6-month blitz on existing receivables (for services already
    billed) as well as a concentration on UR and charge capture (for
    services provided but improperly billed or not billed at all). Collect
    funds due VA and prevent further revenue losses. This will help VA
    accomplish its 1998 collection goal.
        2. Process Compliance.--Through VISN leadership and action,
    immediately take corrective actions to bring hospital programs into
    full compliance with VHA revenue cycle guidelines and regulations, as
    well as with established best practices such as those identified in
    this report. Also begin VISN-level consolidation of applicable front-
    end processes. This will help standardize operations, reduce costs, and
    strengthen all processes in the revenue cycle.
        3. Redesign.--VHA should continue the development of several
    consolidated applications, systems and operations. Attention should
    also be focused on removing some of the policy and institutional
    barriers that inhibit optimum performance. Depending on the results of
    phase 2, move toward greater reliance on contractors to perform back-
    end processes. This will help VA realize MEO status by the Year 2000.
        We recommend that VA require the full commitment and participation
    of VISN and hospital executives in CPR. VA can no longer afford to
    abdicate revenue responsibilities to collection units alone. Revenue
    performance is everyone's business--in the same manner that delivering
    quality healthcare to the veteran is everyone's business. VA leaders
    should make the same investments in leadership, innovation, human
    capital and technology for business functions that they have for
    clinical functions.
                            section 1: introduction
                                 a. background
        The Veterans Health Administration, Department of Veterans Affairs
    (VA) is a $17 billion health care system. The VA medical network of
    hospitals and outpatient centers consists of over 50,000 operating
    beds, and treated over 800,000 inpatients and almost 33 million
    outpatients in fiscal year 1997. Since 1986, the VA has been authorized
    to recover from veterans and private health insurers a portion of the
    costs VA incurs to provide health care services to veterans with non-
    service-connected (NSC) disabilities. Through the Medical Care Cost
    Recovery (MCCR) program, VA has launched several improvement
    initiatives entailing process design, tools development, technology and
    training. There have also been several MCCR studies, such as the 1996
    Birch & Davis MCCR Cost-to-Collect Study and the 1997 GAO report.
        Despite this activity, VA has had limited success in collections,
    partially due to the fact that recovered funds were returned to the
    U.S. Treasury (minus the MCCR's operating costs). As part of the
    Balanced Budget Act of 1997, however, the VHA was authorized to retain
    revenues collected after June 30, 1997. The VA believes that this new
    incentive will spur improvements at the VISN and medical center levels.
    This, along with several new initiatives such as Universal Billing,
    Medicare Remittance Advice, Reasonable Charges, and the Enrollment
    System, will enhance the cost recovery process.
        In fiscal year 1996, VHA sought recovery of about $1.6 billion of
    its costs but only recovered 35 per cent of the billed amount, or $563
    million. Not only was this a low dollar amount, it also represented a
    decrease of more than 5 percent under the previous year's collections
    (see Figure 1-1, MCCR Recoveries). This slide in collections continued
    in fiscal year 1997 to $524 million.
    [GRAPHIC] [TIFF OMITTED] TMA19.030

        Some of this declining performance in the revenue cycle process (as
    the billing and collections function is known in the private sector) is
    because of the VA's shift from inpatient to outpatient care settings.
    However, much of the erosion is because many of the VA's 150 medical
    centers have yet to implement revenue cycle programs. While some
    hospitals have exemplary programs, none have consistently good
    performance across all processes.
        The VA plans to continue with its cost recovery or revenue cycle
    program. It characterizes this plan to retain insurance payments and
    other revenue as the first step in a five-year ``30/20/10'' program.
    Under this program, the VA will reduce its per-patient costs by 30
    percent, increase patients served by 20 percent, and finance 10 percent
    of its expenditures using non-appropriated revenues by the year 2002.
    The bulk of these non-appropriated revenues (56 percent in fiscal year
    2002) will come from private health insurance recoveries. It is
    anticipated that should VA receive Medicare subvention, a large portion
    of additional revenues will be from Medicare (43 percent). Additional
    dollars will be from first party co-payment and from sharing agreements
    with DOD and local hospitals.
        In fiscal year 1997, MCCR collections comprised 2.9 percent of the
    total medical center operating budgets. If process improvements are
    implemented it is estimated that MCCR collections will generate at
    least 4 percent of the operating budget by 1999. (Figure 1.2)
    [GRAPHIC] [TIFF OMITTED] TMA19.031

        Over the next five years, VA's healthcare appropriation will remain
    fixed at $17 billion per year. As such, the VA's primary option for
    increasing its revenues must come from an increase in third-party
    reimbursements and anticipated Medicare subvention, a goal estimated at
    $1.73 billion in 2002. In reality, this goal may be very difficult to
    attain. If VA is to be granted Medicare subvention it must make
    considerable improvements to its revenue cycle processes in order to be
    Medicare compliant. Additionally, there are several factors that help
    explain the current revenue decreases and the downward trend. These
    factors include:
        The decline and aging of the veteran population. This means that VA
    must serve a greater proportion of this declining population to
    maintain its current revenue projections. In addition, more VAMC users
    will have secondary, rather than primary, health insurance coverage in
    the future.
        The changing nature of the healthcare industry, which has been
    moving from traditional fee-for-service plans to managed care. Because
    the VA is not an HMO preferred provider, veterans' increased enrollment
    in HMO's and other managed care plans reduces the number of veterans
    covered by fee-for-service insurance from which VHA can expect to
    recover.
        Payer mix. Figure 1-3 illustrates the payer mix obstacle. As the
    figure shows, the private sector (for-profit and not-for-profit) can
    collect revenue from many large sources unavailable to the VA,
    including Medicare (19-41 percent), and Medicaid (13-35 percent). This
    leaves the private sector dependent on commercial sources for a small
    part of its reimbursement, while the VA must try to make up 79 percent
    of its reimbursement from these sources. While the average private
    hospital has a concentration of very large payers (thereby increasing
    collections and reducing costs of operations) the typical VA hospital
    must bill dozens upon dozens of small payers.

                                   Figure 1-3

                                                                     Percent
    FOR-PROFIT:
        Medicare......................................................    41
        Medicaid......................................................    13
        Other.........................................................     4
        Private.......................................................    36
        Self-pay......................................................     6
                            =================================================================
                            ________________________________________________
    VHA:
        First party...................................................    13
        Sharing.......................................................     7
        Other.........................................................     1
        Third party/private...........................................    79
                            =================================================================
                            ________________________________________________
    NOT-FOR-PROFIT:
        Medicare......................................................    19
        Medicaid......................................................    35
        Other.........................................................     8
        Private.......................................................    16
        Self-pay......................................................    22

        Shifts in care from inpatient to outpatient settings, that could
    reduce private insurance recoveries and increase recovery costs because
    of the greater number of small bills. For the VA, this continuing
    decline in the number of inpatient days provided and a corresponding
    increase in the number of outpatient clinic visits (Figure 1-4) means
    higher workloads with smaller recoveries. (Under the VA's current
    manual coding process, it spends almost eight times the amount to
    collect a dollar from outpatient billing than it does on inpatient
    billing (i.e., $0.65 vs. $0.08). VA must also generate approximately 20
    outpatient bills to produce the equivalent recovery of a single
    inpatient bill. Charges are also fixed fee; this means they are not
    itemized and do not reflect ``reasonable'' charges.
    [GRAPHIC] [TIFF OMITTED] TMA19.033

        The trend continued in 1997 with 826,846 inpatient visits compared
    to 32,648,000 outpatient visits.
                        b. study scope and organization
        In August 1997, VA tasked Coopers & Lybrand, L.L.P., a
    subcontractor to Abt Associates, to perform a review and cost analysis
    of the MCCR program. Specifically, VA requested C&L to review and
    analyze all performance and cost aspects of the MCCR process, including
    insurance identification, UR/clinical charge capture, billing, and
    collection for NSC care. C&L was also asked to assess and benchmark the
    VA's performance to other similar activities of healthcare
    organizations and contractors in the private sector.
        The study scope encompasses several fundamental elements of VA's
    revenue cycle process:
      --Process analysis and business process reengineering to enhance VA's
            revenue cycle collections
      --Program reconfiguration to design a ``Most Efficient Organization''
            via process consolidations, organizational realignment, and
            franchising and/or outsourcing critical processes
      --Benchmarking to base the analysis on best practices in both the VA
            and private sector, including not-for-profit hospitals
      --Activity based costing (ABC) to determine the pattern of
            expenditures and to plan the optimum allocation of future
            resources
      --Cost-benefit analysis to validate the effectiveness and payback of
            the recommended new operation
      --Action planning to establish implementation priorities and
            timelines.
        The remainder of this report is organized as follows:
        Section 2, Background, presents a brief overview of the MCCR
    program, including its legislative background, an overview of
    processing, and some of the obstacles in making a comparison between
    the VA and the private sector.
        Section 3, Methodology, describes the techniques used by C&L in
    performing this review and analysis.
        Section 4, VA Study Site Profile, presents the results of our
    research from the 24 site visits.
        Section 5, Best Business Practices, addresses the best practices
    observed in both the VA and the private sector, describes five Critical
    Success Factors observed at the most successful organizations, and
    explains areas where the VA and the private sector processes and
    practices are fundamentally different.
        Section 6, Proposed Reorganization and Cost Savings, describes the
    VA revenue cycle optimal configuration. We also provide a cost benefit
    analysis of this reorganization.
        Section 7, Recommended Next Steps, identifies short-term and
    strategic action plans using an approach called CPR--Cash, Process
    compliance and program Restructuring.
                          section 2: program overview
                             a. the revenue process
        The revenue cycle is the process by which health care providers
    bill first party (the patient) or third-party (insurance companies, or
    sometimes, managed care organizations) payers for the reimbursement of
    medical services. The VA calls its program Medical Care Cost Recovery
    (MCCR). Whether in the VA or in the private sector, the goal is to
    collect the maximum payments in the shortest time for the lowest cost.
    Successful completion of this task requires: Complete and accurate
    patient and payer information; Appropriate diagnosis and coding;
    Complete and accurate billing; Quick turnaround in payment; and Timely
    reconciliation of appeals.
        The revenue cycle process must meet the demands of at least five
    stakeholders:
      --Patients expect to receive accurate and timely bills for the
            medical care they have received.
      --Payers (first party--the patients and third party--the insurance
            companies) need complete and accurate billing information to
            fully reimburse for medical care.
      --Physicians need access to accurate patient information to provide
            proper medical diagnosis and treatment.
      --Cost recovery personnel need accurate patient and insurance
            information, appropriate diagnosis and coding, ``state of the
            art'' technology, and stakeholder support to maximize
            collections in a timely manner.
      --Hospital administrators, e.g., directors, associate directors and
            CFO's, need to maximize collections to support hospital
            operations and have accurate performance measurements to
            monitor these collections.
        The revenue cycle process is essentially the same in VA health care
    facilities as in the private sector. In each type of facility, the cost
    recovery process is generally composed of several sub-processes, as
    illustrated in the figure below:
    [GRAPHIC] [TIFF OMITTED] TMA19.034

        The four major processing segments are Intake, Utilization Review,
    Billing, and Collections. We describe each as well as several
    characteristics of best practices in the following paragraphs.
    1. Intake
        Intake consists of three sub-processes: patient registration,
    insurance identification, and insurance verification.
    [GRAPHIC] [TIFF OMITTED] TMA19.035

        The entire process depends on the quality of the information
    provided during intake. This information includes: Name, Address,
    Social Security Number, Telephone number, Date of birth, Employer, Name
    of insurance carrier, policy number, and expiration date of policy,
    Next of kin, Allergies or other conditions that might affect treatment
    and care, Spouse's and dependents' names, and Name of spouse's
    insurance carrier, policy number, and expiration date of policy.
        Accurate intake processing is critical, because it influences the
    success of every other phase of processing that follows. The best
    practices of intake processing contain some of these attributes:
      --Accurate demographic and insurance information captured during pre-
            registration and registration. The private sector holds the
            registration clerks accountable for all data captured.
      --Increased efficiency in registering patients at Medical Centers.
            Pre-registration captures up to 95 percent of necessary
            information before patients enter the Medical Centers.
      --Identification and verification of insurance will hold the payer
            accountable for the medical bill while reducing denials and
            increasing 3rd party reimbursements. The private sector
            identifies and verifies 95 percent to 100 percent of insurance.
      --Bills can be adjusted prior to distribution because insurance
            contracts have been verified.
      --The billing staff will face less re-work because they will not need
            to go back to the patient to collect further insurance and
            demographic information.
    2. Utilization review
        Utilization review (UR) confirms that the level and type of care
    that the patient receives is ``appropriate,'' and that the insurance
    provider will reimburse for that care.
    [GRAPHIC] [TIFF OMITTED] TMA19.036

        Utilization Review (UR) performs three processes in the cost
    recovery process: pre-certification and certification, case management,
    and appeals. It is a critical communication link between the business
    administration and the medical care functions of the hospital.
        UR performs pre-certification/certification that is contractually
    required by insurance companies for inpatient admissions and for many
    outpatient procedures. The purpose of pre-certification/certification
    is to determine the appropriate level of care for each patient. UR
    communicates with the insurance companies to certify that the proper
    level of care is being given, the length of stay is correct, and the
    diagnosis is accurate so the hospital will be reimbursed for the
    medical care.
        UR is part of the ``front line'' staff that has direct contact with
    patients. They are instrumental in closing gaps in insurance
    identification, eligibility/benefits information and insurance appeals.
        The best practices of Utilization Review contain these attributes:
      --Inappropriate medical care denials are reduced. The average private
            sector staff, 14 percent of FTE, is a UR nurse while the
            average VAMC staff contains about 7 percent of its FTE are
            allocated to Utilization Review.
      --Insurance company's policy concerning pre-certification/
            certification are fulfilled.
      --Increase number of denials overturned by aggressive appeals.
      --UR participates and conducts meetings with medical staff and cost
            recovery staffs.
    3. Billing
        Billing involves coding the medical care the patient has received
    and generating bills for reimbursement.
    [GRAPHIC] [TIFF OMITTED] TMA19.037

        Billing generates the formal, detailed requests for reimbursement.
    Each bill accurately documents the services provided and the payment
    amount requested in order to maximize both first and third party
    recoveries.
        In addition, since the bill is the formal notification to payers of
    their financial responsibility, it must be accurate and in the correct
    format to avoid denials or challenges.
        Bills document the appropriate diagnostic codes (ICD-9 and CPT-4)
    for the medical care given and the charges generated, which the payers
    review before making payment. In both the VA and private sector,
    administrative error in coding is often a major reason for bill
    nonpayment.
        Billing best practices contain several attributes:
      --Bills are formatted to insurance companies' specifications.
      --Scanning software is used to increase accuracy and speed of coding.
      --Large percentages of bills are sent electronically.
      --Specialized payer teams are established--each with a major payer to
            build working relationships with 3rd party payers.
    4. Collections
        Collection is the actual receiving and accounting for incoming
    revenue and the pursuit of outstanding debts to increase hospital cash
    flow.
    [GRAPHIC] [TIFF OMITTED] TMA19.038

        The collection process involves the following steps:
        Establishment of receivables is the process by which the
    information from a bill is sent to Accounts Receivable and recognized
    as an outstanding debt to be collected, this process is normally done
    in billing as soon as a bill is created. Payment processing is the
    actual collection of money, matching dollars against the outstanding
    balance, notifying billing and UR of discrepancies in amounts billed
    and amounts collected, and closing out completed accounts.
        Collection correspondence and inquiries is the process of
    continuous follow-up on delinquent bills until payment is received.
    Collections can provide additional information or documentation if
    necessary to make sure that a claim is paid. Referral of indebtedness
    is the referral of delinquent, collectable claims to an outside source
    for recovery.
        Collection best practices include these attributes:
      --All substantial claims are automatically pursued after a set time
            period and denials are automatically appealed
      --Collections are aggressive and fast
      --Payments are received electronically and transferred into
            appropriate accounts
      --Accounts past due are outsourced to a collection agency.
                  b. process characteristics unique to the va
        Although the steps of revenue cycle processing are parallel in the
    private sector and the VA, many characteristics unique to the VA make
    private sector comparison difficult. Some of these features include:
        1. Veteran population demographics.--The patient population of the
    VA is generally ``high risk,'' consisting of veterans who are elderly
    and/or indigent, or have a higher risk of mental health. In addition,
    this aging population indicates a high number of patients who are
    eligible for Medicare. Because this specific population composes the
    bulk of veteran patients, the VA's population generally has a lower
    percentage of patients with private, non-governmental, health
    insurance.
        2. Patient mix.--Because the VA provides medical service for
    military veterans based on a service rating, NSC/SC determinations, and
    veteran eligibility status, all patients who participate in the VA
    system are different. Medical charges, patient services, and care
    availability are unique to any single veteran. As a result, patient
    processing becomes a much more involved task than it is in the private
    sector. From a cost recovery standpoint, billing becomes difficult, as
    not all encounters are billable due to service-connected medical care
    and income level.
        3. Insurance identification.--The VA is currently working against
    the average veteran's perception that he is entitled to ``free'' health
    care and, therefore, does not need to provide private insurance
    information. Although Congress has mandated disclosure of this
    information, large proportions of veterans are unaware, unable, or
    unwilling to provide insurance information. Currently, the burden of
    obtaining insurance information is on MCCR in the VA while, in the
    private sector, the burden is on the patients to produce insurance or
    be responsible for the billing charges themselves. The VA now has the
    difficult task of changing veterans' perceptions and their awareness of
    the importance of insurance identification to the medical center for
    cost recovery purposes, as well as their duty as VA patients to provide
    this information.
        4. Veterans' misconceptions.--Because billing the veteran's private
    insurance policy is relatively new to the VA, many veterans are still
    unsure about the implications of this action for both the hospital and
    their individual policy terms. Veterans are still being told that, if
    they give the VA their policy information, it is possible that their
    rates will increase, services are cut, or their level of care will be
    based on insurance coverage. Poor marketing of the positive benefits of
    insurance collections for both the VAMC and the veteran add to the
    confusion surrounding private insurance billings.
        5. Inadequate cooperation from physicians (including inappropriate
    care and slow Patient Treatment File (PTF) closeouts).--Because the VA
    is new to the process of billing third-party insurance, many physicians
    and other clinical staff are still unaware of the importance of their
    cooperation in the cost recovery process. As a result, physicians are
    often slow or non-compliant in completing patient treatment files in a
    timely manner, or they recommend inappropriate care-levels for veteran
    patients (e.g. inpatient admissions for outpatient procedures,
    excessive length of stay). Both of these customs are detrimental to
    full cost recovery for service by MCCR. In contrast, private sector
    clinical staff is fully aware of their duty to provide the clinical
    data and proper services needed to recover billable episodes of care,
    and work with cost recovery services to ensure maximum reimbursement.
        6. Lack of standardized charges.--Unlike most providers, VA does
    not bill health plans for individual tests and procedures that it
    provides to its policyholders. Rather, the VA prepares bills based on
    its average costs for providing a day of hospital care and an
    outpatient visit. Thus, in the process of assigning charges to a given
    service, the VA currently lacks any standardized system from which to
    work, which often results in disputes with insurance companies over the
    accuracy of billing charges. Because the VA's method of assigning
    charges to services is outside the norm for insurance providers, this
    lack of standardization leads to a difficult process for cost recovery
    unique to MCCR.
        7. Payer mix.--Unlike the private sector, the VA cannot bill
    Medicare. The private sector's biggest carriers are Medicare and/or
    Medicaid along with HMO/PPO contractors. All of these carriers will
    reimburse the private sector if billed. In contrast, the VA cannot
    recover payment from HMO's and PPO's at this time because the VA is not
    considered a preferred provider. (The veteran population is showing a
    trend of moving toward these kinds of policies.) Because of the VA's
    small billable payer mix, cost recovery becomes much more difficult.
        8. Inability to bill Medicare.--Legislation prevents the VA from
    collecting from Medicare, which is the largest healthcare payer in the
    country and constitutes 41 percent of the private sector's payer mix. A
    high percentage of the VA's patients are Medicare-eligible veterans,
    which renders any private insurance as a secondary policy. It is
    difficult to collect from Medicare supplemental policies because
    current VA billing practices (i.e., a flat fee) conflict with industry
    practice of paying ``reasonable'' rates. For example, if the VAMC flat
    fee is lower than the standard industry charge for a particular
    service, the Medicare supplemental provider will pay it. If the VAMC
    flat fee is higher, the provider will not pay at all. Currently, there
    are thousands of bills in litigation with supplemental and Medi-gap
    insurance companies that will not pay the VA .
                             section 3: methodology
                                a. introduction
        As part of the Veterans Health Administration's (VHA) ongoing
    process improvement initiative, Coopers & Lybrand was contracted to
    review, study, and make recommendations of how the MCCR process could
    enhance revenue generation. In preparation for this study, C&L
    interviewed MCCR Central Office staff to develop a survey of costs,
    process and activity maps, and a list of questions to ask VAMC's
    executives and MCCR staff. C&L visited two preliminary sites
    (Martinsburg and Richmond) to strengthen and adjust our approach and
    methodology before visiting the 24 VAMC's selected for site reviews.
    The Inspector General selected these 24 facilities prior to the award
    of this contract.
    [GRAPHIC] [TIFF OMITTED] TMA19.039

        To conduct a review and cost analysis of all aspects of the MCCR
    process, C&L:
      --Analyzed fiscal year 1997 costs and FTE's by process (broken down
            into 13 sub-processes)
      --Assigned national overhead costs to each of the 24 VAMC's studied
            based on numbers of bills generated at each site
      --Calculated cost and FTE with and without overhead costs and
            distributed cost by debt type.
        To perform the MCCR process analysis, C&L:
      --Reviewed performance data compiled through VA diagnostic measures
      --Facilitated MCCR focus group sessions at the VAMC's and
            administered a qualitative attribute survey to measure MCCR
            process performance in the areas of rework, accuracy, and
            internal customer satisfaction.
      --Developed an internal C&L team survey to gauge the success of the
            five critical success factors at each VAMC.
        To conduct a private sector benchmark/best practice survey, C&L:
      --Compared the MCCR process to similar activities in private sector
            healthcare organizations
      --Conducted a private sector benchmarking survey of more than 25
            hospitals nationwide and compared performance data between the
            24 VAMC's and the private sector hospitals
      --Reviewed national healthcare financial publications and databases
            for literature and data on ``best practices'' in this industry
      --Interviewed 14 industry leaders in hospitals, patient accounting
            offices, and collection agencies, drew upon C&L's internal
            resources with expertise and experience in the health care
            industry
        To design a most efficient organization, C&L:
      --Analyzed the VA's MCCR organizational structure and created a
            proposed new organizational structure that would streamline the
            overall process
      --Developed scenarios for consolidation and new core businesses
      --Interviewed contractors, vendors, and insurance carriers
      --Factored in other VA and MCCR initiatives
      --Conducted a cost benefit analysis to ascertain which processes
            could be performed more effectively by outside contractors
      --Incorporated findings from the best practice survey
        These various methodologies are described in more detail below.
                                b. cost analysis
        C&L analysts used activity-based costing (ABC) to assign total
    resources (labor, non-labor, and national overhead) for the total MCCR
    process. ABC breaks a process down into its components and sub-
    processes, and measures the labor and non-labor costs associated with
    each activity.
        To collect this data, Coopers & Lybrand sent teams consisting of
    two to four people to 24 VAMC's across the country. The teams
    interviewed VA employees representing the 13 sub-processes in the
    current MCCR process to validate the process activities identified by
    the VA, and to collect quantitative and qualitative data for each
    activity.
        Teams gathered data from each sites' financial reports, diagnostic
    measurements, and statistical packages. The statistical packages
    included information given to us by Central Office on each VAMC site,
    which included workload, number of operating beds, budgets, etc.
    1. Determining resource costs
        Through interviews with VAMC personnel, C&L staff reviewed fiscal
    year 1997 actual costs expensed against the MCCR appropriation, Fund
    5014A. The 830 financial reports, provided by the VAMC's, contain all
    types of costs including: Personnel Compensation; Personnel Benefits;
    Equipment and Supplies; Travel; and ADP.
        The purpose of our review of fiscal year 1997 costs was to
    understand the types of costs that were expensed against the MCCR
    appropriation, Fund 5014A. Based on our discussions with the MCCR
    Program Office, we had reason to believe that the full cost of
    performing MCCR related activities was not charged to Fund 5014A. Our
    goal at each of the 24 VAMC's was to first establish the costs expensed
    against Fund 5014A. Second, identify the MCCR related costs that were
    not supported by, nor expensed against, Fund 5014A. The sum of the Fund
    5014A costs and these additional MCCR costs, which were funded by other
    hospital appropriations, constitute the full local cost of performing
    MCCR.
        After establishing the full local cost of MCCR, the C&L staff and
    VAMC MCCR employees assigned labor and non-labor resources to the 13
    processes. Labor resources were assigned using full time equivalent
    (FTE) employees that support each process. Similarly, non-labor
    resources were assigned based on the FTE employees that support each
    process.
    2. Assigning national overhead costs
        In addition to the MCCR costs incurred at the local VAMC, there are
    costs associated with functions and programs managed at the National
    Level. These costs are referred to as National Overhead. Examples of
    National Overhead functions are the MCCR Program Office, General
    Counsel, and Financial Management Office. The VA requested that C&L
    identify a methodology to assign the National Overhead costs to the
    processes performed at the VAMC. Without performing a detailed cost
    analysis of the National Overhead activities, C&L and the VA MCCR
    Program Office determined the most appropriate method of assigning
    these costs. The National Overhead costs were assigned to each VAMC
    based on the number of bills generated. That is, the National Overhead
    costs were assigned to a VAMC in proportion to the number of bills that
    the same VAMC generated as a percentage of all bills generated
    nationally.
    3. Calculating cost to collect
        The term Cost to Collect is a measure of operational effectiveness
    for the entire MCCR process. This measure refers to the cost to collect
    $1 or the full cost of MCCR divided by the total collections achieved
    represented by the following formula: Cost to Collect = MCCR full Cost/
    Collections
        In order to determine the Cost to Collect for each of the six debt
    types, we first calculated the unit cost of producing each bill. The
    unit cost of each bill was calculated by assigning the MCCR process
    costs to the six types of debt. Through interviews with VAMC personnel,
    we were able to identify the work steps or activities that comprise
    MCCR which support the generation of each type of bill. Therefore, the
    costs associated with these work steps would be driven to the
    appropriate debt type(s). The MCCR activity costs were driven to the
    debt types using the quantity of bills produced. For example, if a MCCR
    activity supports two separate types of debt and the quantity of bills
    produced for Debt A and Debt B are 200 and 100 respectively; two-thirds
    of the MCCR activity cost will be assigned to the production of Debt A
    and one-third will be assigned to Debt B. This method supports the
    notion that the consumption of resources has a linear relationship with
    the quantity of bills produced.
        The cost analysis methodology was applied consistently to each of
    the 24 VAMC's to ensure data integrity and likeness in the study. The
    results of the data collection process and application of activity
    based costing (ABC) methodology to determine full local costs of each
    process and debt type are presented in Section 4.
                              c. process analysis
        Process analysis was a critical tool to measure the inputs,
    activities, and outputs of each of the MCCR core processes. Within this
    framework, data were collected and analyzed to use in assessing the
    current baselines in the VA, benchmarking performance against best
    practices and identifying areas of short-term and long-term improvement
    opportunities. In accordance with our Breakpoint BPR methodology, our
    process analysis focused on the assessment of the baseline in order to
    better determine the points at which improvements would help the VA
    capture revenues more effectively over time and consider redesigning
    elements of the process to fulfill that mission.
        In early 1997, the VA created a basic revenue cycle process map of
    its MCCR operation. C&L worked jointly with the VA to validate the sub-
    processes and activities involved in each process segment, evaluating
    the data according to the four MCCR segments and their associated
    processes. Using already existing data compiled through VA diagnostic
    measures and supplementing the analysis with our own focus groups and
    surveys, we were able evaluate performance in a number of key areas,
    both quantitatively and qualitatively, and describe the current
    environment's readiness for change.
    1. Quantitative Analysis of Process Performance
        The following is a group of diagnostics that was chosen in
    conjunction with the VA to assess already existing performance
    measures.
        VA Diagnostic Measures Analyzed: Percent of completed
    registrations; Insurance and new registrations; Insurance policies--not
    verified; Veterans with unverified eligibility; Bill/payment lag time;
    Outpatient workload; and SC Veterans with NSC episode of care.
        Given these diagnostics, we were able to determine basic averages
    and the range of performance for VAMC's today. These diagnostic
    calculations, though manifesting great variation in the data, enabled
    the C&L team to identify sites associated with best practices as models
    for continuous improvement.
    2. Qualitative Analysis to Assess Organizational Culture and Readiness
            for Process Improvement
        To ascertain the overall quality of performance, the C&L teams held
    focus group sessions at each site, during which they asked VAMC
    employees representing each process to rate themselves and rate each
    other, and to suggest ways the basic process or their performance could
    be improved. Employees were asked to rate the following:
      --Rework, namely the percent of re-work and redundancy for each
            activity, represented in 5 percent increments.
      --Performance accuracy, particularly associated with the intake
            process, rated on a scale of 1 (low) to 5 (high).
      --Internal customer satisfaction associated with the intake process
            and bill generation rated on the same 1 to 5 scale.
        As part of this effort, we ran frequency analyses to determine
    whether a low, average, or high rating in any one activity affected
    performance (cost and cycle time) in a subsequent activity. The
    regression analyses showed a high degree of variability in the data,
    suggesting that business operations and practices related to the
    revenue cycle were not uniform across the VA sample. Some clear
    relationships did exist, however, particularly in how inefficiencies in
    the front end of the process increased cost, rework, and cycle time in
    later phases.
        The team also developed a survey which we used to gauge the degree
    to which five critical success factors (i.e., strong leadership, clear
    accountability, centralized organizational structure, use of
    information system technology, and effective human resource
    management), were in place at each of the 24 VAMC sites. The C&L site
    team leader filled in the survey for each site. The scores were
    validated by other baseline measurements related to overall cost and
    cycle time. Sites that scored high on the critical success factors
    scored higher on overall performance measures and were often the sites
    where we observed revenue cycle ``best practices'' of the kind we
    observed in private sector hospitals, which validated our observation-
    based findings.
                            d. private sector survey
    1. Best practices
        To collect data on best practices in the private sector, the C&L
    team surveyed 25 hospitals nationwide. We also studied more than 100
    articles relating to best practices in all aspects of cost recovery in
    the private sector, AR, patient access, best practices, leadership,
    coding, analyzed national healthcare financial publications and
    databases and conducted interviews with individuals representing
    ``world class'' hospitals, collection agencies, and patient accounting
    operations.
    2. Cost and performance
        In the private sector, the traditional process of the revenue cycle
    represents an expense ranging from 1.5 percent to 9 percent of the
    total amount collected, depending on size and scope of the operation,
    information systems, overhead allocation, and types of activities
    allocated to each segment of the process. Typical expenses associated
    with the revenue cycle include:
        Labor.--Direct labor for each activity, managerial labor, temporary
    or contractual labor and the benefits associated with the direct labor.
        Direct expenses.--Supplies, postage, contract services, equipment,
    outsourced activities collection agency fees, and training.
        Overhead.--Utilities, information systems, senior management
    expenses.
        Most of the hospitals C&L surveyed for this study do not use a
    cost-to-collect metric to measure performance. The percentage is
    generally so low that they rely on other key performance measures to
    evaluate their processes, such as accounts/receivable days outstanding
    and total collections. We used the HARA (Hospital Accounts Receivable
    Analysis) cost-to-collect ratio as our benchmark. HARA collects
    hospital business office expense data (including admitting/
    registration) each quarter. This figure is divided by the total dollars
    collected during the same period (not including non-patient revenue) to
    determine the ratio.
        For each private sector site, we collected cost information by the
    four segments identified in the VA MCCR process: intake, utilization
    review (UR), collections, and billing. We allocated expenses by labor,
    direct costs (supplies and materials), contracts, and overhead. For
    each hospital, we calculated total amount billed, total amount
    collected payer mix, inpatient/outpatient mix and other variables.
        In addition to identifying costs, we compared each of the 13 sub-
    processes to determine level and type of resources and whether the sub-
    process was part of a centralized or decentralized organization. Our
    findings related to comparisons of the VA revenue cycle process with
    that of the private sector is described in detail in Section 4: VA
    Findings.
                e. organizational redesign/optimal configuration
    1. Primary considerations
        Our primary considerations in designing an optimal VA revenue cycle
    process and revenue cycle organization were:
      --Our determination that the VA's basic revenue cycle process was
            valid. It needed to be improved in a number of ways on a
            ``transactional'' level, but it did not need to be scrapped
            completely.
      --The VA can never operate exactly the way private sector healthcare
            organizations do. Fundamental differences in overall culture,
            patient population, and third-party payers needed to be
            factored in to the new revenue cycle process.
      --Any recommendations we made for improving either the process or the
            basic organization had to relate practical process improvements
            to the VA environment.
      --We limited our thinking about consolidating certain functions to
            not just gains in efficiency and costs but to geographical/
            logistical concerns as well. The VAMC's needed to be within a
            reasonable traveling distance of any consolidation site.
      --In general, we tried to focus on the need of the patient for
            quality healthcare and customer service. Part of the intake
            segment, for example, involves contact between hospital staff
            and the patient, what we call ``front office'' activities that
            can make a patient feel less anxious, more informed and better
            cared for at the hospital level. In other cases, the best
            healthcare and customer service for what we call ``back
            office'' activities (pre-registration, bill generation,
            collections, etc.) may require that these activities be removed
            from the hospital level and consolidated elsewhere. Not all
            ``back office'' functions are ready to be consolidated, but
            many are, and the VA will benefit from having these functions
            standardized and centralized.
      --We also tried to make the optimal configuration flexible, allowing
            the VAMC's and the VISN's to determine their best operating
            procedures for each sub-process and activity.
      --And finally, in keeping with the VA's own ``30/20/10'' goals, we
            focused on creating the most efficient organization that could
            be put in place within 24 months and allow VA, in the short
            term, to collect as much cash as possible in the short term
            while maximizing recoveries for the long term.
    2. Cost benefit analysis
        The scope of C&L's cost benefit analysis (CBA) is based on our
    comparison of the VA's current ``as is'' cost recovery process to the
    optimal ``to be'' configuration, which we have termed the Optimum VA
    Revenue Cycle. The scope of the analysis includes:
      --Capturing process cost and performance data during VAMC site
            visits;
      --Benchmarking optimal ``to be'' revenue cycle to private sector and
            identify practical process improvements;
      --Assessing the feasibility of several options that are standard
            practices in the health care industry;
      --Obtaining cost/performance estimates from vendors;
      --Assessing vendor cost projections and determine ``to be''
            reasonable indicators;
      --Determining future cost using constant dollars (excluding start-up
            costs);
      --Using existing data to extrapolate potential cost savings and
            revenue enhancements; and
      --Determining confidence level of the analysis and assessing risks.
        This definition of the cost benefit analysis meets the technical
    requirements of the statement of work and includes the key assumptions,
    which relate to initiatives the VA already has under way. These
    include:
      --Completing the ``clean-up'' of all insurance and demographic data
            in the veterans' files.
      --Implementing all technology systems and related interfaces
            including: National Patient Care Database (administrative and
            clinical attributes), Centralized Patient Accounting System,
            Medicare Remittance Advice (MRA), Electronic Data Interchange
            (EDI), Lockbox and Electronic Funds Transfer (EFT), Point-of-
            Service (POS) Collection, Integrated Enrollment, Decision
            Support System (DSS) Integrated Claims Tracking System, and
            Electronic Coordination of Benefits.
      --Completing all Universal Billing initiatives.
      --Implementing on-line insurance verification software from major
            insurance payers at all VAMC's and VISN's to verify and update
            patient insurance information, a critical assumption as these
            insurance payers comprise roughly 50 percent of all regional
            third-party payments.
      --Implementing electronic medical records systems that link SC/NSC
            ratings with diagnosis and transmit data electronically to
            users across the VA.
    3. Outsourcing analysis
        C&L's outsourcing analysis was framed by our belief that none of
    the sub-processes of the ``to be'' revenue cycle were inherently
    governmental. We have identified some sub-processes (particularly those
    we term ``back office'') that will benefit from being consolidated and/
    or outsourced. In this context, ``outsourcing'' means that the sub-
    process is ``done'' by someone other than VAMC hospital administrative
    staff. For example, if pre-registration is done very well in Baltimore,
    then the VA might consider ``franchising'' all pre-registration
    activities to the Baltimore site or to some other Federal Center for
    Excellence.
        Our preliminary recommendations for outsourcing are included in
    Section 6. However, C&L suggests that the VA revisit its outsourcing
    options at the end of the 24-month ``to be'' implementation. By this
    time, the VA will have incorporated many improvements and changes to
    the basic cycle and can weigh outsourcing options against a background
    of its own revenue cycle process working as well as it can.
        The C&L team spoke with representatives of six contractors that
    provide one or more revenue cycle services. Several contractors
    offering one or more service supplied their pricing schedule for
    discrete sub-processes, pricing for ``turn-key'' services, i.e., from
    intake through collections. The site teams also spoke to contractors
    used by private sector hospitals located in the same areas in which the
    VAMC site visits were made to collect data on the capabilities,
    methodologies, and fees of various vendors.
        We also analyzed data and literature provided by healthcare and
    collections related agencies such as the HARA 1997 (a benchmark report
    on hospital accounts receivables), the American Guild of PAT Accounting
    Managers, the American Hospital Collection Agencies, and the Healthcare
    Financial Managers Association (HFMA).
                              section 4: findings
        C&L visited 24 sites to review and analyze the ``As-Is'' MCCR
    process. C&L found the MCCR process, as it currently exists, to be an
    overall sound approach to cost recovery. However, MCCR operations
    currently suffer from a lack of process standardization across medical
    centers and throughout the entire VA. Additionally, many VAMC's are not
    utilizing existing procedure guidelines or available technology.
    Further, the review identified that there is a critical need to
    establish internal controls and performance measurements in all process
    areas.
        Most important however, is the need for the VA to transform its
    current focus on revenue and collections. It is critical that VA shift
    its paradigm from cost recovery to revenue generation--that is, their
    goal should not be limited to merely breaking even.
        Through streamlining processes, structural reorganization and
    improved use of technology, we believe the VA can transform its revenue
    cycle to achieve the goal of 30 percent cost reduction and 10 percent
    revenue generation by fiscal year 2002.
                            a. va study site profile
    1. General data
        The following is a brief description of cost and performance data
    that C&L identified at each of the 24 VAMC sites. C&L used this data to
    measure VA internal performance and to compare the VA with the private
    sector. Table 4.1 lists this information by site according to
    collections per FTE. To maintain anonymity, the names of the sites have
    been omitted and are listed instead A-X.
        a. Collections per FTE.--C&L found that the average collections per
    FTE for the 24 sites were lower than the national average. Calculations
    were made for all FTE that were actually involved in the MCCR process,
    including additional FTE that were not part of MCCR's FTE budget
    allocations. Because it demonstrates staff productivity and resource
    allocation needs, C&L determined that collections per FTE is an
    important internal performance measure.
        b. Cost-to-Collect.--Cost-to-Collect is a strong measurement of how
    well the MCCR processes are working. This cost data measures whether
    performance tools currently in place are being utilized, whether the
    organization's focus is revenue generation, and whether staff is
    utilized in the areas needed. Finally, this measure gives an outlook as
    to whether the organization is meeting its internal goals.
        c. Collections per VAMC Budget.--In order to meet 30/20/10 goals,
    collections must be one of the organization's primary focuses in order
    to continue optimal patient care, decrease recovery costs, and increase
    revenue. The data are useful internal measures because an operating
    budget reflects the return on care provided by the VAMC. However, both
    the payer-mix and patient-mix that characterize the particular VAMC
    region affect this measure.

                                  TABLE 4-1. FISCAL YEAR 1997 COST AND PERFORMANCE DATA
    ----------------------------------------------------------------------------------------------------------------
                                                                                                     Collections per
                      VAMC                     Operating  FTE  Collections  Collections    Cost to    VAMC budget--
                                               bed size                       per FTE    collect $1      percent
    ----------------------------------------------------------------------------------------------------------------
    N.......................................         470   41   $3,208,589      $78,488       $0.67           1.57
    V.......................................          64   12      951,659       79,173        0.61           3.62
    L.......................................          59   18    1,695,459       95,197        0.53           3.64
    G.......................................          89   16    1,724,923      110,572        0.46           4.71
    T.......................................         224   19    2,510,152      134,161        0.43           3.34
    W.......................................         405   38    4,986,263      131,252        0.43           2.58
    S.......................................         513   45    6,080,114      135,626        0.41           2.58
    B.......................................         342   40    5,753,960      143,993        0.39           2.54
    D.......................................         475   60    7,446,807      124,113        0.37           3.17
    P.......................................         144   22    3,108,006      142,831        0.37           4.18
    C.......................................         187   22    2,913,566      131,065        0.35           2.77
    J.......................................         172   16    2,437,512      155,058        0.32           3.33
    Q.......................................          86   10    1,785,980      180,402        0.32           2.87
    H.......................................         659   33    5,826,145      174,540        0.31           2.66
    X.......................................         106   11    1,790,920      165,214        0.30           3.13
    R.......................................         243   26    4,368,095      169,306        0.29           3.60
    M.......................................          93   12    2,165,059      184,732        0.27           4.59
    A.......................................         757   32    6,911,594      214,313        0.26           3.02
    E.......................................         261   15    3,104,304      203,294        0.26           2.33
    F.......................................         240   23    4,647,077      201,959        0.26           3.22
    I.......................................         268   22    4,350,111      201,955        0.25           3.67
    U.......................................         195   20    3,381,391      172,608        0.24           3.12
    K.......................................         128   10    2,177,233      225,854        0.22           3.53
    O.......................................         264   19    4,560,051      237,379        0.22           2.70
                                             -----------------------------------------------------------------------
          Average...........................         269   24    3,661,874      151,552        0.34           2.93
    ----------------------------------------------------------------------------------------------------------------

    2. Summary of major process findings
        During the 24 site visits, C&L identified several common issues in
    the operation of MCCR processes. The following are major findings that
    were common at 30 percent or more of the sites. In many instances,
    these findings are policy issues that need to be addressed at the
    National level.
        (a) Intake.--Intake is an important segment within the MCCR
    process. If intake processes are not performed to optimum levels, then
    all MCCR processes are effected. As such, investment in training and
    process improvements within the intake process is essential.
        (1) Pre-Registration was utilized at only six sites. Pre-
    registration is a sound activity if utilized which can significantly
    help identify and retrieve patient insurance information.
        (2) Insurance identification lacks aggressiveness. If the veteran
    answers no to the insurance question, no follow-up questions are asked.
        (3) Intake personnel are not properly trained in interview
    techniques and customer service issues. Additionally, intake staff at
    many VAMC's are not knowledgeable about other MCCR processes or overall
    goals.
        (4) Organizational structure issues create communication gaps
    between intake and other MCCR processes.
        (5) Insurance question is often not asked due to excessive points
    of entry for the patients.
        (6) High turnover rate in intake staff contributes to decreases in
    process efficiency.
        (7) Software and technology are not being utilized to optimum
    levels. For instance, clean insurance databases would increase data
    accuracy and process efficiency.
        (8) Insurance verification is currently a labor-intensive process.
    Manual insurance verification often increases the time and cost to
    produce a bill.
        (b) Utilization Review (UR).--UR is an important function in the
    cost recovery process. Because insurance companies require pre-
    certifications and continued stay reviews, information gathered by UR
    staff is critical to both bill creation and collections. Additionally,
    UR must play an integral role in ensuring that inappropriate care is
    not provided.
        (1) UR spends little or no time in the appeals process at most
    VAMC's.
        (2) Claims Tracking software is not being utilized to optimum
    levels. This leads to lost communications between UR and billing/
    collection staff.
        (3) Many insurance companies are now requiring pre-certification
    for outpatient psychiatric visits and same day surgeries. There
    currently are no mechanisms in place to identify, in advance, these
    types of visits for proper certification.
        (c) Billing and Coding.--Billing and Coding play a vital role in
    collections. Both processes could be automated if accurate insurance,
    coding, and billing data is collected.
        (1) Service connected and non-service connected determination is
    often misapplied and difficult to comprehend. The initial veteran
    rating, used to determine SC/NSC, is not specific and does not match up
    to medical diagnostic codes. This problem leads to the medical staff
    marking service connection for all encounters instead of determining
    SC/NSC for each diagnosis.
        (2) Encounter forms are not being utilized properly. Many times the
    diagnosis uses wrong codes or general codes (referred to as V codes)
    which 3rd party payers will not accept. This problem causes a major
    rework loop for the billers.
        (3) Special consents are not obtained at registration for drug and
    alcohol, psychiatric, or HIV related diseases. The billers cannot bill
    unless there is a patient signature for these treatments.
        (4) Insurance data files need to be updated. Autobiller will not
    work well unless insurance data files are accurate.
        (5) Autobiller is not being used at some sites.
        (d) Collections.--Collections, in many cases, were not a primary
    focus.
        (1) There is a shortage of collection personnel. In many cases,
    collection personnel are used for additional tasks beyond collections.
        (2) A/R software package is not regionally linked or compatible
    with billing system.
        (3) Claims Tracking software was not used effectively.
        (4) First party bills for repeat patients are not incorporated into
    previously established payment plans.
        (5) Many receivables are currently tied up in litigation. Our
    survey of the 24 sites identified that an average of $4 million per
    site has been referred to General Counsel.
                b. va performance vs. private sector benchmarks
    1. Primary Benchmarks
        (a) Collections to Operating Budget.--The private sector (both for-
    profit and not-for-profit) was chosen as a means of comparison because
    many billing and collections functions are generic. Also, the private
    sector is dependent on revenue generation as a means for hospital
    operation. (Figure 4-1). Consequently, the private sector has created
    high performing organizations with a focus on revenue generation.

                       Figure 4-2.--Collections to Budget

                                                                     Percent
    Private sector....................................................   100
    VA................................................................     3

        As shown in figure 4-2, collections as a percentage of the hospital
    operating budget demonstrates a major difference between the VA and
    private sector. The private sector recovers nearly all of its revenue
    through collections, while the VA is funded mainly through
    appropriations. The private sector is much more motivated to collect
    payments and has been generating revenue longer, which means it can
    provide meaningful performance benchmarks and best practice ideas.
        According to the 30/20/10 initiative, by the year 2002, 10 percent
    of the VA operating budget will need to come from collections and other
    forms of non-appropriated revenue. The VA can close the gap between the
    3 percent it currently collects and the 10 percent it needs by adopting
    some of the best practices used both in the private sector and high
    performing VAMC's.
        C&L developed four primary and five secondary benchmarks, which are
    used to provide comparisons between the private sector and the 24 VA
    sites visited. These benchmarks are key indicators of how well an
    organization is achieving goals and standards.
        (b) Accounts Receivable

                        Figure 4-3.--Accounts Receivable

                                                                        Days
    Private sector....................................................    60
    VHA...............................................................   239

        Accounts receivable is money owed to an organization that has not
    been collected. Having money in AR means that you do not have the cash
    on hand to use for your operations. Using the VA's ``Date Receivable
    Closed,'' this comparison shows that the VA has major room for
    improvement in AR. The longer a bill is outstanding, the less likely it
    is that it will be collected. This ultimately reduces cash flow. The 60
    days in AR for the private sector is the same for inpatient and
    outpatient AR. The 239 days for the VA is the average of inpatient and
    outpatient AR that is broken out in Figure 4-4.

                                   FIGURE 4-4
    ------------------------------------------------------------------------
                                                               Date of care
                                                                  to date
                                           Bill lag time \1\    receivable
                                                                closed \2\
    ------------------------------------------------------------------------
    Private sector.......................               8.9               60
    VHA inpatient........................              82.14             300
    VHA outpatient.......................              84.71             177
    ------------------------------------------------------------------------
    \1\ Date of care to date claim authorized.
    \2\ Data taken from sites visited.

        The compilation of all the VA obstacles plus poor process
    performance contributes to the extremely long days in AR for the VA.
    Even with all the VA obstacles, by improving process performance, the
    VA should be able to reduce the days in AR by at least 30 percent.
        (c) Accounts Receivable Greater Than 90 days

                            Figure 4-5.--AR>90 Days

                                                                     Percent
    Private sector....................................................    28
    VHA...............................................................    92

        The 92 percent for the VA in figure 4-5 include the 83 days in bill
    lag time. The 92 percent was derived from VA diagnostic measurements
    because the VA does not measure the AR>90 the same way the private
    sector does. The private sector begins their AR cycle at the time of
    discharge. The VA starts their AR cycle after the bill has been issued
    which does not include the 83 days in bill lag time (figure 4-7).
        (d) Bill Lag Time

                           Figure 4-6.--Bill Lag Time

                                                                        Days
    Private sector....................................................     9
    VHA...............................................................    83

        The bill lag time is the amount of time it takes to generate a bill
    from the date of patient care. It is important because the sooner a
    bill is established, the sooner payment can be collected which
    increases an organizations' cash flow.
        Two of the obstacles which make the VA's bill lag time so much
    longer are the necessary separation of Category A patient records for
    which no bills are produced, and the lack of physician incentives for
    the timely completion of medical records or accurate SC/NSC
    designations.

    [GRAPHIC] [TIFF OMITTED] TMA19.040

        We had to adjust the VA measure to include the 83 days of bill lag
    time in order to have a true comparison. A primary goal of the medical
    centers is to increase cash flow. Reducing the days in AR encourages
    that. The longer a claim takes to get paid, beginning from the date the
    care was provided, the more difficult it is to collect. Long standing
    claims increase re-work, denials, and chances for bad debt.
    2. Secondary Benchmarks
        (a) Collections per FTE

                                   Figure 4-8

    Collections per FTE.....................................      $3,077,492
    VHA.....................................................         151,552

        The reason for showing the collections per FTE is to illustrate
    that there is a tremendous difference in performance between the
    private sector and the VA. Even though there are obstacles in the VA
    (e.g. Payer mix) which prohibit the VA from matching the private sector
    performance, the VA should be able to increase their collections per
    FTE by at least 30 percent through process and performance
    improvements.
        (b) New Patients with Insurance Identified

                                   Figure 4-9

                                                                     Percent
    New patients with insurance identified............................   100
    VHA...............................................................    16

        The private sector survives by identifying insurance to ensure that
    everyone treated has a means for paying their bills. The VA is fairly
    new to the reimbursement process, and the majority of the veterans who
    use the facilities do not have billable insurance. Improving the intake
    process however, should help close the identification gap. Identifying
    veterans with billable insurance will be crucial for meeting the 30/20/
    10 initiative.
        The VA has several obstacles in the insurance identification
    process. As discussed in Section 2, veteran's perceptions and
    misconceptions hinder the VA's ability to get insurance information. In
    addition, there is little or no risk to the veteran for not providing
    insurance information.
        In addition to collecting patient insurance information, the VA
    must also identify and verify veteran eligibility and service connected
    conditions. The VA has to conduct income screens and financial means
    tests. All of these additional requirements increase the complexity of
    the intake process and the possibility of collecting incomplete or
    inaccurate information.
        (c) Cost-to-Collect
        [GRAPHIC] [TIFF OMITTED] TMA19.041

        The cost-to-collect results of the 24 VAMC's are shown in the debt
    tree. These results represent the average cost to bill and collect $1
    for each of the six debt types (1st and 3rd party) for the 24 sites.
    The costs included in these measures are labor and non-labor costs
    associated with all 13 processes that perform MCCR activities.
        The costs assigned to the six debt types were divided by the total
    fiscal year 1997 collections for each. It is apparent that the costs
    associated with generating and collecting prescription co-pays are
    greater than the $2 revenue per prescription.

                         Figure 4-10.--Cost-to-Collect

    PS................................................................ $.023
    VHA...............................................................   .34

        Cost-to-Collect is primarily used as a measure by the VA. The
    private sector generally does not use this as a major diagnostic
    because cost-to-collect measures an end result of the process and the
    value is very small. Once again, the huge disparity in the values is
    illustrated. As before, the obstacles faced by the VA, such as payer
    mix and patient mix, can be used to explain a portion of the
    performance difference, but there is still obvious room for improvement
    in the VA. Financial incentives have only recently been provided to the
    VAMC's (e.g. the VAMC gets to keep its collections). The lack of
    financial incentives had been an obstacle that contributed to higher
    costs to collect in the past. The use of these incentives should help
    reduce the Cost-to-Collect, but only through process improvement.
        d) Resource Allocation.--The resource allocation of MCCR personnel
    is different between the VAMC's and private sector (Figure 4-11). The
    Intake process in the VA will most likely continue to consume a higher
    percentage of resources than the private sector even with process
    improvements because of the additional information they are required to
    collect.

                                  Figure 4-11

                                                                     Percent
    Private sector:
        Collections...................................................    31
        Billing.......................................................    25
        Intake........................................................    30
        UR............................................................    14
    VHA:
        Collections...................................................    25
        Billing.......................................................    31
        Intake........................................................    37
        UR............................................................     7

        The resource allocations, which should be corrected in the VA, are
    the resources in Billing (31 percent) and Collections (25 percent)
    which are the exact opposite of the resource allocations in the private
    sector. The VA resources are results of re-work for the bill coding and
    bill generation staff caused by poor insurance identification, poor
    outpatient coding, and delinquent discharge summaries. These factors
    and others contribute to the inverse resource allocation of the VA.
    Organizational and performance improvements in the registration and
    billing processes will allow more resources to be allocated to the
    collection process for the collection of outstanding payments.
        (e) Net Collections

                 Figure 4-12.--Net Collections to Total Billing

                                                                     Percent
    PS................................................................    62
    VHA...............................................................    32

        Net collections to total billings measures the amount of dollars
    collected as a percentage of the total dollars billed. There are
    several reasons why the private sector is nearly twice as efficient as
    the VA in the percentage of net collections to total billings. Two
    significant reasons are that the private sector has aggressive
    collection practices, and the private sector also makes contractual
    adjustments prior to bill generation (figure 4-13). Both of which are
    discussed in further detail in the best practices section.
    [GRAPHIC] [TIFF OMITTED] TMA19.042

        Many private sector hospitals make their contractual adjustments
    before a bill is generated. This makes their AR much more accurate and
    gives them a more realistic idea of what they will actually collect.
    The VA does little in the way of contractual adjustments until
    remittance, a practice that artificially inflates collectable accounts/
    receivable.
                        section 5: best practices review
        In our review of cost recovery programs, C&L identified Best
    Practices in both industry and VA hospitals. The four major process
    segments (Intake, Utilization Review, Billing, and Collections) were
    used to categorize our examination of these best practices. Although
    some best practices were identified in both the private sector and the
    VAMC's, in certain cases, duplication of industry best practices by the
    VAMC's are not feasible, given the various organizational and
    operational constraints discussed earlier.
        Additionally, C&L identified some best practices during the site
    visits that are unique to the VA alone. Specific VAMC's are identified
    for many of these best practices as discussion examples. However, this
    does not indicate that other sites not mentioned in the following
    discussion do not also utilize these same best practices.
                               a. best practices
    1. Intake
        Best Practices in intake maximize the speed and accuracy of data
    capture. The following table summarizes the best practices C&L
    identified in both the private sector and the VA. Following this table
    is a description of the positive benefits of each best practice.
             best intake practices in the private sector and the va
        Private sector.--Preregistration; Limited points of entry;
    Insurance cards are copied or scanned; Online insurance verification;
    Certification program and formal training; Single process owner for
    intake process; Copay information communication at registration;
    Performance measures are utilized; Drop-down lists for insurance
    companies/policies; and Aggressively capture data.
        VA.--Preregistration; Registration teams; Insurance cards are
    copied or scanned; Online insurance verification; Formal training; and
    Single process owner for intake process.
        Pre-registration processing.--The private sector uses pre-
    registration to capture patient demographics for 95 percent of
    scheduled patient visits prior to the hospital encounter. Conducting
    this process has allowed hospitals to cut their registration cycle time
    at the medical center to less than 2 minutes per patient. VAMC's that
    have implemented pre-registration have realized similar benefits,
    including increased insurance identification and customer satisfaction.
    For example, the Tucson VAMC conducts pre-registration using a customer
    service telephone line called ``Telephone Linked Care'' (TLC). Patients
    can use TLC to update demographic information, make or change
    appointments, or register in the VA system. Tucson's ``percent of
    insurance coverage question unanswered'' was one of the best (2.49
    percent) among the 24 surveyed sites (17 percent average).
        Limited points of entry for registration.--In the private sector,
    patients may only check-in at two or three specific registration areas
    before they can proceed to their final destination. This reduces the
    opportunity for missing important registration information. To limit
    their points of entry, some VAMC's have assigned patients to
    registration teams. Patients must register with their team at the
    initial visit and for all subsequent visits, linking accountability for
    patient information directly to an intake team. For example, Walla
    Walla has four registration teams, A, B, C, D, which correspond with
    the patient care teams. Each registration team serves assigned patients
    and updates patient data at each visit. Walla Walla has the highest
    rating in ``percent of insurance question unanswered'' at .01 percent,
    where the mean of the 24 sites is 17 percent.
        Aggressively capture registration data.--In the private sector, the
    registration software screens have mandatory fields that cannot be
    bypassed; this requires entry of 100 percent of the registration data.
    These fields must be verified with a driver's license, insurance cards,
    and/or other forms of identification. The accuracy and efficiency of
    the VAMC registration interview could be improved with these types of
    software modifications.
        Insurance cards are scanned or copied.--In the private sector,
    copies of insurance cards become part of the medical record. This step
    helps to identify all of the patients who have medical insurance;
    identifies people in need of government assistance; and keeps the
    number of self-pay patients under 1 percent. Some VAMC's have also
    adopted this practice, and registration clerks now make copies of
    patient insurance cards during the registration interview.
        Insurance companies and policies are chosen from drop-down lists.--
    Insurance information can only be selected from the data provided on
    the registration system. Registration personnel cannot change any
    information; any insurance information unrecognized by the system must
    be placed in a pending file for later verification. The VAMC's
    currently have no such software capabilities. However, this type of
    modification would reduce the input of erroneous insurance information.
        Online insurance verification.--Private sector hospitals are online
    with 67 percent of the medical center's insurers. This capability
    greatly decreases the cycle time needed to verify a patient's insurance
    coverage. When selected, 98 percent of the online policies are verified
    within seconds. Those policies that are not in the system are put in a
    pending file and later verified by online insurance file maintenance
    personnel. Some VAMC's have contracted with payers to go online for
    insurance verification as well. West Haven and Togus are online with
    their major provider, Blue Cross/Blue Shield, and have decreased the
    amount of time spent on insurance verification.
        Co-pays (deductibles) are calculated up front and communicated to
    the patient; arrangements for payment are made at registration.--When a
    policy is verified at a private sector medical center, the payment
    parameters are described. All co-pays and deductibles are targeted for
    collection up front, with the goal of capturing them upon discharge. It
    is approximately eight times more costly to collect co-pays and
    deductibles after a patient has left the facility than it is at
    registration. VAMC's do not currently communicate any payment
    information to the patient at registration.
        Performance measures are used to provide feedback, incentives or
    discipline.--A number of measures are used to assess performance in the
    private sector, including (1) keeping a count of incomplete/incorrect
    registrations, (2) setting performance goals, (3) conducting patient
    satisfaction surveys, and (4) returning claims which have been denied
    for technical reasons to the responsible party for correction and
    resubmission. Rewards and discipline are clearly linked to measurable
    goals and objectives. The VAMC's currently do not have any formal
    compensation programs for staff based on registration performance
    measures.
        Certification programs and formal, mandatory training are
    utilized.--A minimum of two or three formal, annual training courses
    are required for raises and promotions. Personnel can become Certified
    Patient Account Technicians through the American Guild of Patient
    Accounts Managers (AGPAM). At some VAMC's, formal training programs
    have been developed specifically for training intake staff in
    identifying insurance, in utilizing VISTA software, and in improving
    customer service. Houston uses the incentive of upgrading intake
    personnel one GS level upon successful course completion.
        A single process owner for intake and MCCR.--C&L found that medical
    centers that have aligned the entire `MCCR' organization under one
    process owner have improved information flows and process
    communications. According to an observation survey, 45.8 percent of the
    VA sites visited lacked a system where management of intake and MCCR
    were coordinated under one unit. Some medical centers, however, such as
    Omaha, did organize intake processes under the same business unit as
    MCCR, and reported improvements in communication and data collection.
    2. Utilization review
        Best practices in utilization review aid the rest of the cost
    recovery process by maximizing collections through information
    validation. The following table summarizes the best practices C&L
    identified in both the private sector and the VA. Following this table
    is a description of the positive benefits of each best practice.
               best ur practices in the private sector and the va
        Private sector.--Aggressiveness in processing; Use of claims
    tracking software; UR participates in medical staff meetings; UR
    conducts forums with cost recovery personnel; Precertification is
    performed in preregistration; Certifications conducted 7 days, 24
    hours; and Denials are appealed within 48 hours.
        VA.--Aggressiveness in processing; Use of claims tracking software;
    UR educates medical staff; UR staff dedicated solely to MCCR; and UR
    function located in MCCR business office.
        Aggressiveness in processing.--An aggressive UR staff is critical
    to successful collections. Once it is determined that a patient
    undergoing inpatient treatment has insurance, the next vital step is to
    ensure that the required procedures will be covered by the insurer's
    policy. Because UR is a link between the medical care and business
    administration, UR staff is versed in medical terminology, patient
    treatments, and cost recovery information. Both private sector and VA
    medical centers that have aggressive UR personnel confirm more pre-
    certifications and successfully overturn more denials. For example, in
    Brooklyn, the UR nurse aggressively pursues and resolves most appeals
    in favor of the VA. Brooklyn has one of the lower percentages of
    dollars and number of bills outstanding to regional counsel at 13.57
    percent and 6.43 percent, respectively.
        Pre-certification for scheduled events is done in pre-
    registration.--This private sector practice is beneficial because it
    speeds up the admission process (for both inpatient and outpatient
    care) and gives advance warning of any insurance problems that might
    arise. The VAMC's currently do not perform any pre-certification during
    pre-registration activities.
        Pre-certifications and certifications for unscheduled events are
    conducted 7 days a week, 24 hours a day.--Patients may need emergency
    admissions 24 hours a day, 7 days a week and may need pre-certification
    or certification for certain procedures. In private sector medical
    centers, UR is a continuous participant in the patient care process and
    can immediately confirm the need for care and the case for
    reimbursement.
        Denials are appealed within 48 hours.--The faster the turnaround
    time on denials, the greater the possibility of fiscal recovery, and
    the lower the days in A/R. In the private sector, this is one of the
    final steps of an aggressive UR presence in the collection process,
    directly increasing the cash flow of the hospital.
        Use of claims tracking software.--In all private sector medical
    centers and in some VAMC's, documentation of all reviews for admission,
    extended stays, and appropriateness of care are entered into claims
    tracking databases. The use of claims tracking and other support
    software creates an easy-to-understand record of all the activities
    handled by UR staff. By maintaining records in a database, personnel
    outside the UR function can easily access information captured by UR.
    Traceable patient care episodes and certification records from the
    third party payers result in reductions in rework and denials. The use
    of claims tracking software makes it easy for other cost recovery
    personnel to refer to specific cases. This way, personnel in
    collections are able to quickly recall and review records during the
    appeals process, rather than depending on written notes or commentary
    from UR staff.
        UR participates in Utilization Management Committee meetings with
    hospital administration, medical records, and medical staff to provide
    feedback and information about insurance and hospital environments.--In
    both the private sector and the VA, UR is the liaison between the
    clinical staff and the collection staff. Private sector UR staff
    conduct quarterly (or monthly) UMC meetings with medical staff to
    explain any changes in the insurance environment, such as changes in
    insurance companies' coding policies, explanations for medical denials,
    and instructions on how to avoid denial situations in the future. In
    the VAMC's, UR staff try to overcome the lack of medical staff
    involvement by educating clinical personnel on MCCR functions and the
    importance of timely PTF write-ups and cost-effective or certifiable/
    insurable treatment.
        UR conducts regular forums with registration, billing, and
    collections to discuss changes in insurance policies, reasons for
    denials, and so forth.--In both the private sector and the VA, UR is
    also a liaison between collection processing and the insurance
    companies. Private sector UR staff conducts quarterly meeting with the
    people in collection processing to share information on any changes in
    insurance, types of denial, effects of missing or changing medical
    information, and ways to avoid denials in the future. In the VAMC's, UR
    nurses that are dedicated solely to MCCR can improve communication
    between insurance companies and collection staff, as well as assist in
    the overall collection process. For example, Cleveland and Marion
    VAMC's have UR nurses whose jobs are dedicated to the cost recovery
    process, enabling a strong working relationship within MCCR and with
    insurance providers.
        UR function is located in an MCCR business office.--Unique to
    VAMC's, C&L found that medical centers that located the UR function in
    the same business office as the rest of the cost recovery team
    benefited both the UR staff and the billings and collections personnel.
    UR is readily available to confer with billing and collections on
    particular cases, and collection staff is able to assist UR with
    appeals. UR also has closer access to insurance verification and
    documentation, thus allowing a smooth process from pre-certification
    through the appeals process. For example, Seattle has located its UR
    nurse directly adjacent to the billers and collectors, thus enabling
    strong ties among the three functions.
    3. Billing
        Best Practices in billing increase the revenue stream for the
    medical center. Best practice efforts include human resources,
    processing, use of technology, and communications issues. The following
    table summarizes the best practices C&L identified in both the private
    sector and the VA. Following this table is a description of the
    positive benefits of each best practice.
            best billing practices in the private sector and the va
        Private sector.--Hiring and/or training qualified coding personnel;
    Use of technology; Innovations for timely bill coding; Interim billing;
    Electronic bill generation; Specialized payer teams; Scanning software;
    and Relationship building with major payers.
        VA.--Hiring and/or training qualified coding personnel; Use of
    technology; Innovations for timely bill coding; Interim billing;
    Electronic bill generation; Flagging inpatient files with insurance;
    and Scanning software.
        Hiring and/or training qualified coding personnel. The private
    sector regularly hires certified Medical Records personnel for bill
    coding activities. This practice has several advantages, including: (1)
    ensuring consistency in the bill coding information; (2) removing the
    burden of coding from the clinical clerks and freeing up their time to
    concentrate on their other primary functions; and (3) reducing the
    number of mistakes and amount of re-work. In the VAMC's, training bill
    coding staff has resulted in more increased staff competency levels,
    more accurate bills, and less denials from technical errors. Accurate
    coding reduces the amount of re-work required in bill generation and
    increases the billable amounts by capturing more reimbursable care
    episodes.
        Use of Technology.--The private sector establishes and maintains
    Chargemaster technology to improve its billing process. Chargemaster is
    a centralized electronic repository of contractual information on each
    insurance company and contains information on what each company would
    pay for various ICD-9's; on requirements for processes like pre-
    certifying level of care; on what tests are allowable under a certain
    policy's coverage, and so forth. The Chargemaster also contains
    insurance policy codes, insurance policy coverage, ICD-9 codes and CPT-
    4 codes that are used to electronically produce clean bills. The
    Chargemaster is updated with the latest information from the insurance
    companies and the rules for patient encounter reimbursement. It also
    requires constant maintenance because policies change on renewal and
    because all of the policy packages are not standardized. Similarly,
    some VAMC's maintain a master insurance database to house all insurance
    information. C&L found that those VAMC's that use a single point of
    data entry and file maintenance retained high levels of data integrity
    in their master insurance file. This practice is used in Reno, where a
    single MCCR staff member is devoted to maintaining the insurance files.
    The result is a low volume of rework for both billing and collections,
    and the ability to use autobiller with little technical difficulty.
        Innovations for timely bill coding.--The private sector uses
    certified medical records staff to prepare bills correctly for the
    Chargemaster system. MR staff prepares bills accurately and quickly by
    pulling the codes from patient charts and matching them with
    information in Chargemaster. The MR staff are specifically responsible
    for pulling out all of the chargeable codes from the patient file or
    forms, making sure the codes are present in the billing information for
    the Chargemaster, and moving the bill out of A/R within two days. In
    some VAMC's, coders reduce bill coding time by using the discharge
    instruction sheet to code inpatient encounters rather than waiting for
    the doctors to dictate and transcribe their discharge summary. The time
    it takes physicians to complete the summary can create a considerable
    amount of bill lag time. In Fayetteville, HIMS uses this practice and
    is able to close the PTF before the physician summary is completed. The
    result is a reduction in the time between discharge and the close of
    the PTF.
        Specialized payer teams.--In the private sector, teams are set up
    according to payer type to handle inquires from specific groups,
    resulting in claims correspondence turnaround time of less than 48
    hours. The team concept also allows collections personnel to specialize
    in a particular area of inquiry and to learn the various rules and
    reimbursement policies of a target group.
        Relationship building with major payers.--Private sector hospitals
    have regular meetings with their primary payers and develop strong
    lines of communication. This gives two-way feedback and helps to avoid
    potential denials by better understanding where the payers are headed.
        Interim bills for long-term and nursing home care.--In the private
    sector and in some VAMC's, long-term and nursing home care services are
    billed at regular intervals as opposed to one large bill at the end of
    the stay. Interim billing provides the cost recovery team with an
    opportunity to increase collections while alleviating the fear,
    confusion, and discomfort that patients often experience when receiving
    one large bill. Interim bills allow patient to better comprehend what
    they are being charged for and help in planning for their payments.
        Electronic bill generation.--In the private sector, inpatient bills
    are produced within three days of discharge and outpatient bills are
    produced within 24 hours of discharge. The bills are sent
    electronically to the payers either through a clearinghouse or through
    EDI. This cuts down on postage, mail lag time, and review and denials,
    since the bills are produced in the payer's billing format and can run
    through their system. Only a few VAMC sites are currently using
    electronic bill generation, and in all cases, this is performed through
    use of an outside contractor.
        Flagging inpatient files with insurance.--A practice unique to the
    VAMC's, flagging insured files allows the coders to give those files
    priority and complete them first. In Brooklyn, this practice
    significantly decreased bill lag time and resulted in an average of
    only three days for coding insurable cases.
        Scanning Software.--Both the private sector and the VAMC's use
    scanning software to capture medical documentation needed for the
    billing process. For example, Reno developed a software system called
    Scan Man that can scan two sides of a document. This software allows
    encounter forms to be scanned into the billing records, thus speeding
    process time and reducing rework. In Reno, the use of Scan Man has
    allowed billers to focus their attention on producing and auditing
    bills rather than entering information off the encounter forms.
    4. Collections
        Best practices in collections were identified in the areas of
    processing, technology, and organization. The following table
    summarizes the best practices C&L identified in both the private sector
    and the VA. Following this table is a description of the positive
    benefits of each best practice.
          best collections practices in the private sector and the va
        Private sector.--Outsourcing to collection agencies; Use of payer-
    specific teams; Prioritization of bills by dollar value; Aggressive
    follow-up on past due bills; Electronically posted payments; Copays and
    deductibles collected at patient discharge; and Receivable
    automatically posted at bill generation.
        VA.--Outsourcing to collections agencies; and Billing and
    collections in the same location.
        Receivables automatically posted at bill generation.--In the
    private sector, when a bill is produced it is automatically posted as a
    receivable. There is no lag time between bill production and posting,
    therefore, the days in A/R is reduced. The likelihood of human error in
    processing is reduced as well.
        Co-pays and deductibles are collected upon patient discharge.--The
    private sector utilizes this practice extensively. It costs about eight
    times as much to collect co-pays and deductibles after a patient has
    left than it does if the patient pays the money at the time of
    discharge (or encounter). Labor costs, processing, paperwork, and
    postage are reduced or eliminated when collection is made ``up front.''
    There is also a much lower risk of default on payment if it is
    collected upon discharge.
        Prioritization of bills according to dollar value.--High-dollar
    claims are given higher priority in private sector collection processes
    since they pump more cash into the revenue cycle if collected. Lower-
    dollar claims are given lower priority, but are still pursued.
        Aggressive follow-up on past due bills.--Private Sector collections
    department calls four to six times at scheduled intervals to pursue
    delinquent payments. The national average for bad debt is about 1.3
    percent. Aggressive follow-up reduces the Accounts Receivable greater
    than 90 days to about 10 percent.
        Payments are electronically posted through bank lock boxes or
    electronic funds transfer.--Payments are sent to a contractor, or to
    the facility via electronic file transfer; at either destination the
    payment is matched to the bill and the account is closed or payment
    variances are identified. Payment processing is updated to A/R within
    24 hours. Electronic correspondence speeds up the processing turnaround
    time, reduces labor costs, and removes the potential for human error.
        Use of payer-specific teams.--Private sector collections teams are
    set up according to payer type, in order to utilize a specialization of
    knowledge about a payer group and to provide consistency of response
    for the hospital.
        Outsourcing to collection agencies.--Low-dollar-value, delinquent
    claims are outsourced, as their recovery becomes cost-ineffective.
    These claims are contracted out on a ``percentage of claims recovered''
    basis. In the VAMC's, Houston contracted out with a collection agency
    called Transworld that in 1997 brought in approximately $459,000 in
    collections for a cost of $10,125.
        Billing and collections in the same physical location.--C&L found
    that placing billing and collections operations in the same location
    allows workers to easily confer with one another on particular cases.
    Collections has closer access to billing records and medical files than
    when the two processes are in separate locations and may easily draw
    upon the knowledge of billers familiar with a bill in question. Marion,
    IL, employed this principle: the billing and collections staff were
    located in connecting cubicles and were able to use one another as
    quick and easy resources.
                          b. critical success factors
        During the 24 VA site visits, private sector interviews, and
    industry research, C&L identified recurring characteristics in
    successful revenue generating organizations. We were able to categorize
    these characteristics into 5 Critical Success Factors. They are:
    Leadership; Organizational; Structure; Technology; Accountability; and
    Human Resource Management.
         The best practices C&L identified in both the private sector and
    in the VA have strong ties to these five critical success factors. In
    both cases, these high-performing medical centers utilized the critical
    success factors to develop best practices and effective cost recovery
    programs.
        However, during VAMC site visits, C&L determined several areas in
    which the VA demonstrated shortcomings or difficulties in mastering the
    critical success factors. C&L performed an internal survey to identify
    these apparent shortcomings. The following discussion illustrates
    examples of the areas in which the VAMC's must improve as a group to
    increase their levels of performance.
           areas for va improvements in the critical success factors
        Leadership.--Internal marketing; leadership communication;
    leadership innovations; and external marketing.
        Organizational structure.--Business office model; facility-level
    integration; and seamless operation.
        Technology.-- Local technical support; use available software; and
    technology integration.
        Accountability.--VISN accountability; internal controls;
    performance measurements; and rework.
        Human Resources Management.-- Cross training; formal training;
    incentives or rewards; and overall MCCR knowledge.
    1. Leadership
        Leadership is the foundation and driver of successful revenue
    operations. It provides the strategic direction, planning, and
    standardization to make the process work. National, regional, and local
    leadership promotes process initiatives, develop goals and performance
    measures, and continually evaluate the process and make course
    corrections when needed. In addition, leadership is the initiator and
    manager of cultural change. Leadership areas in which the VAMC's can
    improve are:
        Internal Marketing.--As a group, the VAMC's lacked strong
    leadership within MCCR and the VAMC administration. In more than 60
    percent of the VA sites surveyed, it was not apparent that the
    Director, CFO, Chief of Staff or the Chief of MAS were involved in
    promoting the MCCR mission within the hospital.
        Leadership Communication.--More than 70 percent of the sites
    reported that upper-level management did not hold regular meetings to
    discuss MCCR issues and concerns. Additionally, communication between
    MCCR segment leaders and staff, such as UR and Collections personnel,
    was minimal at most VAMC's.
        Leadership Innovations.--In more than 65 percent of the MCCR
    programs, it was perceived that innovative ways of improving cost
    recovery were not being sought. Additionally, when process changes did
    occur, they were poorly communicated. According to our survey, only 40
    percent of process changes were communicated to the MCCR staff via
    memos, emails, newsletters, etc. In most instances, these changes were
    simply discovered while personnel performed their jobs.
        External Marketing.--In 83 percent of the sites visited, neither
    the MCCR coordinator nor the CFO had ongoing working relationships with
    major payers. In addition, communication with leaders of local veteran
    groups, which could bolster veteran perceptions of the VAMC's as well
    as inform and educate the veterans of VA changes, rarely occurred.
    2. Organizational structure
        Successful operations have cross-functional, centrally managed
    organizations that enhance quality information by integrating sub
    processes into seamless operations. These organizations have single
    reporting structures that reduce instances of re-work, reduce
    fragmentation, and increase effective communication. Areas for VAMC
    improvement are:
        Business Office Concept.--According to our survey, it was apparent
    that a single reporting organization was in place at only 25 percent of
    the sites. All other sites had two to three decentralized management
    structures.
        Facility-Level Integration Across Processes.--It was apparent that
    only 20 percent of the sites had process integration throughout the
    medical center. Most sites were disconnected across cost recovery
    processes, with little or no cross-functional activities.
        Seamless Operation.--At the sites visited, it was apparent that
    only 20 percent of the VAMC's displayed a seamless cost recovery
    operation. In most cases, both processes and activities were broken and
    disconnected, and lacked the communication necessary to provide
    seamless information flows.
    3. Technology
        Technology is the enabler that supports revenue processes. It
    increases data integrity and accuracy, and supports the access and flow
    of information. The successful use of technology helps to streamline
    business operations through automation.
        Local Technical Support.--It was apparent that only 50 percent of
    the sites visited had adequate technical support, although the MCCR
    program office does provide technical assistance for the MCCR process.
        Use of Available Software.--It was apparent that 70.8 percent of
    VAMC's were currently using claims tracking software to communicate
    between cost recovery functions. However, this also means that almost
    30 percent of the VAMC's visited are not utilizing such software.
    Communication through available software and data sharing through
    integrated technology are critical to the successful recovery of both
    inpatient and outpatient dollars.
        Technology Integration.--Interfaces between IB and A/R software
    need to be upgraded so that VISTA, IB, A/R, and FMS all communicate
    with one another and effectively link patient data and billing
    information.
    4. Accountability
        Accountability is the means of tracking and measuring the people,
    activities, and systems involved in the revenue generation process.
    Management and staff are held responsible for their actions through
    performance measures and processes are monitored through control
    points. Areas for VAMC improvements are:
        VISN Accountability.--Fewer than half of the VAMC's appeared to
    have a definitive sense of accountability to the VISN.
        Internal Controls.--For 58 percent of the sites visited, no
    internal controls for data accuracy and staff accountability seemed to
    be in place.
        Performance Measurements.--It was apparent that 52 percent of the
    MCCR coordinators did not use performance measurement tools to assess
    progress on a regular basis.
        Rework.--Almost 50 percent of the MCCR employees interviewed agree
    that there is a high percentage of rework (> 10 percent) in many of the
    front-end cost recovery activities.
    5. Human Resource Management
        The investment in people which facilitates the success of the
    process by developing programs, clarifying employee roles, and
    instilling a true sense of the revenue generation process. HR either
    develops formal training or provides access to training and
    certification. They monitor evaluations and distribute incentives or
    discipline in conjunction with management. Areas for VAMC improvements
    are:
        Cross-Training.--In more than 70 percent of the sites visited, it
    was apparent that they did not cross-train staff across cost recovery
    activities or provide other professional development opportunities.
        Formal Training.--In the private sector, people are certified in
    AGPAM (American Guild of Patient Accounting Managers) and other
    organizations such as HFMA (Hospital Financial Manager Association). In
    contrast, 75 percent of the VAMC sites had no formal training or
    certification programs in place. However, some did report using CD-ROM
    training materials or periodic telephone calls to learn procedures.
        Incentives or Rewards.--In more than 90 percent of the sites, no
    incentives or reward programs were in place.
        Overall MCCR Knowledge.--It was apparent at 72 percent of the sites
    that, overall, cost recovery staff was not knowledgeable about all MCCR
    processes.
        If the VA can successfully enhance their efforts and maximize these
    five critical success factors, then its cost recovery program will
    realize significant decreases in costs, increases in revenue,
    improvements in process efficiency, and increases in customer
    satisfaction. In the following section, C&L describes how the VA can
    realize these goals.
                    section 6: the optimum va revenue cycle
        Coopers & Lybrand's recommended design for the optimum VA revenue
    cycle encompasses two of the fundamental VA goals of the ``30/20/10''
    program-reduction of costs and increases in revenue. The fundamental
    process improvements and organizational realignments will enable the VA
    to better recover the costs of NSC veteran health care from private
    health insurance and the veteran. At the same time, C&L's revenue cycle
    model creates a ``most efficient organization'' (MEO), reducing costs
    through process improvements, consolidation, and outsourcing options.
    Further, through the process improvements recommended in this report,
    C&L estimates that the revenue cycle will realize a 33 percent increase
    in collections; and estimates collections over $700 million by the year
    2000. These estimated increases are derived from the revenue cycle's
    process enhancements and VA initiatives currently underway. However,
    these increased revenues do not account for any additional increases
    from initiatives such as the production of Medicare Remittance Advice
    or developments of reasonable charges for billing rates.
        C&L based the optimum VA revenue cycle on the data gathered from
    both the activity based cost study and the best practices identified in
    Section 5. Additionally, while planning the optimum VA revenue cycle,
    we also considered the several other issues that are important to the
    successful redeployment of MCCR as discussed in earlier sections.
        C&L recognizes the obstacles to the VA's revenue process. These
    include a declining and aging veteran population, increased HMO
    penetration, changes in how insurers process VA claims, shifts from
    inpatient to outpatient settings, and difficulty identifying care
    provided to veterans with service-connected disabilities for treatment
    of nonservice-connected conditions. The recommended revenue cycle is
    designed to mitigate the impact of these obstacles.
        Further, C&L also acknowledges the political momentum to outsource
    the entire MCCR process. The motivation behind this momentum is the
    belief that private sector contracting would significantly enhance
    collection effectiveness. The ``most efficient organization'' does
    recommend centralizing some collection activities to internal or
    external specialists. However, C&L maintains that it is difficult to
    draw a true cost comparison between MCCR and private sector contractors
    until an MEO is established in place of current operations.
    Additionally, outsourcing can be in the form of either private sector
    contractors or VA franchising, whereby a VA center of excellence would
    provide a service for all the VAMC's. Because of issues such as
    procedural compliance, cultural changes, and lack of data integrity,
    the VA is not operating its cost recovery program at its optimum
    performance levels. Only after this optimum VA revenue cycle becomes
    operational within the next 24-month period can a formal cost benefit
    analysis be conducted.
        Finally, C&L also considered the importance of the ``critical
    success factors'' described in Section 4. These five factors,
    leadership, organizational structure, accountability, technology, and
    human resource management must be the foundation of a high-performing
    organization.
               a. scope and methodology of the new revenue cycle
        Overall, MCCR is a sound process very comparable to the private
    sector revenue cycle. Therefore, C&L's recommended design for the
    optimum VA revenue cycle represents ``fine tuning'' of the existing
    cost recovery processes through process enhancement, organizational
    realignment, process consolidation, and outsourcing of critical
    processes. Improvements will significantly increase collections and are
    practical enough for the VA to implement within the next 24 months.
        The highlights of the new revenue cycle are:
      --Focuses on decreasing costs and increasing revenues
      --Leverages process improvements currently underway
      --Standardizes processes across VAMC's
      --Institutes pro-active insurance/veteran follow-up
      --Consolidates crucial processes
      --Improves front-end processes at VAMC's and VISN's
      --Improves back-end processes by centralizing, franchising, or
            contracting
        As we identified opportunities for process enhancements and
    reorganization, C&L considered the need for improvements in the five
    critical success factors as discussed in Section 5. The optimum VA
    revenue cycle promotes and sustains significant changes in these
    success factors.
        Leadership.--The revenue cycle provides a standardized,
    comprehensive, and strategic business process that flows from a single
    executive management group. It establishes local, regional, and
    national integration of process leadership and provides mechanisms for
    continual process innovation by both executive management and program
    staff. Additionally, the revenue cycle installs uniform goals,
    objectives, and performance measures from a top-down process-driven
    approach.
        Organizational Structure.--The revenue cycle installs a results-
    driven ``business office model'' that is cross-functional, centrally
    managed, and seamlessly integrated. In addition, it creates an
    accountable reporting organization, process action teams, consolidated
    process, and options for outsourcing to VA Centers of Excellence or
    private venders.
        Accountability.--Above all, the revenue cycle standardizes
    processes across the VISN's and VAMC's. It installs control points to
    monitor the quality of work by staff and in the process with clearly
    communicated performance measures. In addition, it establishes
    priorities to reduce re-work, identify weaknesses, and eliminate errors
    in the process. Finally, the revenue cycle maps projected goals for
    improved performance metrics to be used as benchmarks for future
    performance and hold staff and the process responsible for accurate and
    efficient data flows.
        Technology.--The revenue cycle utilizes significant Departmental
    investments in information technology. It integrates information
    technology at the national, regional, and local levels, assisting
    process consistency and standardization. Additionally, the revenue
    cycle streamlines business operations and communications throughout all
    process areas.
        Human Resources Management.--The revenue cycle calls for the
    installation of standardized job descriptions for Business Office staff
    and incorporates orientation/training requirements for various process
    leaders to encourage the increase of knowledge capital. Further, it
    establishes employee incentive programs and performance measures at
    every process level. In addition, the revenue cycle creates a standard
    and consistent set of training and performance tools for all VA staff
    to reinforce the use of critical skills and core competencies.
        Overall, these critical success improvements, process enhancements,
    and organizational realignments ensure that the revenue cycle is a
    practical yet optimal approach to decreasing recovery costs and
    maximizing revenue gains.
                       b. key roles and responsibilities
        C&L was tasked to recommend an ``Optimal Configuration'' for the
    MCCR operations with consideration to the analyses performed during our
    study. The five critical success factors, discussed previously, are the
    essential components of the optimal configuration, named the Year 2000
    Revenue Cycle. The process flow shown in Figure 6-1 represents a
    program that can be achieved by the Year 2000 by implementing process
    improvements, adopting best practices from the VA and private sector
    and organizational realignment. This optimal configuration stresses the
    various roles and responsibilities that each of the participants must
    take, and the cooperative working relationships that they must nurture
    to succeed. The participants in the Year 2000 Revenue Cycle are as
    follows: Veteran, VA Medical Center, VISN, VA Franchising/Private
    Contractor, and National Program Office.
        The roles and responsibilities of each participant incorporate VA
    initiatives currently underway. These initiatives target improvements
    in current MCCR sub-processes as well as the development of new sub-
    processes to effectively increase revenues while reducing operational
    costs. These initiatives include, but are not limited to:
      --Increased Insurance Identification of Patients
      --Full implementation of an Electronic Data Interface (EDI) for
            billing and collections
      --Proactively pursuing third party claims
      --Improving the accuracy of data capture through automation and
            training
      --Production of medicare remittance advices
      --Establishment of reasonable charges billing rates
      --Centralized database for the management of 1st party debt
      --Centralized 1st party debt management at VA's Debt Management
            Center
            [GRAPHIC] [TIFF OMITTED] TMA19.043

        Note.--1st party follow-up for debt under 90 days is performed at
    the VAMC/VISN level; follow-up for debt 90 to 180 days is performed at
    the centralized VA Debt Management Center; and by law, debt over 180
    days is referred to the Department of the Treasury.
                                  the veteran
        Increased identification of billable insurance cannot happen
    without the willful cooperation of the Veteran. GAO pointed out that
    increasing the identification of Veteran insurance is dependent on
    ``(1) the willingness of veterans to give VA complete and accurate
    information * * *, and (2) the thoroughness of VA efforts to obtain and
    verify the information provided.'' \1\ While the efforts of the VA to
    improve the methods used to identify and identify insurance can be
    achieved, the Veterans have a responsibility to be forthright and
    provide any employer, income or insurance information when asked.
    However, the VA can influence the Veterans cooperation through
    increased communication and marketing efforts concerning the importance
    and benefits of providing private insurance to the VA.
    ---------------------------------------------------------------------------
        \1\ October 1997, GAO Report to the Chairman, Subcommittee on
    Oversight and Investigations, Committee on Veterans' Affairs, House of
    Representatives.
    ---------------------------------------------------------------------------
                                      vamc
    Registration
        Each VA Medical Center within a VISN will have a decreased
    responsibility in registration as compared with today. Most patients
    will be registered through ``pre-registration'' operated by a VISN
    level group that will obtain and verify all necessary information prior
    to a patient's visit. VAMC's will need to be properly trained and
    staffed to handle registration activities for a small amount of
    patients that have not been pre-registered by the VISN. It will be the
    responsibility of the VAMC to continue providing the service of
    greeting the veterans upon arrival and ensuring that they receive the
    proper care and treatment.
    Certification and Case Management
        Certification and Case Management will be performed at each VAMC in
    the VISN. Pre-certification of patients, performed by a VISN group,
    will be available across each VISN to enable a seamless flow of
    responsibility between the VISN and VAMC. Patient medical records and
    SC/NSC status will be available on a VISN wide database to facilitate
    the transition between pre-certification performed by the VISN and Case
    Management performed locally by the VAMC.
    Point of Service Collections
        Currently, the VAMC's have responsibility to collect first party
    (Veteran) co-payments at the Agent Cashier or by mail. The Year 2000
    Revenue Cycle suggests that the VAMC continue to collect first party
    co-payments, however, a systematic approach to collecting prescription
    and other co-pays at the point of service or distribution should be
    developed. The point of service collections is its own sub-process to
    stress the significance of performing this activity. It is significant
    because prescription co-pays represent small amounts of revenue but
    constitutes a significant cost to collect once the veteran is
    discharged. In other words, it costs more to bill and collect for
    prescription co-pays than the $2.00 per prescription co-pay. The
    collection at the Point of Service is typically a low dollar value,
    approximately $8 on average in fiscal year 1997, and will reinforce to
    the Veteran their responsibility to the VA.
    Charge Capture/Medical Documentation
        The data capture for patient care provided will continue to be
    performed at the local VAMC. The quality and speed of medical care and
    bill coding data capture must be improved. Based on the 24 VAMC visits,
    a significant difference in culture exists between the VAMC and private
    sector medical staff surrounding the emphasis on accurate and timely
    medical documentation. VAMC physicians are not provided incentive to
    perform this portion of their daily activities that will contribute to
    increased hospital revenues. One method of changing this culture is to
    develop a performance rating system which measures physician
    performance and compensation to the accurate and timely completion of
    outpatient coding and inpatient discharge summaries. Additionally, it
    is the responsibility of the VISN and the National Program Office to
    improve the technologies and tools necessary for better charge capture
    and medical documentation.
                                      visn
        Processes performed by VISN-level groups represent those that can
    benefit from consolidation. These benefits come in the form of (1) cost
    savings since fewer staff, in total, will be required to perform the
    consolidated processes; and (2) standardization of processes.
    Standardizing the manner in which processes are performed, the method
    and frequency of training, and the use of technology will prove easier
    at the VISN level than at each individual VAMC within the VISN.
    Additionally, the necessary process improvements and implementation of
    new processes at VISN level groups may occur at a faster pace than at
    the VAMC's.
        VISN consolidation does not imply one regional office where all
    consolidated MCCR sub-processes are performed. VISN consolidation can
    be performed at any of the VAMC's that will be responsible for
    performing a sub-process for the entire VISN. Therefore, it is possible
    to have VISN consolidated sub-processes performed at several VAMC's
    nationwide.
    Pre-Registration
        Pre-registration for the majority of patients, estimated at 80
    percent, will be performed at the VISN-level. Pre-registration is the
    process of contacting scheduled Veterans two weeks prior to their
    appointment to gather income, eligibility, employment and insurance
    data. Unfortunately, much of the data currently being captured is for
    patients that have already received care at the VAMC. However, this
    process has proven to be a cost effective, customer friendly service
    that will result in increased revenue. The nature of the pre-
    registration process, in addition to the technology needed to verify
    insurance on-line and provide VAMC-wide access of this information,
    makes it an ideal candidate for VISN-level consolidation.
    Pre-Certification
        VISN-level consolidated of pre-certification leverages the pre-
    registration process by collecting pertinent medical information during
    the pre-registration interviews with the patient. A staff of
    Utilization Review Nurses or Technicians will obtain pre-certification
    from private insurers prior to the patient's visit to the hospital.
    This will lessen the burden placed on the VAMC's to complete pre-
    certification for inpatient and outpatient services. Additionally, a
    VISN-level group focused on pre-certification should be able to
    establish strong relationships with the large insurers in the VISN,
    which will reduce denied claims. For instance, in a recent study by the
    GAO \2\ it was determined that most of the bills that the VA was unable
    to recover was appropriately denied. One of the reasons cited was care
    provided that was medically inappropriate. The Utilization Staff
    typically is responsible for determining whether care is deemed
    appropriate by the insurer to preclude the hospitals from generating an
    unrecoverable claim. Through continued training, consistent application
    of policy and procedures, and a better understanding of appropriate
    care; VISN pre-certification will have a positive impact on revenues
    and MCCR costs by eliminating the billing and potential appeal of
    inappropriate care.
    ---------------------------------------------------------------------------
        \2\ October 1997, GAO Report to the Chairman, Subcommittee on
    Oversight and Investigations, Committee on Veterans' Affairs, House of
    Representatives.
    ---------------------------------------------------------------------------
    Veteran (1st Party) Follow-up
        Veteran follow-up is a proactive process of contacting veterans
    concerning 1st party co-payments for care provided. Assuming the point
    of service process is in place, these follow up calls concern means
    test and per diem co-pays. For 1st party follow-up on debt under 90
    days, the customer service focus of the VA dictates that any contact
    with veterans concerning payment of co-pays should be from VA
    personnel. It is likely that this sub-process can be incorporated into
    a VISN-level initiative such as pre-registration. However, 1st party
    debt greater than 90 days should be referred to a nationally
    centralized franchiser/contractor for collection. The VA Debt
    Management Center could fulfill this role. Finally, per the Debt
    Collection Act of 1996, delinquent debt over 180 days must be referred
    to the Department of Treasury for cross-servicing and administrative
    offset.
                       va franchising/private contractor
        In C&L's determination, none of the current 13 MCCR sub-processes
    are inherently governmental. Therefore this claim provides the
    opportunity for any or all of the MCCR sub-processes to be contracted
    to a commercial vendor. Alternatively, the same sub-processes could
    also be performed by a VA Center of Excellence or ``Franchise'' that is
    responsible for providing a service for MCCR nationally. However, both
    quantitative and qualitative analysis is necessary to determine which
    sub-processes should be outsourced or franchised. C&L spoke with
    several contractors who provide service for some or all of the MCCR
    sub-processes. Several of these companies provided rates at which they
    will provide these services; however, these companies are accustomed to
    providing their services to hospitals whose patients have billable
    insurance. The mere fact that the VA can only bill for a fraction of
    its patients may significantly alter the rates that they would charge
    the VA. Without detailed discussion or negotiations with the
    contracting companies taking place, the determination of contracting
    and VA franchising was analyzed with the perspective of cost avoidance
    and adherence to current industry standards.
        The capabilities, methodologies and prices of various vendors were
    obtained through discussions with six contractors (All Med, Trans
    World, Medaphis/BSG, Payco and, NEIC) as well as private sector
    hospitals (profit and not-for-profit) and their contractors.
    Additionally, C&L researched data and literature provided by healthcare
    and collections related agencies such as HARA, The American Guild of
    PAT Accounting Managers, The American Hospital Collection Agencies, and
    The Healthcare Financial Managers Association (HFMA).
        Only three of the contractors contacted, Medaphis, NEIC, and Payco
    provided price estimates for the Revenue Cycle processes under
    consideration. The estimates provided were for performing either the
    billing and remittance functions or the entire process referred to as a
    ``Turn-Key'' solution. The contractor costs presented in Figure 6-2
    are:
      --Billing generation and distribution fees quoted as $0.49 for
            electronic and $0.89 paper compared to VA estimate of $1.69
            (includes bill creation and audit)
      --``Turn-Key'' (covers entire process cycle, from pre-registration/
            registration through appeals) fees range from 8 percent to 12.5
            percent of collections compared to 17 percent VA Revenue Cycle.
            [GRAPHIC] [TIFF OMITTED] TMA19.044

        Three contractor estimates indicate Turn-Key Solutions and
    individual process alternatives:
    Billing; Payment Processing; Collections
        The Year 2000 Revenue Cycle recommends the outsourcing of 5 sub-
    processes: Billing, Payment Processing, Collections, Insurance Follow-
    up, and Appeals. These activities center on the bill generation and
    eventual deposit of dollars collected. These activities are standard
    hospital procedures that are easily transferable to a contractor.
    Electronic Data Interchange (EDI) is currently being used by several VA
    hospitals and is planned for deployment in several others. By using a
    contractor at the National or VISN level, the VA can avoid the
    additional costs of hardware and software integration necessary for
    successful implementation of EDI. At present, several contractors are
    electronically linked to private insurers to provide billing and
    remittance services for customers.
    Appeals
        Outsourcing the Appeals sub-process will require clear
    communication among the VISN, Medical Centers and contractor. Patient
    medical records including SC/NSC status, special consent and
    certification will be electronically stored and available to the
    contractor for their assistance with appeals.
    3rd Party Follow-up
        A contractor will perform follow-up with insurance companies for
    high dollar value claims. A case tracking system will be in place to
    provide the contractor with claims that represent a large portion of
    the accounts receivable. Follow-up is a measure that proactively
    attempts to collect revenue before it is delinquent.
    Veteran (1st Party) Follow-up
        Veteran (1st party) debt greater than 90 days should be referred to
    a nationally centralized franchiser/contractor for collection. The VA
    Debt Management Center could fulfill this role. Per the Debt Collection
    Act of 1996, delinquent debt over 180 days must be referred to the
    Department of Treasury for cross-servicing and administrative offset.
                            national program office
        The National Program Office will be required to provide leadership
    to the VA field staff particularly during the establishment of the Year
    2000 Revenue Cycle. National policies that affect the operations of the
    VAMC's as well as the contract negotiations with contractors and 3rd
    party providers will require the wisdom and experience of the senior
    leadership at the National Program Office. The local VAMC's and VISN's
    can benefit from National Office guidance with respect to:
    Standardization of a business office model; Establishment of incentives
    and rewards for VAMC personnel; Development of standardized performance
    measurements; Implementation of technological solutions; and Providing
    professional training nationally.
              c. performance improvements and cost benefit savings
        A cost analysis of the Year 2000 Revenue Cycle was performed to
    estimate the potential cost savings from the recommended process
    improvements and organizational realignment. Cost savings have the
    equivalent impact of increased revenues on the VA system since any
    reduction in operating costs reduces the amount of collections needed
    to offset 10 percent of the total hospital budget.
        Process improvements will translate into reduced cycle times to
    complete work activities. These same process improvements will improve
    the accuracy of work performed, which will have a significant positive
    impact on the percentage of re-work that consumes the MCCR staff.
        These positive impacts to MCCR operations will also enable the VAMC
    and VISN to reach their primary objectives such as: Increased
    identification of insurance; Reduced accounts receivables; and
    Increased revenue.
        The current cost to generate a bill (unit cost: $17.19) is
    projected to be reduced by 37 percent to $10.75 per unit. Unit cost
    represents the average cost to bill and collect for all types of
    claims, 1st and 3rd party. The projected unit cost reflects the roles
    and responsibilities as recommended previously in Section 6. The effect
    of outsourced sub-processes using private contractors and/or VA
    franchises are represented. At this point, the basis of this effect is
    from labor cost savings realized through centralization and
    streamlining of a sub-process. The projected costs for each sub-process
    represents the optimal cost that the VA MCCR should be experiencing
    through VA franchising or contracting.
        Improvement in qualitative performance measures such as percent of
    re-work, performance accuracy, and internal customer satisfaction,
    which were collected through C&L surveys, reflect the projected cost
    savings. As processes are improved and organizational realignment
    realized, the accuracy of work will increase, re-work will be minimized
    and internal customers' (MCCR staff) satisfaction levels will go up.
    [GRAPHIC] [TIFF OMITTED] TMA19.045

                             d. revenue enhancement
        Increasing revenues in the short term, (fiscal year 1998), can be
    accomplished by leveraging key elements of the revenue cycle that will
    provide significant impact without major process or organizational
    changes. The key elements for this short-term revenue increase are
    defined as Leverage Points.
        Leverage points represent basic, simple changes in the Revenue
    Cycle that have significant impacts on the overall goal of enhancing
    revenue. Based on fiscal year 1997 revenue data, C&L was able to
    project potential gains in collection dollars through utilization of
    these leverage points. C&L contends that VA can dramatically improve
    its collections nationwide by 33 percent and decrease ``old'' A/R
    dollars by 20 percent if it can: Identify Billable insurance; Reduce A/
    R days outstanding; and Produce accurate bills.
    Identify Billable Insurance
        As described in earlier sections, identification of billable
    insurance will allow for increases in billable episodes of patient
    care. Pre-registration is the best opportunity to identify 100 percent
    of registered veterans with insurance coverage. Consequently,
    establishing this process in every VAMC creates significant potential
    increases in collections.
                          reduce days a/r outstanding
        Reducing the amount of days of A/R outstanding will both increase
    overall collection amounts as well as decrease the amounts of old A/R
    dollars and overall collection costs. The revenue cycle, by improving
    processes vital to this leverage point's outputs, can potentially
    reduce dollar amount waiting to be collected. By focusing on activities
    such as reducing bill lag time, insurance follow-up, collection of co-
    pays, and aggressive A/R collections, the VA can realize these gains.
    Lower A/R days will increase the potential for maximum collection.
    Produce Accurate Bills
        Producing accurate bills will not only increase timely collections
    and reduce technical/medical denials, but it will also decrease billing
    cycle time and rework. In addition, C&L projects significant increases
    in overall collections. By improving bill coding activities and
    encouraging responsiveness from clinical staff, the revenue cycle will
    allow the VA to utilize this leverage point and its significant
    benefits.
        Figure 6-4 illustrates the three leverage points and their
    estimated benefits. Additionally, the chart also describes the various
    actions necessary for the realization of these estimated goals.

                                   Figure 6-4
    [GRAPHIC] [TIFF OMITTED] TMA19.046

                     e. potential risks and considerations
        Due to uncertainties in the analysis of the optimal configuration
    of VA cost recovery (assumptions, estimates, outside factors, etc.), it
    helps to know potential risks that may be associated with the new
    model. There are five major areas of consideration that the VA must
    examine in determining possible risks. These areas of consideration
    are: Customer Service, Political Influences, Costs, Technology, and
    Timing.
        The following are possible risks that may affect the success of the
    optimal configuration as related to these five areas of consideration.
                             customer satisfaction
        1. Adverse Impact on Veterans.--Because a main goal of
    reconfiguration is to increase revenues to provide better and increased
    services for veterans, one of the most crucial aspects of the optimal
    configuration is to continue the VA's high level of customer service.
    In order for reconfiguration to be successful, patients must continue
    to receive high quality care, accurate bills, timely financial advice,
    and a high level of customer service throughout the entire cost
    recovery process. The lack of any of these components of customer
    satisfaction would potentially be a serious risk to the overall success
    of the optimal configuration.
        Extensive customer service training inter-woven with revenue cycle
    training as well as patient marketing and continuous quality
    improvement programs will mitigate this risk.
                              political pressures
        1. Public Relations Concerns.--Veteran's Service Organizations
    (VSO) and Federal employee unions are the two groups that compose a
    large public relations concern for the VA. As an organization that
    primarily serves veterans, the VA is continually under the scrutiny of
    Veteran's groups to provide high-quality services to veterans. Under
    the new optimal configuration, it is possible that veteran
    organizations may misunderstand the efficiency changes as a swing in
    VA's primary motives from the health of the veteran to revenue
    enhancement. These groups may feel that they need to step in during
    reorganization to ensure that the veterans' needs are still met and
    services are not cut. Additionally, because reconfiguration will mean
    the reallocation of labor resources, Federal employee unions may also
    be concerned with the reorganization of its members to new job
    positions.
        2. Negative Congressional Feedback.--As a Federal Institution, the
    VA must always remain accountable to Congress. Congressional leaders
    may become concerned about the scope and intent of reconfiguration if
    interest groups and the general public in their districts raise
    questions about the VA. The health and happiness of the veteran is a
    major concern within Congress and the entire Federal Government, and
    therefore it is possible that negative Congressional feedback could
    occur if reorganization of VA cost recovery is not promoted and
    explained in light of its positive impact for the veteran and the
    entire VA.
        Aggressive internal and external marketing, integrated with
    continual VA leadership communication with interest groups will
    mitigate these risks.
                                     costs
        1. Technology Costs not Absorbed by Current VA Initiatives.--The
    optimal configuration includes new technology not currently in use by
    the VA. However, there are several current VA initiatives to improve
    cost recovery technology that should absorb the costs associated with
    reconfiguration technology improvements. If these initiatives do not
    absorb the bulk of the new technology costs, there is a potential risk
    for increased technology costs. Additionally, any costs associated with
    upgrades and systems maintenance not absorbed by other initiative
    surpluses will also be a potential cost risk.
        2. Overhead Costs Cause the ``Cost to Collect'' Amount to
    Increase.--Reconfiguration will include some overhead costs from the
    MCCR Central Office to manage new policy, training, and prototype
    systems development. Because these costs are necessary expenditures to
    improve cost recovery processes, they are included in the total ``cost
    to collect'' amount for the VA. Once implemented, these overhead costs
    should decrease from lack of need; if not, then there will be a
    potential risk of an increased ``cost to collect'' amount for VA.
        Continued reviews of overhead costs and detailed technology cost
    assessments to minimize the impact on ``cost to collect'' will mitigate
    these risks.
                                   technology
        1. Information Technology Integration May Prove Difficult.--In
    order for reconfiguration to flow smoothly, the transition to a
    completely integrated information system must occur. However, as with
    any large technology integration, problems may occur when systems are
    integrated. If such problems arise during integration, technology
    difficulties could prove to be a potential risk.
        2. Software May Prove to be Unreliable or Unavailable.--The optimal
    configuration heavily relies on agreements with third party payers to
    provide software to increase the efficiency of the cost recovery
    process. If in the future this software does not fulfill the needs of
    the VA or necessary upgrades become unavailable or incompatible with VA
    systems, such issues would pose serious risks to the success of the
    optimal configuration.
        Sound development of systems requirements and proven implementation
    techniques and methods will mitigate these risks.
                                     timing
        1. The Consolidation Process May Prove to be more Time Intensive
    than Perceived.--The optimal configuration calls for some consolidation
    of cost recovery activities at the VISN level. In part, the success of
    this consolidation depends on a timely and seamless process adaptation,
    including technology integration, with little disruption to needed
    business dealings. If this consolidation does become increasingly time
    intensive, then timing becomes a potential risk to cost recovery
    reorganization.
        Extensive planning to map out time restrictions and minimize
    business process disruption will mitigate this risk.
                   f. summary of the optimum va revenue cycle
        Coopers & Lybrand's proposed design for the optimum VA revenue
    cycle enables the VA to better recover the costs of veteran health care
    from private health insurance. Additionally, the revenue cycle reduces
    health care recovery costs through process improvements, consolidation,
    and outsourcing options. As such, the revenue cycle fulfills two of the
    VA's goals as described in its ``30/20/10'' program. If implemented,
    C&L contends that the VA will realize an estimated goal of over $700
    million in collections by the year 2000. Additionally, these gains can
    be realized while improving the overall customer service provided to
    the veteran. The following summarizes the major benefits of the revenue
    cycle.
        Cost Reductions
      --37 percent cost decrease
      --42 percent cycle-time decrease
      --50 percent reduction in cost-to-collect
        Revenue Enhancements
      --33 percent net revenue increase
      --40 percent third-party revenue increase
      --15 percent first-party revenue increase
        Process Improvements
      --Focus on revenue
      --Utilize new point-of-service collection at VAMC's
      --Initiate pro-active insurance/veteran follow-up
      --Create accountable charge capture process
      -- Emphasize VISN centralization of pre-registration, pre-
            certification, insurance follow-up
        Customer Satisfaction
      --Register veterans more quickly and efficiently
      --Use telephone pre-registration to give veterans more privacy when
            discussing medical/financial information
      --Develop first-party bill payment process that is easier for
            veterans to use
      --Reduce rework and increase accuracy percentages
                           section 7: recommendations
                  a. cash, process compliance, redesign (cpr)
        Coopers & Lybrand recommends that VA pursue a three-phased program
    to remedy its lagging revenue cycle process. Known as CPR, the program
    is an effective approach for prioritizing corrective actions,
    leveraging resources and addressing all aspects of the revenue cycle
    process. Based on our preliminary recommendations on this subject, VA
    and its VISN's have begun planning for a CPR initiative across all
    VAMC's.
        1. Cash.--With VISN sponsorship, immediately launch at each
    hospital a 6-month blitz on existing receivables (for services already
    billed) as well as a concentration on UR and charge capture (for
    services provided but improperly billed or not billed at all). Collect
    funds due VA and prevent further revenue losses. This will help VA
    accomplish its 1998 collection goal.
        2. Process Compliance.--Through VISN leadership and action,
    immediately take corrective actions to bring hospital programs into
    full compliance with VA revenue cycle guidelines and regulations, as
    well as with established best practices such as those identified in
    this report. Also begin VISN-level consolidation of applicable front-
    end processes. This will help standardize operations, reduce costs, and
    strengthen all processes in the revenue cycle.
        3. Redesign.--VA should continue the development of several
    consolidated applications, systems and operations. Attention should
    also be focused on removing some of the policy and institutional
    barriers that inhibit optimum performance. Depending on the results of
    the second phase, move toward greater reliance on contractors to
    perform back-end processes. This will help VA realize MEO status by the
    Year 2000.
                         b. roles and responsibilities
        We recommend that VA require the full commitment, participation and
    leadership of VISN and hospital executives in CPR. It has begun
    planning for this involvement through the creation of VISN revenue
    teams. In addition, central office executives must provide program
    support and continue the development of common tools and technology to
    leverage revenue operations. VA can no longer afford to abdicate
    revenue responsibilities to collection units alone. Revenue performance
    is everyone's business--in the same manner that delivering quality
    healthcare to the veteran is everyone's business. VA leaders should
    make the same investments in business functions that they have in
    clinical functions--leadership, innovation, human capital and
    technology.
        The VISN's, central office and medical centers should all have
    clear roles in the CPR initiative. VA should assign the following roles
    and responsibilities for follow-up action.
    VISN's
        1. Take more active leadership roles in revenue cycle operations.
        2. Hold hospital directors fully accountable, and incentivize them,
    for program compliance and revenue results.
        3. Consolidate, as appropriate, revenue cycle front-end operations.
        4. Adopt central business office models of organization.
        5. Charter and appoint VISN Revenue Cycle Teams.
        6. Train Revenue Cycle Teams.
        7. Conduct VISN-wide CPR planning workshops.
        8. Deploy Revenue Cycle Teams to medical centers to focus on:
    Realizing quick hit opportunities that will accelerate fiscal year 1998
    cash flow; Implementing process compliance and long-term improvements
    toward achieving 30/20/10 goals.
        9. Communicate activities to all stakeholders, including veterans,
    VA staff, third partypayers, VSO's and unions.
    Central Office
        1. Develop financial/revenue performance scorecard for VISN
    accountability.
        2. Sponsor training for VISN Revenue Cycle Teams.
        3. Support VISN CPR roll-out planning.
        4. Provide technical expertise to VISN Revenue Cycle Teams, as
    required.
        5. Continue technical assistance and training support for all
    revenue cycle operations.
        6. Continue development of common tools and technology.
        7. Press for full implementation of the MEO by the Year 2000.
    Medical Centers
        1. Hold all executive leadership and department heads accountable
    for revenue performance.
        2. Assure program compliance by establishing internal control
    systems in accordance with Circular A-123.
        3. Use the Diagnostic Measurement System to establish
    accountability.
        4. Begin implementation of the central business office model.
        5. Send top management team (financial, clinical, administrative)
    to VISN-wide CPR planning workshops.
        6. Participate on VISN Revenue Cycle Teams.
        7. Implement corrective actions.
                                 c. milestones
        The timing of VA's revenue cycle improvements is critical for a
    number of reasons. First, considerable amounts of revenue are being
    forfeited because of ineffective MCCR performance. This is costing VA
    millions of dollars each day. Second, there are many quick-hit
    opportunities that Revenue Cycle Teams could realize in a few months.
    These should not be jeopardized. Third, the longer that VA permits
    insurance companies, as well as some veterans, to default on their
    financial obligations to the agency, the more entrenched this behavior
    will become. Fourth, with each passing day VA continues to lose
    credibility with even those payers who normally honor their
    obligations, but find it too burdensome and costly to do business with
    VA. Finally, VA is petitioning for the right to bill Medicare for NSC
    treatment to Medicare-eligible veterans. The Health Care Financing
    Administration (HCFA) has very stringent claims filing requirements as
    well as regulatory compliance standards. VA must soon correct many of
    its revenue cycle deficiencies in order to qualify for Medicare
    billing.
        Given these circumstances, we recommend the following action
    milestones for VA to initiate both transformational and transactional
    improvements to the its revenue cycle operations. These milestones
    should be implemented in a cascading manner in order to produce maximum
    results.

                                   MILESTONES
    ------------------------------------------------------------------------
                      Timing                               Action
    ------------------------------------------------------------------------
    Immediately..............................  Comply with established MCCR
                                                program requirements and
                                                standards
    Immediately..............................  Announce an aggressive
                                                revenue streams follow-up
                                                initiative (completed)
    Winter 1998..............................  Create VISN Revenue Cycle
                                                Teams (in process)
    Early Spring 1998........................  Train VISN Revenue Cycle
                                                Teams, each plan VISN-wide
                                                initiatives (in process)
    Spring-Fall 1998.........................  Deploy Teams to medical
                                                centers
    Summer 1998..............................  Report progress to
                                                Undersecretary for Health
    Summer-Fall 1998.........................  Realize quick-hit revenue
                                                opportunities
    Fall/Winter 1998.........................  Redesign VISN and medical
                                                center revenue cycle
                                                operations
    Winter 1999..............................  Implement Universal Billing
                                                System, Reasonable Charges,
                                                other national revenue
                                                initiatives
    Continuous...............................  Negotiate preferred provider,
                                                sharing, other revenue
                                                generating contracts
    Spring 1999..............................  Internally franchise and/or
                                                contract appropriate revenue
                                                processes
    Year 2000................................  Implement MEO
    Year 2002................................  Achieve 30/20/10
    ------------------------------------------------------------------------

                              medicare subvention

        Senator Mikulski. Well, Mr. Chairman, I think you want to
    proceed in more detail, and I am going to yield that to you. I
    know there is a series of followup questions.
        In the minutes I have before I need to depart, I think we
    need to know more about this and I do know that ultimately VA
    wants Medicare subvention to pay at least 10 percent. We have a
    whole lot of infrastructure issues. We have the computer issues
    and so on. But I think we all want to be in alignment with you.
        Particularly then, what are the consequences by looking to
    Medicare when we are going to be deeply concerned about the
    solvency of Medicare? So, while we are looking to you and you
    go to Medicare, that is one issue. And the consequences on
    Medicare. And then there are the consequences on the collecting
    of private insurance which many veterans have. So, I think this
    takes more conversation.

                               processing claims

        Mr. West, could you share with me, though, what we are
    doing to reduce both the backlog and the time to apply for
    benefits, particularly in the area of disability?
        Mr. West. Well, the process is at a point where, in
    addition to trying to reduce the time, we are also trying to
    pay attention to the accuracy of the processing of the benefit
    claims, Senator, because otherwise it takes twice as long.
    There has been retraining. There has been an effort to have the
    processors take what I will call lifetime responsibility for
    the claim. Instead of it proceeding along a sort of an assembly
    line effort----
        Senator Mikulski. Some take a lifetime to process.
        Mr. West [continuing]. From one person to another, we ask
    the same person to be responsible for all parts of processing
    the claim. That allows us to have accountability. It is like
    the independent calendar for a judge. But it also allows that
    processor to take responsibility.
        If I might ask Joe Thompson, our Under Secretary for
    Benefits, to say a little more about the details of exactly
    what we are doing. Would that be helpful?
        Mr. Thompson. Senator Mikulski, there are a couple of
    things in the short term that are impacting our ability to get
    faster in a hurry. No. 1, is the business process
    reengineering, which is a complete restructuring of the
    regional office and the way they do business. That has an
    impact because the same people that process claims are now
    undergoing fundamental shifts. That is a transitory thing but
    it takes roughly 1 year for one regional office to complete
    that process.
        The second thing--and this is past, but we still feel some
    of the residue of it--are the additional reviews for gulf war
    cases which were injected into the system through most of last
    year. That was a resource drain on the claims processing
    system.
        And the third thing--and this is more of a long-range
    problem--is that the data was not as accurate as it could have
    been. We have begun to insist that regional offices report
    things exactly as they are, and that has been reflected in a
    higher count. Now, I do not think it is reflected in more time
    to process the claim, but the counts themselves are higher
    although I think they are more accurate than they were.
        As we have gone through this and tried to get these claims
    done more quickly, we have also found that in some cases we
    have tried to do them too quickly because we have a serious
    quality problem. When we reconstructed our quality review
    program late last year and focused exclusively on disability
    evaluation type claims, our core business process, we found
    that the error rate was 36 percent. It is totally unacceptable.
        Senator Mikulski. Absolutely.
        Mr. Thompson. So, we are trying to push a lot through, and
    in the process of doing that, we are running into a quality
    problem.
        As the Secretary mentioned, one of the keystones of what we
    are trying to do is put in place a series of measures that do
    not just look exclusively at how fast you are doing things.
    They also look at the quality with which you do it and how
    veterans feel about it, customer satisfaction, at the real
    costs of doing that business, and also how employees are
    developing in this process. Those five measures combined, we
    call a balanced scorecard.
        Senator Mikulski. Well, we look forward to getting actually
    progress reports on this.
        Mr. Thompson. Exactly.
        Senator Mikulski. Again, we would like to talk in more
    detail.
        Mr. Chairman, thank you for the courtesy of letting me go
    first, and I will submit additional questions for the record.
    Thank you very much.

                         processing compensation claims

        Senator Bond. Thank you very much, Senator Mikulski.
        While we are talking about veterans' benefits, the original
    estimate for fiscal year 1998 for processing compensation
    claims was 106 days. I understand the current estimate is about
    150.
        Talking about the quality problem, I understand that
    remands from the Board of Veterans Appeals continue to be very
    high, about 44 percent, which does emphasize the quality
    question.
        Are these facts accurate in your opinion?
        Mr. Thompson. Those are correct, Mr. Chairman.
        Senator Bond. Given that it is currently taking about 150
    days to process an original compensation claim, do you really
    believe that VA can meet its goal of 53 days by 2002?
        Mr. Thompson. Not at the rate we are proceeding, no, I do
    not.

                          vba's road map to excellence

        Senator Bond. In a draft VBA report, Road Map to
    Excellence, it notes there has not been a consistent sense of
    urgency, of the need to change the way VBA does business. Mr.
    Thompson, can we count on you to bring that sense of urgency
    and get us into the 21st century?
        Mr. Thompson. Yes; you can, Mr. Chairman. I certainly feel
    it myself and I would say anyone within striking distance of me
    will feel it equally as well. We have asked a number of people,
    close to 100 in total now, that work within VBA to get engaged
    in improving this system. We have one-half century old business
    process, and it served our Nation well for many years, from the
    Second World War to the present, but it does not work any
    longer. To bring about the change we need, we absolutely need
    that sense of urgency, and I promise you I will convey it.

                       processing tobacco-related claims

        Senator Bond. I hope to be back here again and talk with
    you next year at this time and we will be following up.
        If legislation is not enacted disallowing tobacco related
    claims, how much additional funding do you need both for fiscal
    year 1998 and fiscal year 1999 to process such claims?
        Mr. West. Let me say a word about that, Mr. Chairman, if I
    might, before Joe tries to answer. Obviously we have not made a
    calculation to that on the assumption that the legislation
    would pass, so that there is nothing in our budget or in our 5-
    year projection that shows the FTE's and the cost of those
    FTE's. There is also nothing in our budget for the projection
    that shows the cost of additional medical care that would
    result from a determination of service-connected disability.
        I think that if one assumes that the $17 billion savings
    assumes about one-half million claims and for about every 1,000
    claims or so--this is not the kind of calculating my folks want
    me to do. They would like to take a little more time on it, but
    if you assume what I understand to be the working assumption
    that it will take about 6 FTE's for each additional 1,000 of
    these claims, I think you begin to see rather quickly that we
    get up to a sizable number of FTE's and the dollars to support
    them. I think that is before you consider the additional kinds
    of infrastructure and support needed as well.
        Joe?
        Mr. Thompson. A real ball park figure would be about $5
    million for every 10,000 claims.
        Senator Bond. $5 million for every----
        Mr. Thompson. Every 10,000 claims.
        Senator Bond. There are about 500,000 claims. You are
    talking about 50 times that?
        Mr. Thompson. Correct. That is over 5 years.
        Senator Bond. A 5-year cost? If my math is correct, $250
    million over 5 years.
        Mr. Thompson. Correct.
        Senator Bond. OK.

                             reducing patient costs

        Let me go back to the bigger question, Mr. Secretary. I
    noted the goals where you seem to be on track, but the
    objective of reducing per-patient cost by 30 percent by 2002--
    do you believe there continues to be enough inefficiency in the
    system that VA can, with no increase in appropriations, provide
    quality care and still increase the number of patients served?
        Mr. West. I think we can accomplish the goal of not just
    maintaining care at the right level, but increasing the
    quality. In fact, I think realizing these efficiencies is
    essential to that.
        To the specific question of is there room for those
    improvements to be made, I am going to ask Dr. Kizer to respond
    on the efficiencies.
        Dr. Kizer. Senator Bond, I would just comment that many of
    the efforts that are underway to produce efficiencies are also
    directed at improving quality. I think health care is not
    unlike a number of other activities where high quality costs
    less. I also think that what we will see as a result of a
    number of efforts, that are directed at improving the quality
    of care, is, as a side effect if you will, reduced costs. So, I
    actually feel considerable confidence in the ability to get to
    that 30-percent reduced expenditure per patient over the next 4
    or 5 years.

                       processing tobacco-related claims

        Senator Bond. Thank you very much, Dr. Kizer.
        I just wanted to say that we are very pleased, at my
    request, to have the Budget Committee chairman drop by. I just
    wanted to fill him in briefly on the tobacco claims, the
    tobacco program. The Department of Veterans Affairs has not
    included a request for funding which would--just to process the
    claims would be about $250 million over 5 years. So, that is
    not included in the budget request.
        We have in the VA some very bold statements about how we
    can serve more patients more effectively at less cost and stay
    within the numbers. So, in your continuing drive to make sure
    that we get the most for our money, we have the promise of
    these very able and distinguished representatives of the
    Department of Veterans Affairs that they are going to be doing
    that job.
        I stated earlier that some of the assumptions in the budget
    were that research would come out of the tobacco settlement,
    which we know it will not. So, we are going to have to do some
    things to restructure the normal revenues to make sure that VA
    is taken care of.
        I appreciate your great interest in this subject. I know
    you have other committee hearings to attend, but this is such
    an important area, I do appreciate your dropping by.
        Senator Domenici. Well, Senator, let me just comment and
    not take the time of the professionals who are here and the
    Secretary. All of us within our distinctive value system insist
    that we take care of our veterans, and one of the most
    important aspects of it is the VA hospital system and the care
    it gives the veterans.
        Frankly, we all know that there is lots of pressure
    everywhere on anything that is health related, and as the
    demographics of the Nation change, they change for you all too.
    We know what those demographics are going to do to Medicare. We
    know what it is going to do to Social Security 10, 15, 20 years
    out. We are going to have a bulge that is very, very big, and
    you are going to have added number of very, very old veterans
    obviously that are going to be coming along.
        We want to do our share in the budget process, but
    ultimately it is left up to people like this chairman heading
    this subcommittee to work with Chairman Stevens to get an
    appropriate allocation from the total budget pie for what they
    have to do, and then do some real magic because it is very hard
    for people to understand how this committee has to pit veterans
    against space----
        Senator Bond. The environment is where we keep getting
    beaten up.
        Senator Domenici [continuing]. If they get $20 billion, $40
    billion, $50 billion for their entire appropriations, then he
    has to do the balancing between these very tough competitive
    issues.
        But that is the way it is in the appropriations process. Do
    not ask me why. It is not terribly rational, but any
    alternative is not so easy either because if you try to put
    certain items all alone in the appropriation bill, sometimes
    they do not get treated as well as they do when they are in a
    bigger committee with more exchanges and tradeoffs available.
        But, Senator, thanks for all you are doing and we look
    forward to working with you.
        Senator Bond. Thank you very much, Mr. Chairman. We very
    much appreciate your interest and concern in this area. I know
    of your longstanding commitment. We are delighted to have your
    concern.

                                 access to care

        Returning to the question, Mr. Secretary, the Veterans
    Health Administration has downsized over 20,000 employees, and
    I just would ask you or Dr. Kizer, is the work force downsizing
    adversely affecting access, the needed care or the quality of
    care, and what actions have you taken to ensure that the
    quality and access are not compromised? The reason I ask this,
    we have heard some complaints that we will be forwarding to
    you. Some of the referral systems may not be working as well as
    they could. What is your overall assessment of that?
        Mr. West. Well, I would note at the outset, Mr. Chairman,
    that, of course, we are reaching more veterans, 134,000 more.
    We are reaching them in more places. Outpatient clinics
    continue to open. My impression from my brief visits--I have
    already been out to, I think, three or four in the brief time I
    have been here--is that we are getting good reports.
        But specifically let me ask Dr. Kizer to respond more fully
    to you.
        Senator Bond. Please, Dr. Kizer?
        Dr. Kizer. I would reaffirm what the Secretary has said, is
    that last year we treated more patients than the VA has ever
    treated in the past. That would suggest, at least as one
    barometer, that access is getting better.
        As you know, over the last 2 years, we have sited or are in
    the process of siting now close to 200 new community-based
    clinics, and I might add for no additional cost to the
    taxpayer, all from redirected savings.
        I would also note that the quality of care, as measured by
    the same indices that are used in the private sector, has shown
    unprecedented improvements. Indeed, I can say, for example, on
    the health plan employee data and information set [HEDIS]
    measures that are commonly used, that on the comparable
    measures of VA and non-VA providers, that the VA is not only
    consistently and uniformly above or higher than what is
    provided in the private sector, but on most measures markedly
    higher than what is provided in the private sector.
        So, I think that if you look at the numbers, not only has
    access improved substantially, but quality has improved
    substantially as well.
        As far as the number of people or staff, as you know, for
    many years Congress and the budget specified a particular
    number of individuals that the VA had to employ, and it has
    only been in the last couple of years that we have actually
    built our budgets up from the ground determining, based on
    local input, what the right number of employees would be to
    provide that care. I think that you are seeing that reflected
    in the numbers of staff that are currently on board.
        Senator Bond. It certainly makes sense.

                           closing medical facilities

        Let me turn to another issue, broader issue. I requested
    the General Accounting Office last year to look into whether
    four VA hospitals were really needed in Chicago to provide
    medical services. I trust you have seen this draft report in
    which they said VA could effectively serve the Chicago veterans
    with three hospitals and save some $200 million over 10 years
    in reduced operation and maintenance costs.
        It seems clear at some point that the VA must close
    hospitals in order really to reduce the cost. As the provision
    of services on an ambulatory basis increases, it gets
    increasingly difficult to justify the number of inpatient
    facilities VA operates today.
        What is the position of the VA with respect to GAO's
    conclusion to close one hospital, and does VA have any long-
    range plans to close hospitals and other facilities?
        Mr. West. Mr. Chairman, I have something to say on both of
    these. I am not sure, but Dr. Kizer may want to be more
    specific in his reaction to the GAO report.
        Let me say that with respect to the specific recommendation
    of closing the hospital in Chicago, we do not have any plans to
    go close a hospital. Indeed--and this now goes to the long-
    range plans--as I read the efforts that have been underway in
    VHA, the emphasis is on needed or unneeded hospital beds. The
    question is making the best use of the resources we have,
    looking at what we need to do to in place outpatient clinics.
        Will there some day be a closure of hospitals? I am not in
    a position to say that. I am in a position to say we will
    continue very carefully to examine hospital beds, and where
    they are unneeded or unused, we will close those. We are using
    the centers in different ways. We are trying to be more
    flexible, give ourselves more flexibility to accommodate the
    needs. As you know, we are opening the outpatient clinics.
        Let me, let my expert say a word on that. Otherwise, my
    amateur explanation will be the only one on the record.
        Dr. Kizer. It is a good one.
        Mr. West. OK, then we will go with it. [Laughter.]
        No, go ahead.
        Dr. Kizer. The GAO report, as you probably noticed, while
    they came to that conclusion, really only looked at the two
    institutions, Westside and Lakeside, and they I think even
    acknowledged, if not in writing, certainly verbally that they
    really did not assess the other two institutions there. So, we
    have had this discussion with them.
        We agree with them that we can provide care with fewer
    hospital beds, and the real issue is with the assets we have
    there--how do we get the best return on investment. We do not
    believe that the GAO report provides a complete enough
    evidentiary base to come to any conclusions. However, our take
    on it is to actually do a more thorough assessment. We expect
    to engage a consulting firm to actually look at the total array
    of assets in that area and come up with some recommendations
    for us.
        Senator Bond. Gentlemen, you have been doing an excellent
    job of rationalizing the system of care. Obviously, closing a
    hospital, wherever it is, is a political hot potato, and
    unfortunately, I see a little bit of dancing rather than a
    willingness to take this head on. I agree that you have to look
    at your asset base, the utilization of those assets, but the
    GAO report does suggest and common sense would indicate and in
    a time when we are moving to more outpatient care, there may be
    some big, old hospitals in the system that need to be shut down
    or converted to another, better use.
        I am asking you not to short circuit the analysis, but by
    next year, assuming we are all still here, give us an answer as
    to your plans to do the big slice and cut off unneeded
    hospitals or other facilities wherever they are needed.
        Mr. West. Senator, I come from an institution that has
    closed facilities all over the world. I will not shy away from
    that if we have to.
        Senator Bond. Closing a veterans' hospital is not easy.
        Mr. West. But it is an emotional thing.
        Senator Bond. Oh, clearly.
        Mr. West. And for us, much more importantly, it is a
    question of the flexibility. Right now our attention is focused
    on beds.
        Senator Bond. And I agree. I applaud you for going in that
    direction, but I notice because of the sensitivity, there is
    some reluctance to take the big step. I am suggesting that to
    continue on your path, you had best look at that, and the GAO
    gives us a general guideline.

                     veterans equitable resource allocation

        Let me move quickly through some other questions. If you
    want to answer more fully for the record, do that.
        But under the resource allocation system, the funds are
    distributed based on workload. We are hearing from other
    sectors that there are in managed care some tradeoffs between
    quality of care and the need to increase numbers of patients
    treated and the size of budget allocations. How are you
    ensuring that that does not happen in VA?
        Dr. Kizer. Let me respond to that because I think those
    concerns--and I have also heard them--miss a few really basic
    and important points. We are measured by how well we provide
    care. We do not pay shareholders. If we increase patients, we
    do not get any increased funds for it unlike in the private
    sector. The more patients you recruit, the more premiums you
    get and the better you do fiscally. That whole financial
    dynamic does not apply in the VA. Whenever more patients are
    treated, we are treating them out of the same appropriation
    with perhaps some increased revenues from third party
    reimbursement, but all those go back into taking care of more
    patients.
        There is a fundamentally different financial dynamic at
    play in the VA, and I think that changes the implementation and
    practicality of some of those same principles. I do not think
    many of the people who have voiced those concerns have thought
    through the situation fully and understand that whatever we do
    as far as savings, all that does is go back into care for more
    patients or doing a better job of taking care of current
    patients. It is a fundamentally different financial dynamic.
        Mr. West. I would add something else, and that is
    throughout this process, especially VERA, as you know, Mr.
    Chairman, Dr. Kizer and the VHA have built in protections. If
    there were an indication that at a particular VISN has a
    special need for resources beyond those allocated, to assure
    quality VHA will intervene. So, we have a fail-safe. VHA has
    maintained a reserve.
        Second, I would say we talk about savings because we have
    said that we expect to realize savings in terms of being able
    to finance health care in the future. But, in fact, this is
    about effective management of a system, of a center, of
    outpatient clinics, of VISN's. Effectively managed, better
    managed facilities give better health care.
        Senator Bond. Bringing more users into the system, how are
    you ensuring that the new users are the ones most in need of
    the services?
        Dr. Kizer. Well, again under VERA, the only funds that will
    be appropriated are for category A users. There is a priority,
    if you will, to bring in the service connected or the poor
    veteran.
        Now, the strategy of bringing in the higher income veterans
    who may come with some revenues we think is really a win-win in
    the sense that we think, for example, with Medicare, that we
    can provide care to those dual-eligible Medicare/VA
    beneficiaries cheaper than their care can be provided in the
    private sector--indeed, that is why we have agreed to that
    being part of the law--but still provide enough margin that we
    can use that to take care of more category A veterans.
        So, the net effect should be not only a benefit to the
    Medicare trust fund, but also a benefit in that we can take
    care of more of those poor veterans who are not going to get
    care otherwise.
        Senator Bond. I appreciate your description of the
    utilization of available resources. I was a little bit stunned
    to see a copy of the letter from one veterans hospital. It
    probably has already been brought to your attention. The
    letters went to local businesses encouraging them to send their
    employees who were veterans to the VA for drug testing,
    background screening, flu shots, and the like.
        The letter said, ``We would like to help you find ways to
    keep your money in your business where it belongs.'' They
    listed the outpatient clinic services with a really stunning
    statement that said, ``Please consider what you are currently
    spending for these services. For eligible veterans, these
    services will cost you nothing.''
        Now, we want to make sure that everybody who needs service
    gets it, but do we need to be telling businesses to stop
    providing services so we can build our body count in VA? Would
    you like to comment on that practice, Dr. Kizer?
        Dr. Kizer. Since that letter was brought to our attention,
    we have had some discussion with the individual involved and
    have hopefully oriented his thinking.
        I think whenever you encourage people to be entrepreneurial
    and innovative and do things differently--and we certainly
    appreciate your support in encouraging that dynamic in the VA--
    that can be manifested in a number of ways, some of which need
    guidance before it gets operationalized.
        Senator Bond. I think that is a good idea. [Laughter.]

                         monitoring workload increases

        In the testimony that GAO presented for the record last
    year, they said, ``We are concerned that some networks may be
    inappropriately increasing their workload numbers to get more
    resources under VERA. Networks may be increasing workload by
    increasing the number of one-visit patients.''
        I know that this is an anecdotal--I hope this is the one
    anecdote, but how are you monitoring workload increases
    throughout the system to make sure there are not similar
    problems?
        Dr. Kizer. Basically we are looking at the workload,
    looking at the numbers, as well as what the utilization of
    services are by those veterans. Insofar as VERA is predicated
    on an historical 3-year user base, whatever may have occurred
    and triggered the specific response by GAO last year, there is
    time to look at it and adjust accordingly. That is part of what
    we are doing right now as we look at VERA in fiscal year 1999,
    what the impact and actual subsequent utilization by some of
    those individuals will be.
        Senator Bond. Do you see any danger? Do you have any
    concern of over-enrolling veterans, promising care to more
    veterans than you have resources for? Do you have some
    mechanism to ensure that the networks do not overenroll and
    that you still will have sufficient resources available?
        Dr. Kizer. A couple of things I would say. Concern. Yes,
    there is always concern certainly in this agency or in
    Government in general.
        One of the reasons why we are doing what has been
    characterized by some as a, quote/unquote, dry run with the
    eligibility this year is to actually inform us so that, when we
    go on line in October 1998, that we will have a pretty good
    assessment of exactly what the numbers will be and how far down
    the statutory priority list we can reasonably go.
        Having said that, I would also note, as the Secretary
    commented a moment ago, that we also maintain a reserve at
    headquarters, and each network is required to maintain a
    reserve, 2 percent of their operating budget. So, there are
    some mechanisms built into the system that should expenditures
    exceed projections, as we move through the year, there are some
    ways of dealing with the problem.
        Senator Bond. The good news is we are going through the
    long list of questions to see those which do not need to be
    asked here. The bad news is we intend still to ask them for the
    record.
        But thank you very much for your time.
        Mr. Secretary, do you wish to make a comment?

                                medical research

        Mr. West. I just wanted to note one thing for the record,
    Mr. Chairman. You have expressed several times about our
    research program and how it will be funded. I think I
    particularly owe you an apology since in my written testimony I
    refer to the increase in research funds as being part of the
    President's fund for research and thus in some way tied to more
    unsure sources. In fact, our request for $300 million in our
    budget is a request for an appropriation that does not change
    with respect to how that works. This is a part of our regular
    budget request to you.
        Senator Bond. We intend to work to get everything we can to
    do that. I was delighted to see--the figures that I saw show
    the NIH grants going up from $220 million to $250 million.
        Mr. West. Yes, sir.
        Senator Bond. Senator Mikulski and I believe very strongly
    that the research component is vitally important, not only for
    the direct benefits or the research, but for the caliber, the
    quality of physicians and health care providers that it
    attracts to the VA.

                         Additional committee questions

        I thank you, Mr. Secretary, gentlemen. It is good to see an
    old friend again, Togo. Glad to work with you.
        [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 Bond

                veterans health administration staff reductions
        Question. For fiscal year 1998, VHA will be cutting its workforce
    4,317 FTE more than originally planned for fiscal year 1998. How much
    are you saving as a result of these additional staff reductions, and
    what is VA doing with the savings? For fiscal year 1999, VHA projects
    additional staffing reductions of 2,589 FTE, according to the budget
    justification. Is it expected that VHA will, in fact, reduce staffing
    more than 2,589 estimated in the budget?
        Answer. The reengineering of our VA healthcare system has resulted
    in improved service delivery and improved quality through shifting from
    inpatient to more clinically appropriate care settings. In doing so,
    the VISN's have retailored their workforce. Since 1994, VHA staffing
    has been reduced by 11 percent. During the same time it has treated
    more patients than ever before (including 8 percent more psychiatric/
    substance abuse patients and 19 percent more homeless patients), and
    VA's quality of care has dramatically improved. VISN's have placed
    continued emphasis on reaching strategic management improvement
    targets, which include reducing per patient costs and increasing
    workload. The impact on FTE exceeded original budget estimates for both
    fiscal year 1997 and fiscal year 1998. Reflecting the field's latest
    spending patterns, the revised estimate for fiscal year 1998 moves $177
    million originally estimated in personal services to other operating
    costs areas such as drugs and medicines, communications, prosthetic
    appliances, equipment and maintenance. In developing the fiscal year
    1999 estimate, we took this into consideration, and, at this time,
    stand by our budgeted estimate for FTE. We do not know when the total
    employment will level out, although we do expect improvements to
    continue and healthcare delivery to change in the future. Because of
    the 5-year straightlined appropriation, we can and must increase our
    reliance on alternative revenues in the future. As we progress through
    this 5-year period, it is anticipated that the changes will become more
    predictable. So, for the next year or two, we believe our budget
    distributions, although estimated as precisely as possible at the time,
    are likely to change.
                 veterans equitable resource allocation (vera)
        Question. Fiscal year 1998 is the first full year of implementation
    of the new resource allocation system, VERA. In some networks there are
    concerns about the adequacy of resources, as network budgets may
    decline as much as 5 percent. Do the ``hard-hit'' networks have
    adequate plans in place to accommodate the proposed budgetary
    reductions for fiscal year 1999?
        Answer. VHA has a strategic planning process. Each network receives
    budget projections that form the basis for planning. Networks use this
    information to formulate plans for the target year as well as future
    years. VHA expects to release projected network allocations for fiscal
    year 1999 in June 1998 so that networks have ample opportunity to
    adjust their plans. For fiscal year 1998, VHA has taken several steps
    to cushion the impact of funding shifts. In addition to capping the
    amount of funds shifted out of a particular network, the Under
    Secretary for Health has retained a reserve and has required that each
    network maintain a reserve so that networks or facilities that are
    ``hard-hit'' can continue to meet patient care obligations. For fiscal
    year 1998, all Network Directors have indicated that, with the release
    of the reserve, their networks will be financially able to implement
    their plan for the current fiscal year.
        Question. What is VA doing to address concerns that VERA may not be
    an equitable method of allocating resources, and what ``fine-tuning''
    of the model is anticipated for the future?
        Answer. First, GAO has conducted an extensive review of VERA. Their
    September 1997 report stated that ``* * * VERA allocates more
    comparable amounts of resources to the 22 networks for VA health
    services users * * * than the resource allocation process it replaced''
    and VERA ``improves equity of regional allocations''. Secondly, the
    Under Secretary for Health has taken steps to ensure that VERA is a
    sound basis for allocating VHA's healthcare resources and to refine the
    methodology for future years. In this regard, the Chief Financial
    Officer has retained Price Waterhouse LLP to evaluate whether VERA is
    sound and is meeting its stated objectives. The contractor has
    presented a final draft report to the Under Secretary for Health.
    Findings indicate that: VERA's conceptual underpinnings are sound;
    VERA's methodological underpinnings are sound; and overall, VERA is
    meeting its specified objectives. Price Waterhouse made several
    recommendations concerning technical and process issues and offered
    suggestions for immediate and long-term improvements. VHA is reviewing
    these recommendations in tandem with recommendations put forth by
    several workgroups that will ``fine-tune'' the VERA model for fiscal
    year 1999 and beyond.
        Question. Will the current VERA model be used for allocating
    resources in 2000 and beyond?
        Answer. VHA plans to use the VERA model for allocating resources to
    the 22 networks in 2000 and beyond and will continue to make necessary
    adjustments and refinements.
        Question. In testimony for the record last year, GAO said ``we are
    concerned that some networks may be inappropriately increasing their
    workload numbers to get more resources under VERA. Networks may be
    increasing workload by increasing the number of one-visit patients.''
    How are you monitoring workload increases to ensure they reflect
    changes that are consistent with VA policy?
        Answer. Efforts are ongoing to accurately identify and monitor
    workload changes in the various networks across the country. First,
    upon the implementation of VERA last April, the Under Secretary for
    Health directed that quarterly special care patient workload tracking
    be immediately undertaken by the VHA Chief Financial Officer. These
    quarterly reports are analyzed to ensure that special care patients are
    not being adversely affected by VERA funding shifts. This information
    is shared with the Network Directors. Also an analysis was conducted on
    the number of basic care patients that used the VA once during a 3-year
    period fiscal year 1994-1996. The analysis showed that for this 3 year
    period, there is little variation among networks from the average
    number of single encounters and the number of single encounters seem to
    have little bearing on VERA funding shifts for the fiscal year 1998
    network allocations.
        Question. How do you ensure that networks have a common
    understanding of VA wide goals and legislative requirements?
        Answer. The Under Secretary for Health has widely distributed
    throughout VA, and to various stakeholders, several publications that
    present goals and legislative requirements, for example, ``Vision for
    Change'', ``Prescription for Change'', and ``Journey of Change.'' Goals
    and requirements are also disseminated via regular system-wide
    conference calls, monthly Network Director meetings, and through Policy
    Board issuance, directives, and performance measures.
        Question. What is the key information that VA headquarters receives
    concerning network activities to identify problems or potential
    problems?
        Answer. VHA has established a performance-based measurement system
    in which all Network Directors are held accountable for specific
    performance measures. These measures address factors, such as cost,
    access, quality, customer satisfaction, patient functional status,
    workforce development, and research. These measures have been
    incorporated in Network Directors' performance agreements for fiscal
    year 1997 and fiscal year 1998. This measurement system is designed to
    assure that VHA provide quality service, in the most appropriate
    setting, and in a cost efficient manner. The measures are monitored on
    a quarterly basis. As an example of the type of information that VHA
    Headquarters tracks, the results for 1997 show a reduction of 29
    percent in acute bed days of care per 1,000 users and a decline in
    operating beds of 21 percent along with an occupancy rate of 78
    percent.
        Question. What steps is VA taking to ensure that networks allocate
    resources to facilities so that veterans have equitable access to care?
        Answer. While VERA is a mechanism to allocate the Medical Care
    budget to the 22 networks, the Under Secretary for Health has also
    issued guidance to the Network Directors regarding resource allocations
    to facilities. A VHA Directive, published in October 1997, establishes
    that the allocation of resources at all levels should be guided by
    principles that move the organization toward accomplishing its system-
    wide goals and objectives. Network allocation systems must incorporate
    these principles:
      --Be readily understandable and result in predictable allocations.
      --Support high quality healthcare delivery in the most appropriate
            setting.
      --Support integrated patient-centered operations.
      --Provide incentives to ensure continued delivery of appropriate
            special care.
      --Support the goal of improving access to care.
      --Provide adequate support for the VA's research and education
            missions.
      --Be consistent with eligibility requirements and priorities.
      --Be consistent with the network's strategic plans and initiatives.
      --Promote managerial flexibility and innovation.
      --Encourage increases in alternative revenue collections.
        The networks have used these principles in providing fiscal year
    1998 allocations below the network level.
        Question. Inspector General audits have found that key data in VA
    in financial and management systems is often erroneous, including
    inconsistent or inaccurate reporting of such basic information as
    patients treated in VA medical centers. Allocation of resources under
    the Veterans Equitable Resource Allocation (VERA) model is
    fundamentally workload based. Given the history of inaccurate workload
    reporting, and the potential that hospital management may exaggerate or
    inflate workload reports to obtain additional funding, has VHA
    established controls to ensure they have accurate data?
        Answer. We have had an ongoing data validation process under the
    VERA system that is being strengthened with the establishment of a new
    technical data integrity workgroup for the fiscal year 1999 VERA
    allocation process to validate the VERA workload and expenditures in
    the 22 networks. This work group comprises members from various
    networks and facilities across the country. We have no indication that
    medical center management is exaggerating or inflating workload reports
    to obtain additional funding. We acknowledge that our data is not
    perfect and we are constantly working to make data validity
    improvements for a credible resource allocation process.
        Question. The Veterans Equitable Resource Allocation system
    allocates funds based on two prices--a basic price and a special care
    price. The special care rate--which was about $35,000 last year--is
    provided for a number of categories, including long-term care. Yet VA
    cannot care for veterans in VA or community nursing homes at this rate.
    I understand that as a result, in some areas access to nursing home
    care has been reduced. Do you believe the VERA model adequately
    addresses the need for long-term care services?
        Answer. The VERA model itself is not causing a reduction in access
    to nursing home care. In the fiscal year 1998 VERA process, the
    national price for Special Care is $36,960 per patient per year. There
    are 29 special care workload classifications in the VERA model,
    including several classes that have long-term care patients in them.
    The fiscal year 1996 expenditures per patient for the 29 special care
    classes ranged from a low of $15,161 for AIDS Category III to a high of
    $246,916 for Heart/Lung Transplants. Under VERA, resources are
    allocated to the twenty-two networks and system-wide the aggregate
    funding is adequate to meet the special care needs of the veterans who
    use the VA healthcare system. As VHA continues to review and refine
    VERA, appropriate study and consideration will be given to adjustments
    in workload classifications and/or workload pricing in the Special Care
    component, as well as the Basic Care component of the VERA model.
                          long-term care for veterans
        Question. What is VA's strategy to ensure adequate capacity for
    long-term care as the need for nursing home care for veterans
    increases? VA's long-term care spending represents about 13 percent of
    VA health care expenditures. Is this adequate to meet the long-term
    care needs of Category A veterans who seek VA nursing care?
        Answer. In November 1996, VA established the Federal Advisory
    Committee on the Future of VA Long-Term Care to make recommendations to
    the Under Secretary for Health on the issues raised in this question.
    The Committee has completed a comprehensive review of VA's extended
    care programs and has studied the alternatives for meeting the
    increasing care needs of the aging, chronically ill and disabled
    veteran populations. Presently, the Committee is finalizing its report,
    which will be issued next month. Following a broad study and review of
    the Committee report by VA stakeholders, the department will be able to
    outline a national policy for all long-term care services.
                                unique patients
        Question. VA underestimated the number of patients who would be
    served in fiscal year 1997 by 200,000. Also for fiscal year 1998, it
    appears more veterans will be treated than originally anticipated. How
    did VA manage to increase patients 7 percent above the estimate? How
    were the patient increases financed?
        Answer. The actual number of unique patients in fiscal year 1997
    increased by 205,000 over the original estimate for fiscal year 1997.
    More than 91,000 of the 205,000 increase represented an improvement in
    our ability to count unique patients. For the first time, the fiscal
    year 1997 actual count includes CHAMPVA--40,000--and Readjustment
    Counseling--51,000--patients not previously counted. Now the patient
    count is more in line with the dollars for these programs which have
    always been included in the budget. The remaining increase of 114,000
    patients is mainly due to increased primary care patients treated on an
    outpatient basis. Savings generated from faster than anticipated
    inpatient care reductions and shifted to more clinically appropriate
    care settings have financed the increase in primary care patients.
                          healthcare enrollment system
        Question. VA is in the process of developing an enrollment system.
    Apparently there is a great deal of confusion as to what enrollment
    will mean. Some veterans believe they could lose their eligibility for
    health care benefits if they do not enroll by October 1st. Could you
    explain VA's enrollment system, and whether any veterans will lose care
    if they don't sign up by October 1, 1998?
        Answer. The Department of Veterans Affairs (VA) is required by law
    to establish an enrollment system for health-care services to be in
    place by October 1, 1998. While most veterans must be enrolled to
    receive care, it does not mean that veterans who have not applied for
    enrollment by that date will lose their eligibility for VA health care.
    Veterans can apply and be enrolled at the time they are in need of VA
    health care. Veterans who have received VA health-care services since
    October 1, 1996, will have an application processed automatically on
    their behalf. The ``rolling enrollment'' system being implemented means
    that any veteran can apply for enrollment at any facility at any time
    during any year. There is no deadline for applying for enrollment.
    Veterans can make application for enrollment at any time that they come
    to a VA medical facility for care, even after October 1, 1998. Further
    details of the VA enrollment system will be included in proposed VA
    Regulations to be published in the near future.
        After October 1, 1998, some veterans may still be treated without
    being enrolled. Veterans with service-connected disabilities may be
    treated for those disabilities, veterans who are rated with 50 percent
    or greater disability may be treated for any condition, and veterans
    who were discharged or released from active duty for a disability
    incurred or aggravated while on active duty may be treated for that
    disability within the first 12 months after their discharge.
        Question. Is there any danger of over-enrolling veterans next
    year--and promising care to more veterans than resources will provide
    for? How will you ensure that the networks don't over-enroll and that
    sufficient resources are available to serve all enrolled veterans?
        Answer. VHA will closely monitor the applications for enrollment
    this year and every year thereafter. We will consider a number of
    factors, e.g. number of applicants by priorities, their estimated
    utilization and expenditures, as well as resources available for their
    care. Veterans will be enrolled from the applicants this year starting
    with priority one through successive priorities as far as resources
    permit. The Under Secretary and Secretary will decide through which
    priority veterans will be enrolled nationwide and this will be
    announced in the Federal Register each year.
        Question. How will the enrollment system be used to ensure that the
    highest-priority veterans receive care?
        Answer. If resources appear to be short, or unusual demand for
    enrollment occurs at times for the higher priorities, VHA will continue
    to enroll the higher priority veterans and may not continue enrollment
    of the lower priority veterans. VHA will also establish a contingency
    fund to cover unpredictable events.
        Question. How many veterans have enrolled during the first 6 months
    of the enrollment season (October 1997--March 1998)?
        Answer. No veterans have been formally enrolled as yet. VHA has
    been accepting enrollment applications since October 1, 1997. VHA is
    currently analyzing information on applications for a report to
    Congress due April 30, 1998. Veterans will be enrolled beginning in
    June.
        Question. Will VA use priority group status to turn away enrolled
    veterans if VA determines during fiscal year 1999 that resources are
    insufficient to serve all enrolled veterans?
        Answer. VA does not plan to turn away enrolled veterans for care.
    Once enrolled, veterans will be provided the same comprehensive range
    of services. If resources become constrained or increased new demand by
    higher priority veterans occurs, VA may not continue enrollment of the
    lower priority veterans. VA expects to give veterans 60 days notice
    before their enrollment is terminated.
          worker's compensation in the department of veterans affairs
        Question. At about $140 million per year, VA has the second largest
    expenditure of all government departments for worker compensation. What
    efforts are being made to substantially decrease the amounts paid and
    get undeserving or fraudulent recipients off the rolls and thus make
    more money available for medical care?
        Answer. While VA's expenditures for workers' compensation are
    larger than those of most other government departments, it should be
    noted that VA's costs are consistent with its larger number of
    employees.
        VA shares the concerns of Congress and has for many years
    aggressively pursued reductions in the cost of workers' compensation.
    VA's OWCP costs and the number of cases receiving compensation have
    decreased each year since 1994. In 1994, we had 18,054 cases at a cost
    of $145.5 million; in 1995, 17,339 cases at a cost of $143 million; in
    1996, 16,514 cases at a cost of $140.7 million; and in 1997, 15,724
    cases at a cost of $136.6 million. This is a decrease of nearly $9
    million and 2,330 cases in 3 years.
        This decline is attributable to aggressive pursuit of cost
    awareness in the form of charging the expense back to the employing
    facilities rather than funding the payments centrally; extensive
    training of field site personnel in detecting the warning signs of
    fraud and abuse; and better, more timely information through VA's WC/
    Safety Tracker (a computerized tracking and management information
    system).
        VA's WC/Safety Tracker is recognized as one of the best OWCP/Safety
    tracking systems available and has been purchased by GSA, NASA, DOJ,
    and the Army Medical Command. The Army Medical Command alone operates
    approximately 170 medical centers. Other Federal agencies have also
    expressed an interest in purchasing the system.
        A comprehensive workers' compensation training program is conducted
    quarterly for 40 students per session at VA's Little Rock Education
    Center. This 40-hour seminar consists of face-to-face training with
    expert faculty from VA Central Office, DOL, and field facilities.
    Additionally, on-site training is also provided to various employing
    facilities for managers and supervisors.
                            third-party collections
        Question. VA's budget depends heavily on the collection of third-
    party payments, estimated to total $677 million in fiscal year 1999.
    For fiscal year 1998, VA is behind estimates by 10 percent. Do you
    stand behind your fiscal year 1998 and 1999 estimates?
        Answer. Yes. VA believes it will meet recovery targets for these
    years. It is expected that the 10 percent will be collected in later
    quarters.
        Question. What will happen if you do not meet your targets in
    fiscal year 1999--is there any danger that VA will not be able to care
    for the number of veterans you have projected, or that quality will
    suffer?
        Answer. VA will be closely monitoring the collections in fiscal
    year 1999. If at any time we do not believe that we will reach these
    goals, we will take immediate action to notify, and work with, the
    Administration and the Congress to ensure that adequate funding is
    provided for the healthcare of our nation's veterans.
        Question. According to GAO, reaching your long-term collection
    goals will be difficult for a number of reasons--including VA's
    increasing reliance on less-costly outpatient care, and veterans
    increased enrollment in HMO's, from which VA cannot recover costs.
    Further, GAO found that VA was unable to provide an analytical basis
    for its recovery projections. How can we have confidence in VA's
    ability to recover these costs?
        Answer. GAO completed their review in July 1997. GAO's analysis is
    largely based on reviewing bills from fiscal year 1996. Since that
    time, VHA has made a great deal of progress toward the goals of
    implementing efficiencies. Physician education, and strengthened
    utilization review of patient care procedures based on healthcare
    industry standards will help to reduce the cost of care by 30 percent.
    The result of increased efficiency is that fewer claims are denied by
    insurers as inappropriate. Also, the Networks are placing greater
    emphasis on appealing denied claims.
        VA is also pursuing Medicare remittance advice, which will provide
    adjudicated claims to supplemental carriers.
        With respect to HMO's, VHA is placing emphasis on providing a
    seamless continuum of care through better integration of VA resources
    and strategic alliances allowing VHA to participate as a provider in
    other health care systems. In addition, traditional HMO's recently
    began offering their enrollees point of service contracts allowing
    enrollees to obtain health care outside the HMO network if the
    enrollees agree to bear larger copayments. Aggressive identification
    and recovery from these HMO plans is being pursued. VHA is moving
    aggressively to become the provider of choice.
        The Balanced Budget Act of 1997 (Public Law 105-33) allowed VA to
    retain the medical collections formerly returned to Treasury. There is
    an important culture change occurring, resulting in increased
    motivation to collect. VHA also received authority to implement
    reasonable charges. One of the major opportunities for increases in
    third-party recoveries resides with the ability to implement billing
    rates based on reasonable charges. This will allow market prices for
    actual services provided and the development of a Diagnosis Related
    Group (DRG)-based per diem rate schedule for inpatient care to be used
    with an automated multiple rate schedule pricer. Outpatient procedure
    rates are planned for late in fiscal year 1998.
        Question. The Inspector General (IG) has issued reports pointing
    out that VA is not effectively using the authority it has now for
    collections. For example, the IG found in its report on Means Testing
    and Income Verification that staff is failing to collect income
    information, actually inserting ``zero income'' in many instances to
    get workload credit but failing to identify patients who should be
    billed for medical care. What actions are you taking to identify
    veterans who should be billed and improve your rate of collection?
        Answer. Both national and local initiatives are underway to improve
    insurance identification. The Networks are implementing efficiencies in
    the patient intake process, and utilizing preregistration procedures
    developed for nationwide use. VHA is also pursuing data matches of
    Medicare and VA records to identify primary payer data.
        Question. GAO acknowledged that VA has some initiatives underway to
    improve collections, but identified several additional things VA could
    do, such as contacting State insurance commissioners to obtain their
    help in removing exclusionary clauses in insurance policies that appear
    to preclude payment to VA. What are VA's plans to follow GAO's
    recommendations?
        Answer. In addition to initiatives that we have previously
    mentioned are being undertaken, the following responds to other GAO
    recommendations with which we agree:

              ``We believe it now is generally recognized that exclusionary
            clauses in private health insurance policies that attempt to
            discriminate against Government furnished healthcare are
            unenforceable as a matter of law. Therefore, in our view,
            removal of such clauses, mostly relics of outmoded practice,
            would have no appreciable effect on VA collections.
            Nevertheless, we plan on contacting state insurance
            commissioners, as GAO recommended, to request their assistance
            in a technical ``clean up'' of such policies (other than self-
            funded ERISA plans, which are not governed by state law) in
            this regard.''

        Question. Given that VA's expertise lies in health care, but not in
    debt collection, wouldn't it make sense to contract out the collections
    function?
        Answer. It would appear so at a quick glance. However, this issue
    is complex as VA must adhere to rules and regulations the private
    sector doesn't have to deal with. Nevertheless, we are currently
    evaluating what functions could be effectively done by a contractor.
        Question. Has any cost-benefit analysis been performed of
    contracting out this activity?
        Answer. Recent outsourcing analysis performed by Coopers and
    Lybrand indicated that the VA's approach to cost recovery is inherently
    sound, but indicated that VA should consider some outsourcing. We are
    currently considering these recommendations.
                              medicare subvention
        Question. By 2002, VA's plans are for third-party collections to
    increase 75 percent over the fiscal year 1998 estimate, assuming
    enactment of authority to collect from Medicare for certain veterans.
    How dependent is your goal upon the Medicare ``subvention'' authority
    you are seeking?
        Answer. VHA's goal is to reach 10 percent of total funding from
    alternative revenues by fiscal year 2002. This would include, Medical
    Care Cost Collections (principally third party), sharing (VA/DOD,
    TRICARE and enhanced sharing) and Medicare subvention. Medicare
    subvention is an important part of the strategy to meet the 10 percent
    alternative revenue goal. If legislation is not passed or is delayed,
    our goal still remains 10 percent by fiscal year 2002, but achieving it
    becomes significantly more difficult.
        Question. Absent enactment of this proposal, what is VA's
    contingency plan for increasing funding?
        Answer. We have confidence that Medicare subvention will be
    enacted, and that the test will show dual eligible veterans prefer to
    come to VA to use their Medicare benefits and that VA will provide
    excellent cost-effective healthcare at reduced expenditures to the
    Medicare Trust Fund. If not, other revenue alternatives (e.g., VA/DOD
    sharing, enhanced sharing, TRICARE and Medical Care Cost Collections)
    would need to be expanded further to fill the gap to meet the 10
    percent target by fiscal year 2002.
        Question. What is the status of Medicare subvention authority, and
    can you describe what has been so controversial about this proposal?
        Answer. The Department of Veterans Affairs and the Department of
    Health and Human Services have prepared and co-signed a Memorandum of
    Understanding that will govern the VA Medicare project when it is
    authorized. Although enabling legislation has not yet been introduced
    in Congress, the VA Under Secretary for Health and members of his staff
    are working with Congress, OMB, and HHS in support of legislation to
    authorize a Medicare pilot. The Memorandum of Understanding conforms to
    the requirements and guidelines contained in legislation which the
    Administration submitted last year, and resolves many difficult issues
    that could have been obstacles to a successful project. The Agreement
    contains an evaluation effort to ensure neither VA nor the Trust Fund
    are adversely affected.
        Opposition to the VA Medicare project has stemmed primarily from
    concerns that it would increase costs to the trust fund. The
    controversy appears unfounded to VA, as VA agrees to reimbursement
    rates lower than what Medicare pays in the private sector. Therefore,
    the Trust Fund will benefit by reducing expenditures for dual eligible
    veterans.
        Medicare beneficiaries who are veterans are entitled to equity of
    access in health care just as non-veteran Medicare beneficiaries. Many
    veterans who do not have service-connected disabilities and are not
    financially needy are now denied access to VA care because
    discretionary funding does not cover the cost of their care. The VA
    Medicare program would allow them to use their Medicare benefits to
    obtain care in VA. We believe veterans will benefit by having the
    freedom of choice.
        Question. Given that VA seems to have excess inpatient capacity but
    little or no excess outpatient capacity, how will VA ensure that
    veterans using VA outpatient facilities are protected from reductions
    in services, longer waiting lines, or quality of care problems,
    assuming enactment of Medicare subvention authority?
        Answer. VA is committed to providing high quality care for all
    patients. Waiting times, service capacity, and appropriateness of care
    are routinely monitored at all VA facilities and will be closely
    monitored at VA Medicare sites as part of the pilot evaluation and to
    ensure that high quality is maintained. Additionally, the Medicare
    funds collected from providing services to dual eligible veterans may
    be used to extend hours of operation, contract for services, or other
    enhancements to expand capacity.
                           primary care accessibility
        Question. VA over the past several years has established scores of
    new community-based outpatient clinics to improve accessibility of
    primary care. GAO has expressed concerns that VA may be currently
    improving access for thousands of lower priority new users (non-
    service-connected) while thousands of higher priority current users
    must wait several years for reasonable geographic access to care.
    Networks' business plans and clinic proposals do not contain
    information needed to assess these concerns.
        Answer. The Veterans' Eligibility Reform Act of 1996 has changed
    all the underlying ground rules concerning this issue. There are only
    two eligibilities for VHA care: those for whom VA ``shall'' provide
    care and those for whom VA ``may'' provide care. Low income non-service
    disabled as well as the service-disabled fall into the first category.
    Congress has required that VA use specified priorities only to enroll
    veterans into the VHA healthcare system should resources be
    insufficient to cover all veterans who want to receive VA healthcare
    services. An important concept in the new law, which GAO has not
    recognized, is that once veterans are enrolled, there is no distinction
    now between service-connected or non-service-connected veterans or the
    services they receive. All are treated equally. ``Enrollees'' are the
    appropriate population for planning services and the community-based
    outpatient clinics will improve access for all enrollees.
        Question. Does VA have a goal for equalizing veterans' access among
    the 22 networks? If so, what is VA's target percent of veterans that
    should have reasonable geographic access?
        Answer. VA does have a goal to equalize and improve veterans'
    access among the 22 networks, although no target percent exists. Under
    the Veterans Equitable Resource Allocation (VERA) methodology, VA is
    able to meet its goal of treating the greatest number of veterans
    having the highest priority for healthcare and allocate funds in an
    equitable, understandable and predictable manner. This allocation
    methodology corrects past geographic funding imbalances and helps make
    sure equitable access to care is available to all eligible veterans
    within the overall funding availability. Within their allocations,
    VISN's are shifting resources to more clinically appropriate care
    settings such as Community Based Outpatient Clinics (CBOC's) and
    improving access to care.
                consolidated mail outpatient pharmacies (cmop's)
        Question. What level of success has VA's Consolidated Mail
    Outpatient Pharmacies (CMOP's) initiative had in reducing costs
    associated with mailed outpatient medication refills?
        Answer. A conservative estimate of raw cost savings for the
    physical act of dispensing a mail prescription through CMOP's is $1.50
    per prescription. Currently, at a rate of approximately 30 million
    annual prescriptions processed through CMOP's, estimated annual savings
    are $45 million. The CMOP program has provided VA medical centers the
    opportunity to redirect pharmacists to patient centered activities.
    Additional cost savings in drug costs and total health care costs have
    been and are being achieved through the more efficient and effective
    management of individual patient's pharmacotherapy by using clinical
    pharmacy specialists as facilitators with other health care providers
    and patients in the medication use process. The concept of reinventing
    the role of pharmacists (through the use of automated outpatient
    dispensing technology) into more direct patient care activities was an
    important consideration when the CMOP program was initiated in the
    early 1990's.
        Question. Has VA's Consolidated Mail Outpatient Pharmacies
    initiative met with any reluctance or direct competition by VISN's or
    individual VA medical centers, which have adversely affected cost
    reductions?
        Answer. There has been some reluctance by some VISN's or individual
    VA medical centers before those facilities were served by a CMOP. The
    VA CMOP program has had to prove the value of the program to VISN's and
    individual VA medical centers on a case by case basis and must continue
    to demonstrate that value on an ongoing basis. None of the reluctance
    has adversely affected cost reductions. In January 1998 the seventh
    CMOP became operational; therefore, capacity to process current system-
    wide mail prescription workload was finalized. Since the capacity now
    exists to process mail prescription workload across the system and
    outpatient prescription workload continues to increase due to the shift
    from inpatient to outpatient care and new patients entering the system,
    facilities, in general, have realized that CMOP's impact positively on
    customer service issues such as waiting time at the pharmacy window and
    mail processing time. Based on an ongoing analysis of private sector
    mail order pharmacy systems, these same facilities also realize that
    our average overhead cost of $2.10 per prescription for each
    prescription processed by CMOP is substantially less than private
    sector rates.
        Question. How effective has the mailed refill program been at
    providing faster delivery to veterans?
        Answer. For the variables that are under the control of the
    Veterans Health Administration, CMOP's have been very effective at
    reducing mail backlogs at individual VA health care facilities. Each
    CMOP monitors, tracks and evaluates mail delivery times routinely. If a
    mail delivery time problem occurs, there are software processes, which
    can be activated by the medical centers, to allow the CMOP to ``pull''
    suspended mail prescriptions ahead of their scheduled release date.
    Generally, each CMOP takes approximately 36 hours to process work
    received from their participating medical centers. This is not true of
    each medical facility (some are greater and some are less on any given
    day). The key here is the consistency the CMOP program brings to the
    distribution portion of the outpatient prescription process.
        Question. How have the successes in automated dispensing of
    inpatient medications?
        Answer. The use of automated dispensing equipment first began for
    inpatient medication. VA tested one of the earliest automated
    computerized dispensing systems (Unit Dose) in 1987 to improve the
    accuracy and quality of inpatient medications use systems. VA has
    installed over 110 of these Unit Dose systems throughout the nation. In
    addition, the same company and others have adapted the inpatient
    technology for use in VA's outpatient clinics.
                     medical and operating supply inventory
        Question. VA's fiscal year 1997 expenditures for supplies (such as
    drugs, medical supplies, operating supplies, prosthetics, and
    provisions) totaled $2.6 billion. In 1995 the Office of Inspector
    General (OIG) issued a report (Review of Operating Supply Inventories
    at VA Medical Centers) which concluded that medical center operating
    supply inventories on hand were excessive and most inventory items were
    not recorded on supply control records. Have VA medical centers
    eliminated their excess operating supply inventories?
        Answer. Many medical centers have exercised the option to record
    operating supply inventories under the Generic Inventory Package
    (GIP)--an automated system which tracks inventory and supplies from
    receipt to issue at point of use. This system enables medical centers
    to control and manage optimal inventories. Not all VA medical centers
    have elected to use the GIP and it is unknown whether those VA medical
    centers have excess inventories.
        Question. Are VA medical and operating supply inventories
    adequately controlled by inventory records or automated systems?
        Answer. Medical and operating supply inventories are recorded and
    adequately controlled through the Generic Inventory Package (GIP). The
    GIP, which is not mandatory, also is used to record and control the
    warehoused supply inventories that are owned by the VA Supply Fund.
        Medical Centers that have not elected to use GIP have supplies that
    have been issued to the using services which are not recorded as
    inventories. In those instances, local VA using service management is
    responsible for establishing and maintaining reasonable supply
    inventory levels and controls. Since these supplies are unrecorded,
    there are no inventory records or automated systems to monitor local
    supplies.
        Question. In 1997, GAO reported that the Department of Defense
    prime vendor program for medical supplies along with other inventory
    reduction efforts resulted in savings of over $700 million, eliminated
    unnecessary layers of inventory, and emptied warehouses. Are there any
    VA efforts to apply a prime vendor approach to managing medical supply
    inventories?
        Answer. VA was among the first Government agencies to award a
    medical/surgical prime vendor contract. Previous to that, VA had
    awarded successful pharmaceutical prime vendor contracts that
    dramatically reduced inventories and were instrumental in the
    Department's decision to close its depot system. For pharmaceuticals
    alone, inventories at the depots and at medical centers were reduced
    $30 million. Recently, prime vendor contracts were awarded for
    subsistence items. This has reduced inventories for this commodity by
    $6-$8 million. VA is now in the process of developing an improved
    medical/surgical contract that could significantly reduce the amount of
    inventory of medical supplies at medical centers. This contract, in
    conjunction with VA's active product standardization program, should
    markedly reduce inventories, improve product utilization, and reduce
    costs.
        Question. VA initiated a prime vendor program for pharmaceuticals a
    few years ago. What lessons have been learned from the pharmaceutical
    prime vendor program that should be applied to a medical supply prime
    vendor program?
        Answer. The VA Pharmaceutical Prime Vendor (PPV) Program has been
    highly successful since it was established in 1991. Several aspects of
    the PPV program can be assumed to apply to the Medical-Surgical Prime
    Vendor (MSPV) program as well. Significant factors that influenced the
    positive outcome of the PPV program are:
    Inventory Costs
        Storage costs were dramatically reduced because inventory levels
    dropped from a 30-120 day cycle to a just-in-time (JIT) cycle.
        Stock on-hand was reduced to seven to 10 days.
        Emergency delivery service for life-threatening situations ensured
    the pharmacist had the right product on time.
        As the number of days of stock on-hand decreased, the inventory
    turnover rate increased, and the likelihood of receiving outdated stock
    was significantly diminished (product quality and freshness was
    preserved).
    Storage Space
        Over the past six years, the physical inventory space of VA medical
    centers has decreased substantially due to implementation of the VA
    Pharmaceutical and Prime Vendor programs.
        Using a Pharmaceutical Prime Vendor system reduced warehouse and
    ward space, and this available space was converted to use for revenue-
    generating activities, such as leasing the property to neighboring VA
    facilities, other government agencies, or affiliated hospitals.
        Today, approximately 75 percent of VA inventory space is used to
    store bulkier medical and surgical supplies, that are purchased in
    larger quantities than pharmaceuticals. Fully implementing a MSPV will
    decrease this stock on-hand and increase inventory turnover by 3 fold.
    The available warehouse space will be better utilized by the medical
    facilities for additional revenue-generating activities. Because
    warehouse and storage space (square footage and overhead costs) varies
    by facility, an actual saving is difficult to predict without
    performing a more detailed analysis.
    Personnel and Administrative Time and Costs
        PPV orders are placed electronically.
        Using a pharmaceutical prime vendor enables the pharmacies to place
    one order for the medical facility and have the flexibility to choose
    from over 21,000 products available from over 300 manufacturers.
        Since orders are placed daily and up to five times a week, the
    total number of orders placed is approximately 260 orders per year per
    medical facility.
        Previously, a medical facility had to place multiple orders with
    many suppliers. This practice required the medical facility to receive,
    inspect, certify, and pay vendors individually. At that time the
    transaction costs were $75 per delivery order and $150 per purchase
    order.
        Electronic ordering, inventory bar coding, confirmation, and
    electronic funds transfer (EFT) payment reduced the number of personnel
    and administrative time and costs used to support the VA's manual
    system procedures.
        Once the PPV program was implemented, facilities had to evaluate
    the program's impact on its organization. FTE previously responsible
    for purchasing, warehousing, distribution, and fiscal functions, became
    available for reassignment to a different responsibility area/service,
    and most importantly, were available for reassignment to more critical
    direct patient care areas.
    Payment Process
        Next day payment provisions utilize a better payment method than
    International Merchant Purchase Authorization Card (IMPAC) card.
        There are nominal transactions fees because the ghost credit
    account program is congruent with wholesale industry rather than retail
    industry.
        Payment reduction from 15 days (initial Prompt Payment Act
    deviation) to approximately 24 hours positively reduces the cost of
    money.
        The VA will continue negotiations with the prime vendors to
    decrease distribution fees.
        It is anticipated that cost savings will exceed the initial
    projection of hundreds of thousand of dollars in annual savings.
    Other
        The PPV program is mandatory for all medical centers, outpatient
    pharmacies, and mail-out pharmacies--this ensures total ownership by
    VHA customers and competitive distribution fees.
        Single award for each region (regions are contingent upon VA
    business strategies, both current and anticipated)--permits lower
    distribution fees and enables region to obtain consistent and uniform
    service.
        Lockout mechanism on product groups or classes enables VA to meet
    its standardization goals and contract compliance objectives--economies
    of scale are successfully achieved.
        Pharmacy Directors have been able to improve operations because the
    JIT method enables them to budget and forecast more accurately.
                 telephone personal identification number (pin)
        Question. In 1997, the IG concluded that installing telephone
    Personal Identification Number (PIN) access systems at VAMC's could
    significantly reduce long distance costs. VHA agreed with this. What
    has been VHA's progress in installing PIN systems?
        Answer. In keeping with his policy to give field facilities as many
    operational responsibilities as possible, implementation of personal
    identification number (PIN) access systems was decentralized. The Under
    Secretary for Health encouraged the Veterans Integrated Service
    Networks (VISN's) and the VA Medical Center (VAMC) Directors to install
    PIN systems at their facilities and/or integrate PIN systems into plans
    for their new telephone systems or upgrades to existing systems. In a
    memorandum, dated April 11, 1997, the Under Secretary for Health
    advised the Assistant Inspector General for Auditing (52) that he was
    hopeful that installation of the PIN system at all hospitals would be
    completed by September 30, 1998.
                         just-in-time (jit) inventories
        Question. What level of success has VA had in reducing staffing and
    warehousing costs associated with the implementation of just-in-time
    inventories and the use of prime vendors?
        Answer. Each VAMC activity has undergone reorganization or
    realignment. In many cases, some or all logistics functionalities were
    transferred to other programmatic areas such as Engineering,
    Environmental Management or Dietetic Service. While exact numbers are
    unknown, there has been a reduction in personnel devoted solely to
    logistics functions.
                    addictive and high cost drug inventories
        Question. What level of success has VA had in safeguarding
    inventories of addictive and high cost drugs?
        Answer. Both GAO and VA OIG have reviewed the actions taken by VA
    to safeguard inventories of addictive and high-cost drugs and conclude
    that the actions taken addressed the vulnerability. Understanding that
    no system is foolproof, the vulnerability has been removed from the
    list of the Departments material weaknesses.
        Question. What initiatives are being implemented to prevent theft
    and conversion of drug inventories?
        Answer. Since 1992, VHA has implemented a number of actions
    designed to both protect supplies of controlled substances and high
    cost drugs and to detect any unexplained losses. In 1992 VHA
    established the requirement that all VA pharmacies limit access to
    controlled substances to a few authorized individuals. In addition,
    pharmacies are required to maintain a perpetual inventory of controlled
    substances in all areas of the pharmacies.
        VHA also requires pharmacies to have electronic access locks in
    addition to manual lock requirements for all controlled substances
    areas. These electronic systems record the time, date and person
    entering the storage areas.
        Over the last six years VHA has developed and released three
    versions of Controlled Substances software to track the ordering,
    distribution and dispensing of controlled substances on inpatient
    wards. The most recent version supports automated dispensing equipment
    and a wireless system to document inventory on the wards using bar
    codes. VHA also requires a perpetual inventory of controlled substances
    on all nursing wards.
        In September 1997 VHA released version 3.0 of the Drug
    Accountability software. This software allows pharmacy managers to
    automatically track the receipt of pharmaceuticals from pharmaceutical
    prime vendors into the master inventory of the pharmacy and throughout
    the different dispensing areas of the pharmacy. This software also
    enables pharmacy officials to audit discrepancies in inventory about
    established tolerances.
        Currently, VHA is reviewing proposals to automate medication
    administration at the inpatient ward level. This action, when
    implemented, will reduce medication errors, enhance the quality of
    patient care and provide for the complete tracking of pharmaceutical
    utilization from the wholesaler (prime vendor) to the medical facility
    to the patient.
                  community based outpatient clinics (cboc's)
        Question. Does VA require networks to improve access first for
    higher priority veterans before lower priority veterans?
        Answer. Improved access in the form of community based outpatient
    clinics is based on providing the best quality and array of healthcare
    services to eligible veterans using existing funds. One of the reasons
    for establishing new CBOC's is to provide more convenient access to
    healthcare for currently enrolled users, and to improve access
    opportunities for eligible veterans not currently served within
    existing resources. Category A Veterans continue to receive the highest
    priority for appointments, even at the CBOC locations.
        Question. Are newly established clinics being systematically
    evaluated so that consistent and comparable data are available to
    monitor performance and make adjustments, if warranted? If so, what do
    the results show?
        Answer. When proposals for new CBOC's are developed, the VISN and
    parent facility identify the criteria by which the clinic activities
    will be evaluated upon activation. The criteria address the business
    plan and the overall goals and objectives identified for the clinic.
    While some data collected may be unique to a particular clinic or
    Network, most of it is the same as that collected for all CBOC's.
                                patients' deaths
        Question. There have been several reports over the past couple of
    years of inappropriate deaths of patients and serious misadventures;
    what assurances do we have that the requisite resources are being
    devoted to ensure that these ``adverse events'' are consistently and
    accurately reported and that corrections of deficiencies are
    effectively implemented?
        Answer. Requisite resources are being devoted to ensure consistent
    and accurate reporting of adverse events and the correction of
    deficiencies.
      --VHA Handbook 1051/1, ``Patient Safety Improvement'', published on
            January 13, 1998, establishes policy on the identification,
            reporting, review and analysis of adverse events. Staff
            responsibility for the Patient Safety Improvement (PSI) program
            is delineated at the facility, Network and Headquarters levels.
            Oversight responsibility to ensure accurate reporting and
            follow-up is delineated at the Network as well as Headquarters
            levels.
      --A Sentinel Event Registry to track and monitor adverse events
            reported to Headquarters within 48 hours is maintained by the
            Office of the Chief Network Office (CNO). In addition, computer
            software is being enhanced to allow facility entry of reports
            of Focused Reviews and Administrative Boards of Investigation,
            thus ensuring timely entry as well as access to appropriate
            Headquarters offices.
      --A Patient Safety Oversight Committee with membership from the Chief
            Network Office, the Office of Performance and Quality (OPQ),
            the Office of the Medical Inspector (OMI) and the Office of
            Patient Care Services is meeting every two weeks to review each
            facility's analysis of adverse events, Boards of Investigation
            and Focused Reviews for appropriate actions and the
            identification of lessons learned.
      --In addition, a Quality Management Integration Council (QMIC),
            chaired by the Under Secretary for Health, has been formed to
            provide oversight of quality and patient safety improvement
            activities. The Office of the Medical Inspector (OMI) monitors
            Focused Reviews and Boards of Investigation for the correction
            of deficiencies and conducts independent focused reviews,
            investigations, and site visits on quality of care issues.
            Recently, both the OMI and the Office of Performance and
            Quality have been authorized to hire additional staff to
            conduct these activities.
      --A Quality Management Officer has been appointed at each of the 22
            networks. One of their roles is to facilitate the reporting and
            analysis of adverse events at each medical center and to assure
            follow-up.
                               validation of data
        Question. The information and data systems on adverse events, such
    as Occurrence Screens (OS) and Patient Information Reports (PIR), have
    often been criticized for lack of accuracy in VHA; what processes are
    there for validating this data, and the information contained in
    reports derived from the data, concerning quality assurance issues, and
    how effective are they?
        Answer. Reports of adverse events and assessments of those adverse
    events are reviewed at both the VISN and at Headquarters to assess the
    validity of the data and the appropriateness of the assessments and the
    actions being taken. At Headquarters this review is performed by both
    the Office of the Medical Inspector and the Patient Safety Improvement
    Oversight Committee. The latter body, in particular, frequently
    requests additional data from the facility if the original information
    seems questionable. While no data are available regarding this issue,
    we believe that these mechanisms are quite effective in improving the
    validity of patient safety information reported from field facilities.
        Question. You have partnered with several other organizations and
    established a select group of expert advisors on quality assurance and
    you are seeking improved ways of identifying medical errors and their
    reporting by employees in VAMC's; how do you propose ensuring the full
    extent of these medical errors are reported and analyzed for their
    frequency and any trends that can be evaluated for making improvements
    throughout the VHA system?
        Answer. Based on our consultations with safety experts, we have
    decided to improve the reporting and review of medical errors and other
    safety related incidents by adopting procedures based on the Aviation
    Safety Reporting System (ASRS), which has been successful in improving
    aviation safety over the last 23 years. The key feature of the ASRS is
    confidential, voluntary reporting with the reports being used to enrich
    knowledge of the factors that need to be addressed to improve safety.
    This new system will complement, not replace, our current internal
    management system that involves mandatory reporting and review of
    adverse events causing significant injury to patients. Currently, VHA
    is developing plans to pilot test and implement this new system. We
    believe the ASRS model will substantially increase the proportion of
    medical errors and adverse events that are reported by front-line
    staff. In addition, the ASRS based system should provide a quality
    check on our internal management system regarding the frequency with
    which adverse events that involve significant injury are reported.
                      business process reengineering (bpr)
        Question. A draft report produced by the Veterans Benefits
    Administration--``Roadmap to Excellence'' notes ``there are widely
    divergent and often unproductive approaches to BPR implementation being
    taken in the field stations.'' How will you improve implementation of
    business process reengineering and other initiatives aimed at improving
    the quality of work in VBA?
        Answer. VBA is field testing the major process change initiatives
    that compose a significant part of the reengineered system in a series
    of test sites prior to full national deployment. The aims of these
    tests are threefold. First we wish to validate and measure the positive
    outcome and underlying assumptions of each of these process changes
    prior to full-scale national deployment. Second, we want to fully
    develop the actual field process from the theoretical concept so that
    field stations will be able to deploy successfully. Finally, we want to
    be able to successfully capture the costs in terms of workload
    management as well as the new opportunities for improvement produced by
    these changes in a systematic and maintainable way. These lessons will
    be shared throughout the organization. Likewise, we seek to capture the
    success stories and the problems encountered by regional offices and
    assure that the information is available to all stations so that they
    can leverage the knowledge gained by other facilities.
                            accountability measures
        Question. Last year in testimony the National Academy of Public
    Administration stated ``VBA nationally operates in too permissive a
    manner with little accountability for the achievement of specific
    results across all 58 of its regions.'' Have appropriate accountability
    measures been implemented to ensure managers are held responsible for
    meeting quality and timeliness goals?
        Answer. The Under Secretary for Benefits was confirmed by the
    Senate in November 1997. In just 5 months under his leadership, the
    Veterans Benefits Administration has taken dramatic steps to change its
    way of doing business. Among these steps are a number of strategies
    specifically related to improving quality and timeliness and holding
    managers accountable for meeting performance goals.
        Accountability will be achieved primarily through: (1) strategic
    planning, which will be outcome based with measurable goals and based
    on a Balanced Scorecard, and (2) the restructuring of our 58 regional
    offices into consortiums which will require managers to meet team goals
    tied to strategic planning.
        The balanced scorecard is a method of performance measurement that
    facilitates planning, setting targets, and alignment of strategic plans
    with our vision and goals. The VBA is presently developing systems and
    processes to implement the Balanced Scorecard.
        The consortiums will provide the framework for the managers of the
    VBA's 58 regional offices, working in teams, to pursue performance
    goals linked to strategic plans and monitored and evaluated using the
    Balanced Scorecard. The performance evaluation system for managers will
    tie individual performance to team goals aligned with the strategic
    plan, thus assuring accountability for achieving specific results.
        Question. The National Academy of Public Administration in its 1997
    report called for consolidating VBA's 58 regional offices. Are your
    plans consistent with NAPA's recommendation? Will any regional offices
    be closed?
        Answer. To some extent, our plan for creating consortiums is
    consistent with NAPA's recommendation. For example, member benefit
    offices within a consortium will identify economies in operation
    generally associated with consolidation. Certain activities will be
    consolidated as a means of reducing costs and redundancies. There will
    also be opportunities for sharing resources which, in turn, will help
    to increase service access points and the delivery of benefits.
        The VBA prefers the option of consortiums to the alternative of
    closing regional offices. The consortiums enable VBA to maintain a
    presence in each State which helps in building partnerships with the
    Veterans Health Administration, community organizations, local and
    State governments, and veterans service organizations. In addition, a
    presence in each State is important in fulfilling our outreach mandate.
    Personal interaction with our customers at walk-in units, medical
    centers, military installations, and itinerant offices in every State
    is an integral component of this mandate and is consistent with our
    service philosophy.
                        impact of tobacco-related claims
        Question. If legislation is not enacted disallowing tobacco-related
    claims, and no additional funds are provided above the budget request,
    how will VA accommodate the increased caseload?
        Answer. This answer assumes that the issue is increased workload,
    rather than increased caseload. VBA's discretionary budget request is
    based on the Administration's policy to not award compensation for
    tobacco-related illnesses acquired after military service and based
    solely on nicotine dependence that began in the military.
        VA surveys suggest that if legislation is not enacted, over 500,000
    veterans will apply for and ultimately receive compensation payments.
    Without additional resources to process these claims, VA will be unable
    to accommodate the increased workload without backlogs.
        Question. Will VA give special priority to tobacco-related claims?
        Answer. VA will not give special priority to tobacco-related
    claims. These cases, just like other claims, will be assigned work
    priority based upon the date they are received by VA. However, VBA has
    recently placed an emphasis on working older claims, which comprise a
    significant portion of our pending claims workload. Since many of the
    tobacco related claims are among our ``older'' claims, they will
    receive appropriate attention.
        Question. What impact will the tobacco caseload have on timeliness
    and quality of compensation claims adjudication?
        Answer. VA surveys suggest that over 500,000 veterans will apply
    for and ultimately receive compensation payments. Tobacco-related
    claims will overburden VA, causing backlogs. Claims processing
    timeliness and accuracy of claims adjudication will deteriorate. The
    increased workload will impact not only tobacco-related claimants, but
    others with more traditional claims.
        Question. When will VA decide a supplemental and budget amendment
    are needed and when will the administration send up the request?
        Answer. VBA's discretionary budget request is based on the
    Administration's policy to not award compensation for tobacco-related
    illnesses acquired after military service and based solely on nicotine
    dependence that began in the military. If legislation is not enacted,
    additional discretionary resources will ultimately be needed. We are
    hopeful that the Administration's proposal to not pay these benefits
    will be enacted sooner rather than later to avoid the need for a
    supplemental request in fiscal year 1998 and an amendment to the
    President's fiscal year 1999 Budget request.
                               claims processing
        Question. A total of $38 million is requested for VBA initiatives
    to improve claims processing, such as computer-based training. Have
    these initiatives been prioritized, so that in the event that we cannot
    meet your full budget request we can fund the highest priority
    initiatives? Could you provide this prioritization to the Committee?
        Answer. Of the $37.8 million requested by VBA, $22.6 million is for
    Compensation and Pension (C&P) initiatives. Claims processing
    improvements will be realized from each of these C&P initiatives.
    Although funding for all of the initiatives is needed in order to
    realize our vision, the C&P Service has prioritized them. C&P
    prioritized initiatives are:

            Initiative                                                 Funds
    Computer Based Training.................................      $6,373,000
    Pre-Discharge Exam......................................       5,000,000
    Claims Processing System (CPS)..........................       1,000,000
    Conversion to Service Centers...........................       5,983,000
    Information Technology C&P BPR..........................       2,400,000
    Outreach/Surveys........................................         512,000
    Outbased Decision Makers................................         138,000
    Personnel Information Exchange (PIE)....................         500,000
    Partner Assisted Rating and Development System (PARDS)..         250,000
    Enhanced AMIE...........................................         462,000
                        --------------------------------------------------------
                        ____________________________________________________
          Total.............................................      22,618,000

        The remaining $15.173 million is identified by business line.

            Business Line                                              Funds
    Education...............................................      $4,493,000
    Loan Guaranty...........................................       3,364,000
    Vocational Rehabilitation and Counseling................       1,000,000
    Insurance...............................................       1,751,000
    Crosscutting............................................       4,565,000
                        --------------------------------------------------------
                        ____________________________________________________
          Total.............................................      15,173,000
                              year 2000 compliance
        Question. What is the status of VA's efforts to address the Year
    2000 issue, and what steps remain to ensure systems will be compliant?
        Answer. We are following the standardized, government-wide Year
    2000 best practices phases established by the Office of Management and
    Budget (OMB) in conjunction with the Federal CIO Council Subcommittee
    on Year 2000. These Year 2000 phases are: (a) assessment (inventorying
    systems); (b) renovation (making the systems compliant); (c) validation
    (verifying the fixes); and (d) implementation (placing systems into
    production). Progress is measured as a percentage completed for each
    phase. These phases overlap and are not consecutive. For example,
    systems can be implemented before the renovation of all systems are
    completed. We have completed our assessment phase. Our current
    timetable and percentage completed for Year 2000 compliance is below:

    ----------------------------------------------------------------------------------------------------------------
                                                                  Assessment  Renovation  Validation  Implementation
    ----------------------------------------------------------------------------------------------------------------
    Completion Date.............................................      1/1998      9/1998      1/1999        3/1999
    Percent Complete............................................         100          74          53            42
    ----------------------------------------------------------------------------------------------------------------

        Overall, 74 percent of VA's systems have been renovated and made
    Year 2000 compliant. This represents a substantial increase from the 61
    percent VA reported to OMB in November 1997.
        Question. How much is included in the budget request to address the
    requirement that computer systems be ``Year 2000 compliant?''
        Answer. Our estimate for resolving Year 2000 problems in fiscal
    year 1999 is $67 million. This estimate includes such costs as
    personnel, hardware, software and contractor expenditures.
                               smoking cessation
        Question. When will the administration submit its proposal for a
    smoking cessation program for veterans? What details can you provide on
    how this program will work?
        Answer. We expect the authorization language for smoking cessation
    to be submitted to Congress by the end of April. The VA will develop a
    program guide once congressional authorization has been provided.
    Private sector contractors will provide the smoking cessation program.
    The guide will address the responsibilities of the contractors as well
    as the monitoring and reporting process of the program. The program
    will be offered to any honorably discharged veteran who claims to have
    started smoking while in the military.
                                    vetsnet
        Question. What is the status of the Department's effort to develop
    a corporate level database as part of the Veterans Service Network
    (VETSNET) program? A recent OIG Summary Report on Claims Processing
    highlighted VETSNET's key role in supporting the Veterans Benefits
    Administration corporate model and database and the Compensation &
    Pension (C&P) reengineering efforts. In addition, the report
    highlighted the fact that VETSNET is the sole means by which the
    Department is addressing two material weaknesses identified under the
    Federal Manager's Financial Integrity Act: (1) Aging, Antiquated,
    Obsolete, and Proprietary Hardware Systems, and (2) C&P Systems--Lack
    of Adaptability and Documentation.
        Answer. The VBA Corporate Database has been established. It
    supports all VBA program areas and the following VETSNET application
    development efforts: VETSNET C&P, Loan Service & Claims, Automated Loan
    Production System (ALPS), Expanded Lender Information (ELI) System, and
    Education Chapter 1606. ALPS and ELI are the first applications
    scheduled for production (during 1998) that will use the VBA Corporate
    Database as a production database. When all VETSNET applications have
    been completed the VBA Corporate Database will be the central
    production database supporting all VBA business lines and will replace
    many of VBA's disparate databases currently supporting systems such as
    BDN. The VBA Corporate Model and Database provides VBA with a central,
    standardized view of its business that is fully documented and easily
    changed and maintained.
                  veterans benefits administration performance
        Question. How is the Veterans Benefits Administration (VBA)
    assuring that it can effectively track, measure organizational
    performance, and assure effective use of staff resources?
        Answer. VBA is refining a strategic management process that
    integrates comprehensive performance measures with the resources
    formulation and execution processes. VBA is using a balanced scorecard
    of performance measures in each business line. This scorecard of
    measures will be used to develop the request for resources and the
    scorecard will be used to track organizational performance. VBA has
    linked performance measures to the annual budget request, by developing
    integrating business line plans and the budget request, as required in
    the Government Performance and Results Act. The scorecard performance
    measures will be regularly monitored by the business lines and the
    leadership of VBA to assure the resources used by VBA deliver the
    desired performance.
                           franchise fund/supply fund
        Question. What results can the Department identify under its pilot
    test that established franchising fund operations?
        Answer. The Department successfully converted the six organizations
    selected for VA's Franchise Fund from appropriated to self-sufficient
    fee-for-service activities, established a customer based board of
    directors, and improved service delivery to its customers. The
    franchise effort has established a buyer seller relationship within the
    Agency that fosters a closer look at cost by the providers as well as a
    closer look at usage by the customers.
        Through the operation of the Franchise Fund, VA customers are
    billed each month for services received, resulting in improved cost
    awareness for both the customer organization and the service provider.
    A monthly individual service activity and consolidated fund level
    income statement is produced by the Franchise Fund office, further
    improving management cost awareness. This process has resulted in unit
    cost reductions for Franchise Fund customers, more efficient use of
    common administrative resources, and better budgetary resource planning
    and usage by customers.
        Examples: CPU rates have been decreased from $654/hour in 1997 to
    $524 in 1998, with additional reductions anticipated for both fiscal
    year 1999 and fiscal year 2000.
        Disk Storage rates have been decreased from $246/gigabyte month to
    $153/gigabyte month.
        Rates for the records storage facility have dropped from the
    anticipated $7.00 per square foot in fiscal year 1997, when the project
    began, to less than $5.00 in fiscal year 2000. Additional decreases are
    anticipated as the customer base increases.
        Question. The Department retained $89 million for investment
    purposes in its Supply Fund, what is the status of that revolving fund?
        Answer. Rather than retain $89 million for investment purposes in
    its Supply Fund, the Department actually returned $89 million to the
    Treasury. These funds were savings resulting from the Supply Fund's
    closure of its three depots and the subsequent sale of Supply Fund
    inventory.
        Question. How is income in the Supply Fund used to supplement VA
    appropriations?
        Answer. Supply Fund income is not used to supplement VA
    appropriations. The Supply Fund, which does not receive appropriated
    operating funds, must recover all program operating costs through fees
    and charges recovered from internal VA customers, other Government
    agencies (OGA's), and other sources in exchange for the full range of
    products and services provided. When the business volume from non-VA
    sources exceed projections, the Supply Fund appropriately reduces the
    collection of fees from VA customers, but does not supplement
    appropriations.
        Question. How much income has VA generated from franchising
    activities?
        Answer. In our first year of operations, the VA franchise fund's
    fiscal year 1997 income exceeded $59 million. Focus during fiscal year
    1997 has been on redefining the way these operations conduct their
    business, and the way VA customers view the services. VA does
    anticipate growth each of the next three years.
    [GRAPHIC] [TIFF OMITTED] TMA19.047

        Question. How is this income used?
        Answer. Fiscal year 1997 income was used to pay for the costs of
    all operating salary, depreciation and equipment expenses of the six
    service activities and the fund office. In addition, almost $2 million
    was applied to retained earnings for future capital investments,
    financial management, and other improvements not related to current
    operations, as is appropriate under fiscal year 1997 appropriation
    language.
                                quality of care
        Question. The OIG report demonstrates a great variation in the
    staffs at VAMC's and the VISN's devoted to monitoring and correcting
    deficiencies in the quality of care received by veterans; what are your
    plans to rectify the situation and bring about some more consistent
    assignment of roles and responsibilities?
        Answer. Quality Management Officers have been appointed in every
    VISN Director's office to oversee the QM activities in the VISN. VHA's
    efforts to ensure that our patients receive the highest quality of care
    have never wavered.
                         computer software procurement
        Question. The procurement of new and updated computer software is
    often a very costly and time consuming process for government agencies.
    I understand that the Defense Department has implemented a new means of
    procuring software that has made the process much easier and saved the
    defense Logistics Agency $50 million (over 50 percent) on one contract
    alone. I am told the new approach involves what is called a ``per user
    fee'' contract. In addition to saving money, the ``per user fee''
    method has reportedly made it easier and less of a security risk to
    install and upgrade computer software. Can you tell me how VA makes
    software procurement decisions, and whether this new more efficient
    method is being considered?
        Answer. VA acquires most of its software today through GSA Federal
    Supply Schedule channels. Software may be a separate commodity or is an
    integral part of a broader solution that also includes hardware and
    services. Before Federal Acquisition Streamlining Act (FASA)
    legislation relaxed regulations governing schedule purchases, VA
    acquired software or solutions through full-and-open competition. It is
    our understanding that the Department of Defense contract relates to
    the Defense Logistics Agency's (DLA) Electronic Software Distribution
    (ESD) contract. Under ESD, Agency end users download software product
    updates via the Internet from a Microsoft channel supplier, such as
    CyberSource in the case of the DLA contract. We recognize that Federal
    agencies are expected in the future to adopt ESD into their acquisition
    strategies to shift software administration costs to industry. We
    understand that some issues still need to be worked through. Late last
    year the Software Publishers Association issued industry ESD policies
    and procedures to member software companies, distributors, and
    resellers. We will be looking into this option as the process improves.
        Question. I understand that in an effort to capitalize on the
    Defense Logistics Agency's (DLA) successful efforts to lower software
    procurement costs, the Navy's Fleet Industrial Supply Center (FISC) in
    Philadelphia is attempting to expand this new software procurement
    model to other government agencies as well. In a time of tight budgets,
    innovative and cost-effective procurement strategies should be
    encouraged. Is VA considering joining FISC and DLS in this effort?
        Answer. In advance of the ESD marketplace having matured
    sufficiently, VA has already taken certain steps to leverage its buying
    power to drive down software-related costs. VA's Procurement of
    Computer Hardware and Software (PCHS) contracts, competitively awarded
    in January 1997, have resulted in the lowest product pricing in the
    Federal market on certain software packages widely used in VA. The
    Department-wide PCHS contracts provide software maintenance options to
    permit VA facilities to better administer software media and
    documentation at lower costs. In the future, VA will introduce to their
    computer acquisition strategies other approaches including ESD and
    product service (also known as seat management).
                                     ______

                      Questions Submitted by Senator Craig

                 state extended care construction grant program
        Question. As you know, the request for construction and maintenance
    of extended care facilities has been almost cut in half from a request
    of $80 million (fiscal year 1998) to a request of $37 million (fiscal
    year 1999). This substantial decrease brings to mind questions about
    the VA's commitment to meeting its construction requirements.
    Currently, there are $237 million in ``Category One'' projects, for
    which States have come up with 35 percent of the costs, and are waiting
    for the Federal Government to meet its obligation to provide the other
    65 percent. Thirty seven million dollars will barely cover the costs of
    five projects. How do you plan to meet the VA commitment to fund 65
    percent of the ``Category One'' projects with $37 million.
        Answer. The President's fiscal year 1999 budget request of $37
    million is consistent with the original fiscal year 1998 President's
    budget request of $41 million. Although this SEC grant program is an
    important element of VA's plans for meeting long-term healthcare needs
    of eligible veterans, the request level reflects the consideration
    priorities for funds both within the Department and throughout the
    Administration.
                         state cemetery grants program
        Question. For a number of years, Idaho has tried to provide a
    national cemetery for our State's veterans. As you know, the VA has
    proposed to cover the entire cost of constructing veterans cemeteries
    around the country, if in return, the States agree to pay all required
    maintenance. Do you believe this is a fair burden for the States to
    incur for a veterans cemetery?
        Answer. The State Cemetery Grants Program is a complement to VA's
    system of national cemeteries. Through a Federal/State partnership, the
    State Cemetery Grants Program allows veterans in less densely populated
    areas to also be served by a burial option. The development of new
    national cemeteries has targeted areas with a large concentration of
    veterans currently without access to either a national or State
    veterans cemetery. For example, the four new national cemeteries in the
    NCS strategic plan are being constructed near the large metropolitan
    areas of Chicago, IL; Dallas/Ft. Worth, TX; Cleveland, OH; and Albany,
    NY.
        Currently, VA funds 50 percent of the construction of a State
    veterans cemetery and contributes a $150 plot or interment allowance
    for each eligible veteran interred to partially defray State cemetery
    operating expenses. VA has proposed legislation to expand the State
    Cemetery Grants Program by increasing the Federal share of funds to
    States from 50 percent to 100 percent of the costs of construction,
    plus 100 percent of the initial equipment costs, along with the
    continuation of the $150 plot or interment allowance. With this
    additional incentive, the Department hopes that new burial space could
    be provided to our Nation's veterans. State veterans cemeteries can
    also be used to ensure the continuation of service delivery. For
    example, the States of Tennessee and North Carolina have opened new
    State veteran cemeteries as the national cemeteries in the areas being
    served no longer had space for new casketed interments.
                                     ______

                    Questions Submitted by Senator Mikulski

                                   education
        Question. I was very pleased to see that this year's budget request
    begins to address my concerns of providing lifetime learning
    opportunities to our veterans.
        As I understand, one of the barriers to the utilization of
    educational benefits is the gap between the increasing cost of
    education and the level of the GI benefits. In this year's budget there
    is an increase to the Montgomery GI Bill education benefit that would
    raise the active duty benefit to more than $500 a month.
        What analysis was performed to determine that this amount would
    provide sufficient funds to encourage/increase the use of the education
    benefits?
        Answer. We compared the cost of education to increases in the full
    time monthly rate for Montgomery GI Bill--Active Duty benefits from
    1985. Using the Digest of Education Statistics to track tuition and
    fees paid by students at public four year institutions during each
    academic year, we assumed a similar growth in the original full time
    rate of $300 monthly. The monthly rate would have been $648.25 during
    the 1995-96 school year had it kept pace with rising tuition costs.
    That represents more than a 45-percent increase over the current rate.
    The Administration determined that a 20-percent increase, while not
    fully restoring the lost purchasing power, provides adequate incentive.
        Question. The increase in the Montgomery GI Bill education benefit
    is linked to the tobacco legislation which would restrict payment of
    service-connected disability compensation for tobacco related
    illnesses.
        Answer. The Administration's budget identified many savings
    opportunities. As a complete package, in the balanced budget
    environment, this proposed increase is consistent, and it demonstrates
    the President's commitment to veterans' education.
        Question. If legislation is not approved where does the Department
    propose that the increase for active duty benefits (GI Bill) would come
    from?
        Answer. The department has not identified a funding source outside
    the Administration's budget package of spending and savings.
        Question. If there is not an increase in the active duty benefit
    how will this impact the percentage increases proposed by the
    Department with respect to utilization?
        Answer. No detailed analysis is available at this time to show the
    direct correlation between a rate increase and usage. However, we
    believe that rising costs in tuition, fees and living expenses without
    adequate funding sources serves to discourage usage.
        I understand that a recent Business Process Re-engineering analysis
    on the manner in which education benefits and services are delivered
    was recently completed. You are considering several fundamental changes
    to enable VA education beneficiaries to receive financial assistance
    and information in a more effective and efficient way.
        Question. Can you detail some of the changes you are considering
    and how they tie into lifetime learning opportunities?
        Answer. The Education Business Process Reengineering (BPR) team
    addressed issues that inhibited veterans from beginning a program of
    education or training. For example, ``program of education'' is defined
    in title 38 in a way that prevents many high quality programs from
    being approved for VA benefits. Many are skills enhancement courses, or
    courses necessary to upgrade professional or technical skills.
    Modifications to the definition are being explored which expand
    educational and training opportunities while maintaining the integrity
    of all VA approved course offerings.
        The team suggested VA also explore alternatives to the current
    restrictions on payment, such as accelerated payment. At present,
    payment is calculated based on a student's training time and months of
    entitlement. For instance, a veteran training full time will receive a
    monthly rate no higher than the equivalent to one month of entitlement.
    For a high cost program of short duration, that veteran would be forced
    to assume a debt for the difference between VA payments and the cost of
    the course, even though his or her total entitlement could cover all
    course costs. Of course, the costs and benefits of each alternative
    would need to be carefully examined before formal proposals could go
    forward.
        Question. How will the changes increase the utilization of
    education benefits before they are lost?
        Answer. Veterans who delay or decline educational or training
    opportunities because VA payments do not cover enough of the expenses
    may pursue those programs. They might also use more of their earned
    entitlement before their eligibility expires.
        Question. When will you be making a decision on which changes you
    will be implementing?
        Answer. There are potential cost implications for many of the
    recommendations. Our strategic planning process will assist us in
    developing and prioritizing proposals beginning with the 2000 budget
    cycle.
        Question. What improved education opportunities does the Department
    foresee through the improved coordination efforts with DOD, Department
    of Education and education institutions?
        Answer. We will enlist the aid of these partners to increase the
    awareness of opportunities available. With DOD we will provide service
    personnel with more information on educational and training
    opportunities before they leave military service. With the Department
    of Education we hope to heighten the awareness of other forms of
    financial assistance to better leverage VA benefits. Institutions will
    guide veterans through the educational process by offering pertinent
    programs and coordinating the various forms of financial assistance to
    better serve the needs of veterans and other eligible beneficiaries.
                               medical education
        Question. As a result of the recommendations of the Residency
    Realignment Review Committee sited in the budget justifications the
    Department will be making a shift of 1,000 specialty resident
    positions; 750 will be filled as primary care positions and 250 will be
    eliminated. In addition, VA is redirecting educational resources to
    primary care and reviewing its academic affiliations agreements to
    ensure they match the goals and objectives of VA.
        With this new focus on primary care how will VA equip itself to
    handle unique patient care needs, say for example homeless veterans who
    must have their healthcare needs addressed in one single encounter?
        Answer. VA's patient mix provides a rigorous test for both new
    systems of care and education of the nation's future physicians. By way
    of illustration, when an ill homeless veteran presents to a VAMC for
    healthcare, he/she must be provided in that single encounter with
    accessible care that accommodates all his/her principal healthcare
    needs. Referral appointments to several consulting specialists at some
    later date reflect practice that is inadequate and unrealistic.
    Resident trainees must have experience in systems of care that combine
    ready access and continuity with high levels of medical expertise if
    they are to be prepared to give effective care to patients and
    populations in a more systematic and quality-focused healthcare system
    in the future.
        For example, to accommodate this need, VA initiated two new
    programs in October 1997--Access and Continuity in Education of
    Specialists (ACCESS) and Psychiatry Primary Care Education (PsyPCE).
    ACCESS provides a targeted experience within medical subspecialty
    residencies that focus on the development of primary care management
    skills. These residency-training experiences take advantage of patient
    care settings where physicians trained in medical subspecialties serve
    as the primary care physicians for patients with complex health
    problems. Similarly PsyPCE is an example of primary care that employs
    psychiatrists as the primary care physicians for patients with major
    mental health problems. In both programs, comprehensive primary
    healthcare will be provided by specialists. It is the intention of this
    program to provide as much expert care as possible in each encounter
    with a veteran patient.
        Question. How can VA and its academic affiliates take advantage of
    the pressures building in the graduate medical education reform to go
    beyond the labels of ``primary care'' and ``specialist'' to align
    educational programs with the best systems of patient care?
        Answer. Confining definitions strictly to ``primary care'' and
    ``specialist'' limit the opportunities for improvement that are
    available in the residency realignment process. An improved future
    health professions workforce will require models of care and education
    that embody the best aspects of both the primary care physician and the
    specialist.
        One such strategy is the Primary Specialist Program. As mentioned
    above, VA and its affiliates are pursuing a strategy that defines
    criteria for specialties that provide the patient and population
    management skills of primary care together with specialty expertise for
    severely ill patients. These two new VA-sponsored programs, ``Access
    and Continuity in the Education of Specialists'' (ACCESS) and
    ``Psychiatry Primary Care Education'' (PsyPCE), place emphasis on the
    role of future specialists in the primary care of chronically seriously
    ill patients.
        VA is engaging appropriate stakeholders and opinion leaders
    regarding this issue including the Accreditation Council for Graduate
    Medical Education, specialty organizations, the American Medical
    Association, the Association of American Medical Colleges and the
    Association of Academic Health Centers. Given the broad implications of
    graduate medical education reform for the future physician workforce,
    VHA must explore information and advice from all willing and valid
    sources as this process goes forward.
        Question. Can you briefly describe the review process of your
    academic affiliations agreements?
        Answer. The review of VA-medical school partnerships differs from
    other accreditation and standards based reviews. It is not so much a
    ``report card'' as a foundation for planning and the establishment of
    goals. The guidelines for review of affiliations encompassed six
    domains. These included the mission and vision of the partnership,
    physician faculty issues, medical care of veterans and the education
    and research partnership, business relationships, network-wide issues,
    and VA/university governance.
        In most of the VISN's, the review of academic affiliations was
    coordinated by the leadership of the VA medical center and the medical
    school. The review was valuable on several fronts. First, the process
    helped to provide an accounting of the strengths and weaknesses of the
    partnership. Second, it provided an agenda for the future, which should
    serve to strengthen the affiliation over time. Third, and probably most
    important, the process strengthened new lines of communication and
    working relationships that should benefit VA's patients, students, and
    faculty staff as these affiliations move through this period of rapid
    change in medicine and medical education.
        Question. How are you ensuring that innovative academic
    affiliations, which will create healthcare programs that best meet
    patient needs, will be established as a result of these reviews?
        Answer. The Under Secretary for Health's Academic Partnership
    Instruction, titled ``The VA-Medical School Partnership: Guidelines for
    Review of Affiliations'' dated February 26, 1997, included guidelines
    and questions to assist in the development of educational programs that
    best meet patient care needs.
        It is informative to consider some of the assumptions that underlie
    VA affiliations to ensure that education and patient care programs are
    focused on providing the best care to the veteran patient. First,
    health care workforce training, medical education, and research are
    most beneficial to patient care and most valuable to learners when they
    are aligned with the best models of patient care. Learning the art and
    practice of medicine in a setting that provides comprehensive care for
    the sickest and neediest of patients affords opportunities to learn
    medicine for practice of the highest quality. Second, education and
    research should be accountable to healthcare system needs. Accordingly,
    they should be managed with performance expectations and outcome
    measures. Third, VA's educational offerings should provide the numbers
    and types of healthcare professionals that reflect the needs of
    veterans as well as the broader community.
        Finally, faculty, residents, and students should focus on providing
    healthcare value. In this vein, VA has explicitly defined value in
    healthcare to include technical competence, the wise and economic use
    of scarce resources, systematic provision of access to primary care,
    awareness of the importance of the functional status of the patient as
    a goal of health care, and focus on patient satisfaction.
        One very daunting problem that we are facing with another
    population of veterans, the aging, is the shortage of health
    professionals with training in geriatrics. The shortage exists even
    among the number of those in academic settings who might train others
    about the significant differences between how to treat a younger and an
    older patient.
        Question. What is the role in the re-engineering VA's medical
    education in training physicians and others in geriatrics and are there
    plans to increase this role?
        Answer. VHA is in the second year of a 3-year implementation of the
    recommendations from the Residency Realignment Review Committee. These
    recommendations are germane to all resident physician training. In
    fiscal year 1997, the first 25 percent of these reductions were made
    and an additional 50 percent are being made this year. VA and its
    academic affiliates have expanded positions in general internal
    medicine and geriatrics as well as other primary care fields that have
    not traditionally trained in large numbers in VA. VA residency
    allocations for geriatric medicine increased from 104 positions in
    Academic Year (AY) 1995-1996 to 160.5 positions in AY 1998-1999. This
    represents a 54-percent increase. VA intends to continue the leadership
    it has held in geriatrics training over the last two decades.
        These changes in health professions training build on a strong
    foundation of commitment to training of geriatric health professions in
    VA. VA's substantial commitment to geriatrics training and education is
    reflected in existing programs including training in geriatrics at all
    VA facilities and specific programs targeted to the sixteen Geriatric
    Research, Education and Clinical Centers (GRECC's), the Geropsychology
    Post-Doctoral Fellowship, and the Pre-Doctoral Nurse Fellowship and the
    Rehabilitation Research Pre-Doctoral Fellowship programs.
        Question. What is being done in the area of preventive care
    education for older patients.
        Answer. Preventive care education is done through several
    geriatrics programs, including the GEM programs (Geriatric Evaluation
    and Management), the GRECC's (Geriatric Research Education and Clinical
    Centers) and also through the Geriatric Primary Care Clinics.
    Preventive care education is also an important component of the HBPC
    (Home Based Primary Care) Programs.
        The following is a description of improvements in the quality of
    care indicators tracked by our Chronic Disease Care, Prevention and
    Palliative Care Indexes.
        The Prevention Index consists of 9 quality outcome indicators that
    measure how well VA follows national primary prevention and early
    detection recommendations for diseases having major social consequences
    such as cancer, smoking and alcohol abuse. Compliance with these
    recommendations nearly doubled (from 34 percent to 67 percent) in
    fiscal year 1997. VA outperforms the private sector on all indicators
    where comparable data exist, ranging from being 5 percent to 69 percent
    better on individual quality indicators. In addition, VA has already
    surpassed the U.S. Public Health Service Healthy People 2000 goals for
    5 of the indicators. Specific examples are immunizations for pneumoccal
    disease (61 percent) and influenza (61 percent), and the percentage of
    women receiving cervical cancer screening (90 percent).
        The Chronic Disease Care Index consists of 14 quality outcome
    indicators that measure how well VA follows national guidelines for
    high volume diagnoses such as ischemic heart disease and diabetes.
    Percentages reflect the number of patients who actually receive a
    required medical intervention. The Chronic Disease Care Index in the
    aggregate rose 73 percent in fiscal year 1997. Again, where comparable
    data exist, VA consistently outperformed the private sector, ranging
    from being 21 percent to 124 percent better on individual quality
    indicators. Examples of VA versus private sector performance include
    the rate of aspirin therapy for patients with heart disease (92 percent
    vs. 76 percent) and the percentage of diabetics whose blood sugar
    control is monitored annually by a blood test (85 percent vs. 38
    percent).
        In the way of background, our Prevention and Chronic Disease Care
    Indexes are analogous to the Health Plan Employer Data and Information
    Set (HEDIS) instrument used in the private sector, although in viewing
    these VA indexes it is notable that we are evaluating our performance
    for several important indicators not routinely tracked in the private
    sector. For example, VA is setting the national benchmark for all
    healthcare systems by mandating and monitoring the use of standardized
    instruments to screen for alcohol abuse and to assess the functional
    status of substance abusers.
                                   year 2000
        Question. In May of 1997 the GAO made recommendations to VBA with
    respect to strengthening its year 2000 program management. Since the
    date of the GAO report, VBA has made progress in resolving the year
    2000 problem. The VA is fully aware of the serious implications that
    the year 2000 problems may have on not only the Department but the
    world at large. The Department has a self-imposed December 1998
    deadline to ensure that all systems are made compliant.
        All of the GAO recommendations have been adopted and are either
    implemented or in the process of being implemented.
        Who is on the oversight Committee that provides advice to the year-
    2000 Project Manager and the Chief Information Officer?
        Answer. This committee has a GS-15 representative from the Office
    of Management and a GS-15 representative from the Veterans Benefits
    Administration. Contractor support is provided by SRA International,
    Inc.
        Question. When will all applications and third party products be in
    compliance?
        Answer. VBA is following the standardized, government-wide year
    2000 best practices phases established by the Office of Management and
    Budget (OMB), in conjunction with the Federal CIO Council Subcommittee
    on Year 2000, to resolve year 2000 problems. VBA has set December 1998
    as the self-imposed deadline to ensure all systems are compliant,
    including commercial-off-the-shelf products. However, VA, like any
    other consumer--both public and private sector--is dependent on
    manufacturers' efforts to disclose year 2000 compliance information,
    and upon our trading partners to help resolve, implement, and test
    interface changes. We are working with the CIO Council Subcommittee on
    Year 2000 to expedite efforts in this area.
        Question. What is being done to resolve interface issues with other
    agencies?
        Answer. VBA completed its inventory of external data exchange
    interfaces in July 1997 and has identified 318 interfaces external to
    the VA. As of February 28, 1998, 65 percent, of the external interfaces
    are year 2000 compliant. VBA has made substantial progress in resolving
    interfaces issues and making direct contact with trading partners (both
    Federal and private sector) to discover their plans. VBA has contacted
    all external trading partners, and we have agreements for 90 percent of
    our external interfaces. VA's partner agencies are fully aware of the
    need to resolve interfaces issues and agencies are actively working
    with VA.
        Question. Can you describe what will occur as a result of the new
    VBA Systems Architecture hardware environment hosting its first
    application?
        Answer. In January 1998, the Claims Processing System (CPS) was
    successfully migrated to the new, centralized hardware environment, the
    Sequent NUMA-Q (Non-Unified Memory Allocation-Q) platform at the Austin
    Automation Center. CPS is the first three-tiered client server
    application to run in this environment. Initial reports indicate that
    migrating to the new VBA systems architecture environment improved
    response time and provided easier operation and maintainability of CPS.
        Two Loan Guaranty applications will soon follow CPS: the Expanded
    Lender Information (ELI) system and the Automated Loan Production
    System (ALPS) are both scheduled for implementation in third quarter
    1998.
        A task order is currently underway to analyze the major functions
    related to systems development, identify missing or weak standards,
    policies, and procedures and deliver new or revised ones.
        Question. When will this analysis be complete?
        Answer. An initial task order has identified infrastructure
    functions required by VBA application development and has inventoried
    existing standards, policies, and procedures. This task order also
    identified infrastructure gaps and formulated a plan to address them in
    a follow-up phase. This phase, addressed in a second task order, is
    currently underway and is scheduled to be completed during third
    quarter 1998.
        The purpose of the second phase is to develop and fully document
    the necessary policies, processes, procedures, and standards for
    institutionalizing VBA's infrastructure functions. These functions are
    the following: Project Management, Configuration Management, Software
    Quality Assurance, Development Management, Application Security
    Management, Architecture Management, and Development Environment
    Management.
                                   hepatitis
        Question. Secretary West, I am aware of recent reports out of the
    VA that the rate of hepatitis C in the VA health system has tripled at
    VA hospital in the VA health system. At the 1997 NIH Consensus
    Conference on hepatitis C, Dr. Leonard B. Seeff noted that a small
    study at one VA hospital in Washington, DC, revealed that 50 percent of
    all the incoming veterans were infected with hepatitis C.
        This high rate at one institution begs the question, has there been
    any effort to screen incoming veterans at all VA hospitals or other
    facilities for hepatitis C? What does the Department plan to do to
    identify infected veterans throughout the VA health system and to
    provide them with information and treatment to arrest the progression
    of hepatitis C for their own recovery and to stop the spread of
    hepatitis C?
        Answer. There is not evidence that the rate of hepatitis C virus
    (HCV) infection in the VA has tripled. In 1991, the VA mandated the
    aggregate tracking of the number of patients seen in VA facilities who
    were positive for HCV antibody, using the tests which first became
    available in 1990. In 1991 there were slightly over 6,600 patients who
    tested positive; comparable numbers for 1994 and 1996 were 18,800 and
    21,400, respectively. In the last 3 years the rate of increase has
    diminished, which may indicate a plateau of antibody positivity.
    However, each entry does not indicate a single individual, and it is
    possible that some persons were tested more than a single time.
    Moreover, it is not certain whether the data indicate a true increase
    in prevalence, or alternatively, greater knowledge of the disease and
    the availability of antibody tests, with subsequent increased
    utilization of testing over time. Finally, since this was an
    observational study and not a serologic survey, we cannot determine
    what proportion of hepatitis C infected VA patients were captured.
        Dr. Seeff's data from the Washington, DC, VAMC are misrepresented
    in the question; specifically, a 6-week survey of inpatients revealed
    an antibody prevalence of 20 percent, not 50 percent.
        There is no formal program to screen all ``incoming'' veterans at
    all VA hospitals. Given the expected frequency of HCV infection this
    would be impractical and very cost ineffective. However, the Office of
    Patient Care Services, in conjunction with VA experts in liver disease,
    has prepared standards for assessing risk of HCV and derivative
    recommendations for appropriate testing. This information, and an
    algorithm for HCV antibody testing, will be distributed by the Under
    Secretary for Health to all VA facilities.
        The standards address counseling for reduction of high risk
    behavior. However, it is unclear if any current interventions, such as
    interferon with or without ribavirin, can arrest the progression of
    hepatitis C.
        Question. Based on your experience in your former position, is the
    Army testing its personnel for hepatitis C to ensure our military is at
    optimum readiness?
        Answer. The Army does not view occurrence of the hepatitis C virus
    as a readiness issue. The occurrence rate of the virus in current and
    prior service personnel is 0.6 percent, consistent with the U.S.
    population. Therefore, hepatitis C virus testing is not routinely
    performed at any entry or screening process for Army personnel, except
    when they are blood donors. As a blood donor, all units of blood are
    tested for various strains of hepatitis and HIV. The only other time
    Army personnel are tested for hepatitis is when they or a family member
    exhibit symptoms consistent with the virus.
        Question. Do you believe that implementing a preventive strategy
    aimed at identifying and treating the hepatitis C infection at this
    time would be effective?
        Answer. We believe it is important to identify HCV infection in
    those veteran patients at risk, and are implementing the strategy
    identified above. We do not believe that treatment of all antibody
    positive patients is indicated at this time. Current therapy is of
    relatively poor efficacy, and data are lacking that biochemical
    improvement in hepatitis, or reduction in HCV viral load (measured as
    viral RNA) will translate into clinical outcomes such as improved
    quality of life or prevention of disease progression. Clinical
    determinations to treat HCV infection are most appropriately
    individualized, based upon current literature and shared clinician-
    patient decisions; alternatively, therapy may be offered within the
    context of ongoing clinical trials.
                                 aging veterans
        Question. VA seems to be in a unique position to help better
    prepare us to deal with the impact of an aging population. By virtue of
    now more than 20 years of experience in responding to the needs of the
    aging population of World War II veterans, VA has learned a great deal
    about how to care for an older population and about the field of
    geriatrics. We must ensure that VA continues to explore creative new
    approaches to long-term and geriatric care programs.
        I am concerned, however, that too little of what VA knows and has
    learned, and indeed, what VA could learn through focused research in
    the coming years, is shared with those outside of VA who have an
    interest in aging issues.
        We all know that most older persons do not want to go into nursing
    homes. I have often thought that it would be a benefit to veterans if
    VA were to encourage States to build State Veterans Homes on VA
    property so that the veterans could live in the State facility while
    enjoying easy access to VA care.
        I am interested in facilities that provide a continuum of care for
    our aging veteran population such as is being proposed at Fort Howard
    in Baltimore. The Governor of Maryland will include a $100,000 planning
    grant in the State's fiscal year 1999's supplemental budget for Fort
    Howard Veterans Home. Dennis Smith, Director of the Maryland Health
    Care System, has indicated his support of such a facility.
        What do you think of that idea?
        Answer. Title 38 gives VA statutory authority to transfer real
    property to a State for use as the site of a State veterans' nursing
    home or domiciliary facility [Sec. 8122(a)(3)]. If the State of
    Maryland is willing to commit the necessary resources to participate in
    the construction of such a facility and then to operate the facility
    primarily for the care of veterans, this idea has merit. The Medical
    Center Director and Network Director concur with the idea.
        Question. What can the VA do to support Maryland in its creative
    efforts at Fort Howard?
        Answer. In addition to transferring land, providing up to 65
    percent of the cost to construct a State veterans' home and paying per
    diem to the State of Maryland for eligible veterans residing in the
    facility (once the facility is operational and recognized), VA has
    authority to provide support through sharing agreements. A State
    veterans' home may also benefit from access to Federal Supply Schedules
    and VA contracts for acquiring services, equipment, supplies and
    pharmaceuticals for operations within the home. Enhanced-use lease
    ventures are another alternative that VA is exploring with interested
    States.
        Question. What is VA doing to promote this type of approach and
    ensure a continuum of care to our aging veterans?
        Answer. VA has provided land for State veterans' homes at
    Murfreesboro, TN; Roanoke, VA; Batavia, NY; St. Albans, NY; Phoenix,
    AZ; Boise, ID; Pittsburgh, PA; Fayetteville, NC; and Salt Lake City,
    UT. Land transfers are pending at the following sites: Montrose, NY;
    Big Springs, TX; and Temple, TX. Enhanced-use lease initiatives are
    also under development between VA and the States of North Carolina and
    Kansas.
        Question. To what extent is VHA working with community entities to
    develop joint programs to take care of older patients?
        Answer. VHA has used its specific sharing authority in Adult Day
    Health Care (ADHC) to develop joint programs in Chicago and Salem, VA.
    There are ongoing discussions with community ADHC's in a number of
    cities. VHA expects that its new National Strategy on Home and
    Community Based Care, will stimulate more joint ventures in home and
    community based services.
        Question. What is the current mix across the VA system between
    institutional care in a VA nursing home or in some other institutional
    bed and non-institutional care, such as adult day care, or hospital
    based home care?
        Answer. In fiscal year 1997, VA expended $1.9 billion in long-term
    care programs. Of that amount, $1.75 billion or 92 percent was spent in
    nursing home care. Home care services and day health services accounted
    for $146 million or 8 percent of all long-term care expenditures.
        Question. Does the resource allocation model--Veterans Equitable
    Resource Allocation (VERA)--work to promote non-institutional care?
        Answer. VERA is a method of allocating VA's Medical Care
    appropriation to the 22 networks. VERA is not designed to promote a
    specific type of care. It has the following objectives:
      --Equitably distribute funds across networks.
      --Fund highest priority veterans.
      --Address veterans' special health care needs.
      --Create a funding framework that is understandable and predictable.
      --Align management and incentives with best practice.
      --Improve accountability for research and education support.
      --Comply with Public Law 104-204 requirements.
        Within these objectives, Network Directors have discretion to
    provide the services that are deemed clinically appropriate for their
    patients. They are expected to fund facilities and programs according
    to the following principles:
      --Funds distributions are readily understandable and result in
            predictable allocations.
      --Support high quality healthcare delivery in the most appropriate
            setting.
      --Support integrated patient-centered operations.
      --Provide incentives to ensure continued delivery of appropriate
            special care.
      --Support the goal of improving access to care.
      --Provide adequate support for the VA's research and education
            missions.
      --Be consistent with eligibility requirements and priorities.
      --Be consistent with the network's strategic plans and initiatives.
      --Promote managerial flexibility and innovation.
      --Encourage increases in alternative revenue collections.
        If these principles are applied, and if non-institutional care is
    the appropriate setting for a particular patient, then VERA would
    support this type of care.
        Question. What is Headquarters communicating to the Veterans
    Integrated Systems Networks (VISN) about furnishing long-term care?
        Answer. VHA is awaiting the final report of the Federal Advisory
    Committee on the Future of VA Long-Term Care. The Committee has
    completed its year-long review of VA's long-term care and is finalizing
    its report to the Under Secretary for Health. Following a broad study
    and review of the Committee report by VHA stakeholders, the agency will
    be able to outline a national policy for all long-term care services.
        Question. Are the VISN's left to their own devices in this area or
    are there types and levels of long-term care which must be provided?
        Answer. Under current law, long-term care services are lower
    priority than other forms of hospital and outpatient care. With the
    introduction of eligibility reform, home health care services will
    become part of the basic benefits package to the extent they are
    available in each local area.
        Question. What plans does VA have to expand the amount of non-
    institutional long-term care offered to veterans?
        Answer. VHA Directive 98-022, dated April 1, 1998, articulates
    national VHA policy and establishes a national VHA strategy that will
    provide the context for expanding and developing home and community-
    based care within each Veterans Integrated Service Network (VISN). The
    VA can provide national leadership in this critical area of healthcare
    by developing an innovative, flexible approach to home and community-
    based care that is fully integrated into the healthcare system and uses
    resources efficiently and effectively to meet the needs of an aging and
    chronically ill population.
                                    benefits
        Question. VBA has continued its commitment to improving the
    processing of compensation and pension (C&P) claims through its
    Business Processing Re-engineering (BPR) approach. VA, however,
    continues to lag in meeting its timeliness goal for the processing of
    C&P claims. At this time, VA has ambitious goals for the year 2000 with
    respect to time required to process claims.
        Although an improved claims system can improve the efficiency of
    claims processing you still need the human commodity to make those
    systems work properly. I am very concerned about the level of staffing
    in VBA. Everything I have seen or know suggests that VBA must have
    more, not less, staff if there is to be any hope of cutting into the
    backlog of claims and giving veterans and other claimants timely
    service on benefit claims.
        However, the Administration's budget calls for only very modest
    increases in the Compensation and Pension Service and an actual
    reduction in VBA FTE overall.
        Do you believe that the proposed staffing level will be sufficient
    for VBA to fulfill its missions in the coming fiscal year? Stated
    another way, if there were not resource restrictions, what staffing
    level would you recommend for VBA?
        Answer. From 1995 to the present, VBA reduced employment from
    13,147 to 11,200, approximately 15 percent. There have been workload
    decreases that occurred at the same time, which made this reduction
    somewhat easier to accommodate. However, the C&P workload is expected
    to increase and the claims are expected to be more complicated. The
    1999 budget requests additional resources to maintain overall
    employment at 1998 levels. The 1999 request technically shows a slight
    decrease (125), but this primarily reflects the transfer of Debt
    Management positions from VBA to the Franchise Fund.
        While I am very satisfied and support the budget request for VBA
    there are strategic issues that warrant further evaluation. Two areas
    that I believe require further analysis and review are quality and the
    plan for Business Process Reengineering implementation (BPR). In order
    to improve quality throughout the system, I believe we need to re-
    institute quality reviews in each of our business lines. The front-end
    computer based training planned as part of BPR will enhance our claims
    processing and improve the quality of our claims, but does not come
    without a price. As personnel are engaged in learning these new tools
    it takes time from the processing of claims and increases the pending
    workload. Yet these initiatives must take place in order to realize
    long term gain across the system.
        VBA's long term initiatives are built on the assumption there will
    be a stable workforce that continues to provide better service each
    year. This is why the maintenance of a stable employment level for 1999
    is so important.
                           perry point rent increase
        Question. Secretary West, I am concerned with the large rent
    increase that is proposed for the Perry Point facility in Maryland as a
    result of the QMIS rate evaluation. I have not received a written
    response to my request to put that rent increase on hold until an
    assessment was done of the fairness of the rates proposed by QMIS.
        What commitment has the Department made to address this issue at
    Perry Point, ensuring that we don't place an undue burden on the men
    and women who serve our veterans?
        Answer. VA has put the Perry Point rental increases on hold until
    such time as new fee appraisals are obtained. The new appraisals will
    be used to validate the appropriateness of proposed increases. No
    change in existing rental rates will occur until after these new
    appraisals are reviewed, evaluated and approved by VA Headquarters. It
    is anticipated that this process will be completed by May 1998.
        Question. If the reassessment of rental values at Perry Point still
    calls for a drastic rate increase, what are you willing to do to phase
    in the rent increase?
        Answer. Current quarters management guidelines issued by OMB allow
    increases that are 25 percent or more above the current rent, to be
    imposed incrementally over a period not to exceed 1 year.
        Question. What can the VA do to ensure that the national policy has
    adequate flexibility to allow for unique situations with drastic
    increases--including on site assessments when necessary to ensure that
    comparisons are being made of similar types of housing?
        Answer. VA's national quarters policy stipulates that when the
    facility Director has knowledge, supported by specific examples, that
    the appraised basic rental rate is out of line with comparable private
    housing in the local community, or that allowable deductions have not
    been given proper consideration in the establishment of comparable
    rent, he or she may first request reconsideration from the appraiser or
    the regional survey coordinator. The existing rental rates charged for
    the period immediately preceding the appraisal or survey under
    consideration will continue to be charged pending the outcome of
    reconsideration by the appraiser, or regional survey coordinator, or
    until the next annual adjustment is required. If a reappraisal or
    resurvey requested by the facility Director is refused or results in no
    relief, an appeal may be sent to VA Headquarters for resolution. VA
    Headquarters has the flexibility to order new appraisals or make other
    rental adjustments as may be warranted to establish rates that are
    consistent with market values in the nearest established community.
               medical care cost collections/medicare subvention
        Question. Indications are that the VA is running behind in its
    collections of third-party payments. Does the Department believe it
    will meet its collections projections for fiscal year 1998 and fiscal
    year 1999?
        Answer. VA believes it will meet recovery targets.
        Question. What is the VA doing to increase collections?
        Answer. The chart below describes the proposed changes, updated
    February 1998, VA will make to increase recoveries. Implementation of
    these improvements will occur over the next several years.

    ------------------------------------------------------------------------
                   Initiative                          Description
    ------------------------------------------------------------------------
    Insurance Identification...............  Pre-registration: Involves
                                              contacting patients scheduled
                                              for outpatient visits to
                                              remind the patients of their
                                              appointment and to update
                                              patient information.
                                             $6.4 million was recovered from
                                              insurance from 10 medical
                                              centers in one year. Assuming
                                              average recoveries of $500,000
                                              per each of 150 medical
                                              centers, $75 million in new
                                              revenues could be generated.
    (Pre-registration, HCFA Match).........  HCFA Match: Approximately 5
                                              percent of the Medicare
                                              eligible population possess
                                              third party primary, full
                                              coverage, reimbursable
                                              insurance as a result of their
                                              full time employment or the
                                              employment of a spouse.
                                             MCCR is pursuing a match of
                                              Medicare and VA records to
                                              identify primary payer data.
                                              If the estimate is correct and
                                              VA mirrors the private sector,
                                              potential recoveries from this
                                              group may total between $60 to
                                              $97 million.
    HCFA Medicare Remittance Notices.......  Since VA presently cannot
                                              receive reimbursement from
                                              Medicare for eligible
                                              veterans, MCCR has not been
                                              able to submit claims to
                                              Medicare Supplemental insurers
                                              similar to those of Medicare
                                              providers that have an
                                              accompanying remittance notice
                                              from a Medicare Fiscal
                                              Intermediary or Carrier.
                                             As a result, certain payers are
                                              withholding payment of
                                              Medicare Supplemental claims.
                                              HCFA and VA are negotiating an
                                              agreement to allow VA to
                                              utilize existing Medicare
                                              contracts to obtain the
                                              remittance notices to satisfy
                                              payer requirements.
                                             A one-time recovery of $42
                                              million in outstanding unpaid
                                              claims and a recurring annual
                                              $8 million in additional
                                              revenue are expected as a
                                              result of this contract and
                                              change in processing.
    Utilization Review.....................  In fiscal year 1995,
                                              approximately $159 million in
                                              non-Medigap inpatient claims
                                              and $44 million in non-Medigap
                                              outpatient claims were denied
                                              by payers. Utilization review
                                              staff, familiar with third
                                              party criteria, such as
                                              admissions, lengths of stay,
                                              discharges, pre-certification,
                                              continued stay reviews, etc.,
                                              could negotiate payments for
                                              many of the denied claims. UR
                                              staff have recovered as much
                                              as $400,000 per medical center
                                              in previously denied claims.
                                              If we assume a possible
                                              average success rate of
                                              between $100,000 and $200,000
                                              for each of the 150 medical
                                              centers, recoveries from
                                              proper training and assignment
                                              could amount to between $15
                                              and $30 million.
    TRICARE, Sharing, etc., Revenue........  As a consequence of Public Law
                                              104-262, eligibility reform
                                              legislation, expanded sharing
                                              contracts, including support
                                              of TRICARE is expected to
                                              result in $25 million in new
                                              revenues annually.
    SC/NSC Documentation and Billing.......  Approximately 3.3 percent of
                                              service connected inpatient
                                              care and 2.5 percent of
                                              service connected outpatient
                                              care for adjunct conditions
                                              are inappropriately being
                                              coded as treatment for
                                              adjudicated service connected
                                              care. Properly coding this
                                              care as adjunct and billing
                                              insurance carriers will result
                                              in an additional $11 million
                                              per year.
    Salary and Benefit Offset..............  An IG audit determined that by
                                              referring delinquent patient
                                              copayment and means test debt
                                              for salary and benefits
                                              offset, an additional $3
                                              million in revenues can be
                                              recovered. The MCCR program
                                              currently utilizes IRS offset
                                              for delinquent debt and is
                                              implementing referral of debt
                                              over 90 days old to the Debt
                                              Management Center in St. Paul.
    Point of Service Contracts.............  In order to remain competitive,
                                              traditional HMO's recently
                                              began offering their enrollees
                                              the option of obtaining health
                                              care outside the HMO network.
                                              The enrollees agree to bear
                                              larger copayments and
                                              providers receive
                                              reimbursements that are less
                                              than customary and usual.
                                              Aggressive identification and
                                              recovery from these HMO plans
                                              will be pursued.
    Network Incentives.....................  Network retention of revenues
                                              recovered will result in
                                              better-managed local recovery
                                              efforts.
    Reasonable Rates.......................  Reimbursement rates are being
                                              structured to reflect
                                              reasonable charges responsive
                                              to market prices for the
                                              actual services provided; and
                                              a DRG rate schedule for
                                              inpatient care is being
                                              developed to be used with
                                              automated multiple rate
                                              schedule prices in Integrated
                                              Billing. Outpatient procedure
                                              rates are planned for late in
                                              fiscal year 1998.
    Third Party Delinquent Claims..........  A nationwide contract to handle
                                              MCCR delinquent third party
                                              claims over 90 days for
                                              inpatient health care services
                                              provided veterans will help
                                              increase delinquent
                                              collections.
    ------------------------------------------------------------------------

        Question. Does the Department have a plan with specific benchmarks
    that it will use to increase collections and ensure that projections
    are met?
        Answer. Yes. Networks have Strategic Plans, which include revenue
    projections. National recovery projections incorporate those goals.
        Question. What will the VA plan to do if it is clear that it will
    not meet its collections projections?
        Answer. VA is closely monitoring the collections. If at any time we
    do not believe that we will reach these goals, we will take immediate
    action to notify, and work with, the Administration and the Congress to
    ensure that adequate funding is provided for the healthcare of our
    nation's veterans.
        Question. What plan does the VA have in place to ensure that the
    medical services provided to veterans does not suffer?
        Answer. VA has developed an implementation plan for Public Law 105-
    33. This addresses the process that is to be followed. Below is the
    plan.

                                PUBLIC LAW 105-33
    ------------------------------------------------------------------------
                Implementation plan                      Target date
    ------------------------------------------------------------------------
    Monitor monthly deposits in Medical Care    Beginning November 1, 1997.
     Collection Fund (MCCF) to U.S. Treasury
     36 5287.1.
    Provide estimates to Secretary of Veterans  April 1998 July 1998.
     Affairs regarding deposits to MCCF and
     necessary action to be taken if shortfall
     of $25,000,000 below estimated recovery
     level of $604,000,000 is projected as
     contained in Public Law 105-33.
    If shortfall exists as noted in No. 2,      August 1998.
     prepare certification to the Secretary of
     the Treasury identifying the amount of
     the estimated shortfall.
    Establish policy and mechanism to make      September 1998.
     available any additional deposits from
     the U.S. Treasury as a result of an
     estimated shortfall to each designated
     health care region an amount that bears
     the same ratio to the total amount
     recovered or collected by such region
     during that fiscal year.
    Reconcile the estimates certified by the    October 1998.
     Secretary of Veterans Affairs for fiscal
     year 1998 as a shortfall to actual MCCF
     deposits and make adjustments assuring
     that not less than $579,000,000 ($604
     million less $25 million) shall be
     available for veterans' medical care.
    ------------------------------------------------------------------------

        Question. What role does Medicare Subvention play in the VA's plan
    to increase non-appropriated income to 10 percent?
        Answer. VHA's goal is to reach 10 percent of total funding from
    alternative revenues by fiscal year 2002. This would include, Medical
    Care Cost Collections (principally third party), sharing (VA/DOD,
    TRICARE and enhanced sharing) and Medicare subvention. Medicare
    subvention is an important part of the strategy to meet the 10 percent
    alternative revenue goal. If legislation is not passed or is delayed,
    our goal still remains 10 percent by fiscal year 2002, but achieving it
    becomes significantly more difficult.
        Question. What contingency plans does the VA have to ensure
    adequate Medical Care funding is provided in the event that Medicare
    Subvention is not passed this year?
        Answer. We have confidence that Medicare subvention will be
    enacted, and that the test will show dual eligible veterans prefer to
    come to VA to use their Medicare benefits and that VA will provide
    excellent cost-effective healthcare at reduced expenditures to the
    Medicare Trust Fund. If not, other revenue alternatives (e.g., VA/DOD
    sharing, enhanced sharing, TRICARE and Medical Care Cost Collections)
    would need to be expanded further to fill the gap to meet the 10
    percent target by fiscal year 2002.
        Question. What is the VA doing to help get Medicare Subvention
    passed?
        Answer. The Department of Veterans Affairs and the Department of
    Health and Human Services have prepared and co-signed a Memorandum of
    Understanding that governs the VA Medicare project when it is
    authorized. Enabling legislation has been submitted although not yet
    introduced in Congress. The VA Under Secretary for Health and members
    of his staff are working with Congress, OMB, and HHS in support of
    legislation to authorize Medicare reimbursement to VA. While awaiting
    legislation, VA is moving ahead to position itself to become a Medicare
    provider.
                                 tobacco issues
        Question. What is the VA's justification for seeking to go against
    the VA General Counsel decision and not provide benefits to veterans
    who develop smoking related illnesses after the normal presumptive
    period?
        Answer. The Administration has consistently supported the integrity
    of the veterans' compensation program, which is intended to compensate
    our Nation's veterans and their survivors for deaths or disabilities
    acquired as a result of military service. There is no question that the
    program should compensate veterans for tobacco-related illnesses which
    became manifest during military service or an applicable presumptive
    period. However, awarding compensation for tobacco-related illness
    acquired after military service or after the presumptive period and
    based solely on claims of nicotine addiction beginning during service
    goes beyond the very important purposes of the veterans' disability
    program.
        Congress has recognized the appropriateness of boundaries to the
    program by prohibiting payment of disability benefits for illnesses
    based solely on use of alcohol or drugs during military service. Like
    the consumption of alcohol, the use of tobacco products reflects a
    personal decision, not a requirement of military service. Most
    veterans, like most Americans, do not use tobacco products. It seems
    inappropriate to compensate those that choose to use tobacco with a
    program developed for those who became disabled in service to our
    nation. Our legislative proposal would disallow future claims of this
    type. Veterans currently receiving these benefits and veterans filing
    claims prior to enactment would not be affected by the change.
        Question. Why aren't all of the savings from this proposal directed
    back into veterans programs?
        Answer. The benefits that you refer to are not traditional VA
    benefits. Our legislation would merely reinstate VA policy in place
    prior to the new legal interpretation, thus retaining the program's
    intent. Awarding benefits for tobacco-related illnesses acquired after
    service based solely on tobacco-use during service, goes beyond the
    purpose of a program that we have consistently supported.
        We have proposed several improvements for veterans:
      --Fund a new smoking-cessation program for any veteran who began
            smoking in the military.
      --Provide a 20-percent rate increase for the Montgomery GI Bill
            education program.
      --Provide an annual increase of $100 million in VA's readjustment
            benefits account to reimburse Department of Labor programs to
            train, retrain, and assist older veterans to find employment.
        Question. What does the VA propose would be provided for these
    veterans?
        Answer. In lieu of providing monetary compensation, VA would
    provide medical care for any eligible veterans with smoking related
    illnesses. In addition, VA would provide smoking cessation through a
    contract program to any honorably discharged veterans who began smoking
    in the military. Eligible veterans, who are enrolled in VA's health
    care programs, already have access to smoking cessation if desired.
        Question. Why isn't the Administration seeking any tobacco
    settlement money for the VA? Do you think that the VA should receive
    any tobacco settlement money?
        Answer. As you know, VA programs were not a subject in the
    settlement negotiations. However, as the details of the tobacco
    settlement are established and if Federal programs are considered as
    possible recipients of settlement funds, VA has requested that it be
    included in these considerations.
                          DEPARTMENT OF DEFENSE--CIVIL

                           Cemeterial Expenses, Army

    STATEMENT OF JOHN H. ZIRSCHKY, ACTING ASSISTANT
                SECRETARY OF THE ARMY (CIVIL WORKS)
    ACCOMPANIED BY:
            MAJ. GEN. ROBERT F. FOLEY, COMMANDER, MILITARY DISTRICT OF
                WASHINGTON
            JOHN C. METZLER, JR., SUPERINTENDENT, ARLINGTON NATIONAL
                CEMETERY
            RORY D. SMITH, BUDGET OFFICER, ARLINGTON NATIONAL CEMETERY
            CLAUDIA TORNBLOM, ACTING DEPUTY ASSISTANT SECRETARY (MANAGEMENT
                AND BUDGET)

        Mr. Zirschky. I thank you for the opportunity to testify.
    It is an honor and a pleasure to be representing Arlington
    Cemetery. I think it is our foremost national shrine to the men
    and women who have served in the Armed Forces.
        Let me introduce a few people who are with me today. Major
    General Foley is the Commander of the Military District of
    Washington and Medal of Honor winner.
        Senator Bond. Welcome, General Foley. Delighted to have you
    with us.
        Mr. Zirschky. We have Jack Metzler, the Superintendent for
    Arlington Cemetery; Rory Smith, the Budget Officer for the
    cemetery; and Claudia Tornblom is here in place of Steve Dola
    who retired after more than 30 years with the Army at the first
    of the year.

                                   expansion

        There are only two things I want to discuss today, and I
    will be very brief. I was interested in your comments about
    Jefferson Barracks. It is very difficult to expand cemeteries
    for veterans. We have been working for many years to try and
    expand Arlington Cemetery, and we are so close but we could use
    a little help to get across the finish line. If we do not take
    action, the cemetery is going to close early in the next
    century. If we can accomplish our new master plan that was
    recently approved by the National Capital Planning Commission,
    we can keep it open hopefully through the next century.
        In our budget request, we have asked for one-half million
    dollars to begin preparation of a concept plan for how we would
    expand the cemetery onto adjacent areas. Part of the land is
    called section 29 which is near the Custis Mansion at the
    cemetery. We are also hopeful that we can acquire the Navy
    Annex and Henderson Hall, as well as parts of Fort Myer when
    they become no longer needed for military purposes.
        We would invite you, Senator, and any of your colleagues to
    tour the cemetery. We would be happy to show you the areas, but
    also be happy to arrange for you to lay a wreath at the Tomb of
    the Unknown in honor of Missouri's veterans or all of the men
    and women who have served in the Armed Forces.
        We probably will need legislation to make those transfers a
    reality. I understand both the House and the Senate are at
    least considering such legislation, if they have not already
    introduced it. We would appreciate your support for that.

                               budget highlights

        The second issue I want to briefly talk about is our
    budget. As you noted, it is $11.6 million in new funds. We
    also, through scrubbing our books, found about $633,000 from
    prior years that has been recovered. Some of that money will be
    used for the new expansion plan, for a wash/fuel island, for
    expansion of our maintenance work done by contract, and
    $250,000 to restore the amphitheater.
        We would also like to hire by contract an environmental
    manager to help us deal with some of the environmental issues
    at the cemetery.

                               prepared statement

        Last, Mr. Chairman, we recently submitted a strategic plan
    as required by the Government Performance and Results Act. The
    goal of that plan is to help keep the cemetery open through the
    next century. Again, we will need your help to do that.
        Thank you, Mr. Chairman.
        [The statement follows:]*

                     Prepared Statement of John H. Zirschky

                                  introduction
        I appreciate the opportunity to appear before the subcommittee in
    support of the fiscal year 1999 appropriation request for Cemeterial
    Expenses, Department of the Army. Arlington National Cemetery is the
    Nation's premier military cemetery and it is an honor to represent the
    cemetery.
        With me today are Major General Robert F. Foley, the Commander of
    the Military District of Washington; Mr. John C. Metzler, Jr.,
    Superintendent of Arlington National Cemetery; Mr. Rory D. Smith,
    Budget Officer from Arlington National Cemetery; and Ms. Claudia
    Tornblom, Acting Deputy Assistant Secretary (Management and Budget).
    The Assistant Secretary of the Army (Civil Works) is responsible for
    the operation and maintenance of Arlington and Soldiers' and Airmen's
    Home National Cemeteries.
        Mr. Chairman, Members of the Subcommittee, unless action is taken
    to extend the life of the cemetery, space will not be available after
    2025 to lay to rest today's heroes. We have recently completed a multi-
    year effort to develop a new Master Plan for the cemetery. We have also
    completed a Strategic Plan. Both support keeping the cemetery open as
    long as possible. Consistent with the President's fiscal year 1999
    budget, Arlington National Cemetery will develop an expansion plan for
    using contiguous land sites that will be vacated by the Army, Navy and
    Marine Corps. The Army has agreed to transfer major portions of Ft.
    Myer to Arlington National Cemetery for development into grave sites
    when these lands are vacated. The first phase of this transfer will
    address Ft. Myer sites and the Navy Annex, part of the expansion plan
    for which funding is included in the fiscal year 1999 budget. We need
    your help to make this vision a reality.
        The program I will present before you today is directed toward
    meeting today's requirements, while moving forward to address
    tomorrow's challenges.
                        fiscal year 1999 budget overview
        The request for fiscal year 1999 is $11,666,000. In addition to
    that amount, $633,664 has been identified as remaining available from
    prior year recoveries, bringing the total fiscal year 1999 program to
    $12,299,664.
        The sum for recovery of prior year obligations was identified as
    part of a comprehensive review of the Cemeterial Expenses, Army,
    appropriations going back to fiscal year 1986. During the review it was
    discovered that, after meeting requirements for operation, maintenance
    and improvement, these funds are available for reapportionment and use
    in fiscal year 1999. The availability of these funds was recently
    affirmed by the Army Audit Agency.
        The appropriations requested, in combination with prior year
    recoveries, are sufficient to support the work force, to assure
    adequate maintenance of the buildings, to acquire necessary supplies
    and equipment, to provide maintenance standards expected at Arlington
    and Soldiers' and Airmen's Home National Cemeteries, and to permit
    selected improvements in cemetery infrastructure. The budget includes:
      --$800,000 to construct a wash stand/fuel island;
      --$500,000 to prepare a concept land utilization plan for land
            contiguous to Arlington National Cemetery under the
            jurisdiction of the Department of Defense and currently used by
            the Army, Navy and Marine Corps; and
      --$253,000 to expand contracts for enhancing the appearance of the
            cemetery while implementing government-wide streamlining plans.
        The fiscal year 1999 program is divided into three programs:
    Operation and Maintenance, Administration, and Construction. The
    principal items in each program are as follows:
        The Operation and Maintenance Program, $9,401,000, will provide for
    the cost of daily operations necessary to support an average of 20
    interments and inurnments daily and for maintenance of approximately
    630 acres. This program supports 106 of the cemeteries' total 112 full-
    time equivalent Federal employee workyears. Contractual services are
    estimated to cost $3,429,000 and include these major items: $1,288,000
    for grounds maintenance contract, $775,000 for the information guide
    service contract, $663,000 for a tree and shrub maintenance contract,
    and $110,000 for a custodial services contract. The tree and shrub
    maintenance contract work is increasing by $253,000 and expands an
    initiative begun in fiscal year 1996 to increase the amount of work
    performed and to enhance the appearance of the cemetery, while reducing
    the overall number of Government employees. Based on past experience,
    the custodial contract was estimated in the fiscal year 1998 budget to
    cost $210,000. Recent competition, however, has resulted in the award
    of the fiscal year 1998 custodial contract to a lower bidder, producing
    significant apparent savings in fiscal year 1998 and fiscal year 1999.
    We will continue to monitor the situation, retaining the differences in
    costs as contingencies until we have gained experience with the ability
    of the new contractor to satisfy the requirements of the contract
    during the busiest season at Arlington.
        The Administration Program, $914,000, provides for essential
    management and administrative functions to include staff supervision of
    Arlington and Soldiers' and Airmen's Home National Cemeteries. Funds
    requested will provide for personnel compensation, benefits and the
    reimbursable administrative support costs of the cemeteries. The
    increase of $314,000 in support costs is necessary in order to expand
    our reimbursable administrative support services, including undertaking
    support services for procurement and property accountability.
        The Construction Program, $1,985,000, provides funds as follows:
    $800,000 to construct a wash stand/fuel island, $500,000 to prepare a
    concept utilization plan for developing contiguous land, $250,000 to
    restore the Old Memorial Amphitheater, $100,000 to perform minor road
    repairs throughout the cemetery, and $335,000 to continue the
    graveliner program.
                                    funerals
        In fiscal year 1997, there were 3,525 interments and 2,000
    inurnments; 3,500 interments and 2,000 inurnments are estimated in
    fiscal year 1998; and 3,600 interments and 2,100 inurnments are
    estimated in fiscal year 1999.
                                   ceremonies
        Arlington National Cemetery is this Nation's principal shrine to
    honor the men and women who served in the Armed Forces. It is a visible
    reflection of America's appreciation for those who have made the
    ultimate sacrifice to maintain our freedom. In addition to the
    thousands of funerals, with military honors, held there each year,
    hundreds of other ceremonies are conducted to honor those who rest in
    the cemetery. Thousands of visitors, both foreign and American, visit
    Arlington to participate in these events. During fiscal year 1997,
    about 2,700 ceremonies were conducted, and the President of the United
    States attended the ceremonies on Veterans Day and Memorial Day.
        During fiscal year 1997, Arlington National Cemetery accommodated
    approximately four million visitors, making Arlington one of the most
    visited historic sites in the National Capital Region. This budget
    includes $40,000 to continue a study, begun in fiscal year 1998, to
    develop an estimating procedure and obtain reliable estimates of the
    numbers and kinds of visitors that Arlington National Cemetery serves.
    This increased orientation to our ``customers'' is consistent with the
    Government Performance and Results Act and the National Performance
    Review. Additionally, the study will lead us into the development of
    customer surveys to be used in implementation of the Strategic Plan for
    Arlington and Soldiers' and Airmen's Home National Cemeteries.
                             construction projects
    New and Expanded Projects in Fiscal Year 1999
        Wash stand/fuel island.--This is a significant commitment to
    complete a capital improvement project, which will address
    environmental concerns. It was designed and included as an additive bid
    item in the solicitation for the Facility Maintenance Complex. The
    purpose of this project is to centralize fueling and vehicle washing
    operations for efficiency and to ensure compliance with environmental
    laws and regulations. Construction funding of $800,000 is included in
    the fiscal year 1999 budget.
        Concept land utilization plan.--The 1997 proposed Master Plan for
    Arlington National Cemetery has identified and evaluated 14 parcels of
    land that potentially could be used to expand the cemetery, which would
    allow it to remain open for initial burials into the 22nd century. All
    of the parcels are either currently contiguous to the cemetery or would
    become contiguous after currently adjacent parcels are acquired.
    Attached is a map showing the locations of the 14 contiguous land sites
    considered in this plan.
        Conceptual planning is required to determine when the contiguous
    lands might be available in the future. Toward that end, $500,000 is
    included in the fiscal year 1999 budget to prepare concept utilization
    plans to develop contiguous lands owned by the Federal Government as
    they become excess to the needs of the Army, Navy and Marine Corps in
    the future.
        Old Memorial Amphitheater restoration.--Phase I of the Old Memorial
    Amphitheater project will be completed by June 1998. The work being
    undertaken in Phase I is primarily at the rostrum, the architectural
    focal point of the amphitheater and is funded at $175,000. Construction
    funding of $250,000 is included in the fiscal year 1999 budget for
    Phase II of the restoration. Phase II will complete the project,
    restoring the elliptical ambulatory which embraces the rostrum. The
    complete project will stabilize masonry and carpentry elements which
    have deflected, deteriorated, or are otherwise damaged, and will
    repair, replace, or add elements necessary to extend the serviceable
    life of the structure. This includes repointing brick columns;
    repairing and supporting deteriorated brick walls; repairing
    deteriorated column capitals; repainting all columns; replacing
    deteriorated wood trellis members; painting; cleaning, resetting and
    replacing stone pavers; and installing subsurface drainage.
    Construction Projects Underway
        Custis Walkway.--The Custis Walkway was initially constructed in
    1879 along the route of General Robert E. Lee's departure from the
    Custis Mansion at the beginning of the Civil War. A significant portion
    of the 2,500-foot-long walkway is affected by heaving and cracks. The
    Custis Walkway project also will restore aesthetic features along the
    walkway consistent with historical records of previous conditions. The
    design for the walkway was developed, pursuant to the National Historic
    Preservation Act, 16 U.S.C. 47f, in coordination with the Virginia
    State Historic Preservation Officer and the Advisory Council on
    Historic Preservation, as well as with the Commission of Fine Arts.
    Construction funding of $1,175,000 was provided in fiscal year 1998
    appropriations for this project. The contract is expected to be awarded
    this summer.
        Columbarium roads.--The contract for Columbarium roads associated
    with the Phase III increment is expected to be awarded in April. The
    work, estimated to cost $810,000 (including design costs), is scheduled
    to be completed in November 1998.
        Columbarium Phase III.--Construction of the first of two courts
    comprising Phase III of the Columbarium was completed in October 1997
    at a cost of $3,374,632. Construction of the second court, which is
    ongoing, will be completed in July 1998. The construction cost for the
    second court is estimated at $3,227,100. The combined capacity of the
    two Phase III courts is 11,286 niches, bringing the total capacity of
    the Columbarium Complex to 31,286 niches.
                             claims and settlements
        The fiscal year 1999 budget includes $98,000 to reimburse the
    Judgment Fund for the cost to the Department of Justice of a recently
    settled and paid claim related to a defective contract option in a
    grounds maintenance contract.
        Following is a summary of the status of other claims associated
    with projects and contracts at Arlington National Cemetery.
        We previously reported that a claim for differing site conditions,
    submitted by the construction contractor for the demolition of the old
    temporary Visitors Center and development of that land (Section 54 and
    55) into gravesites, was formally denied. However, the contractor
    appealed this decision to the U.S. Court of Federal Claims on December
    19, 1996. The Department of Justice is handling this case, which
    remains in the discovery phase and is at least 6 months from trial.
        In addition to the settled claim for which reimbursement is
    budgeted, in another claim the grounds maintenance contractor alleged
    defective specifications in an interim contract. This claim was tried
    in July 1997, and a decision is anticipated within the next 6 to 9
    months.
        A claim was submitted for extended overhead and additional
    irrigation system work at the Kennedy gravesite. A tentative settlement
    with this contractor in the amount of $17,500 has been reached.
                         master plan and strategic plan
        The Army recently completed the first update of the Arlington
    National Cemetery Master Plan since 1977. The Master Plan identifies
    projects and policies to respond to the challenges confronting
    Arlington National Cemetery. The proposed 1997 Master Plan for
    Arlington National Cemetery has been provided to the National Capital
    Planning Commission (NCPC) and Commission of Fine Arts for review. The
    NCPC considered the new Master Plan at a hearing on March 5, 1998. The
    NCPC's review is required for all master plans and designs for proposed
    construction projects in the National Capital Region.
        The Master Plan challenges include: an aging infrastructure,
    declining availability of space for initial interment, and the need to
    preserve the dignity of the cemetery while accommodating substantial
    public visitation.
        The future projects envisioned in the Master Plan will not begin to
    be implemented until we are into the next century. Projects and
    policies must be measured against funding to be made available in the
    budget and appropriations processes. Detailed planning and engineering
    studies necessary to establish the cost, feasibility, and
    responsiveness of individual capital projects to the Master Plan
    challenges will be programmed and proposed to Congress at the
    appropriate times, consistent with the overall program and budget of
    the President.
        The challenges articulated in the Master Plan were incorporated,
    along with others, into the recently submitted Strategic Plan for
    fiscal year 1998 to fiscal year 2003. The Strategic Plan also covers
    the Soldiers' and Airmen's Home National Cemetery. Pursuant to the
    Government Performance and Results Act of 1993, the Strategic Plan lays
    out the following: a vision statement, a comprehensive mission
    statement, the general goals and objectives that will govern the use
    and development of the cemetery, the key strategies that will be used
    to achieve the goals and objectives, and the performance indicators
    that will be used to assess how well the goals and objectives have been
    achieved.
                         army--interior land transfers
        Public Law 104-201, the National Defense Authorization Act for
    Fiscal Year 1997, includes two land transfer provisions in Section 2821
    relating to Arlington National Cemetery.
        Section 29 Land Transfer.--The first part of Section 2821 of the
    1997 Authorization Act instructs the Secretary of the Interior to
    transfer to the Secretary of the Army certain lands found in Section 29
    of Arlington National Cemetery. The land found in Section 29 is
    currently divided into two zones: the 12-acre Arlington National
    Cemetery Interment Zone and 12.5-acre Robert E. Lee Memorial
    Preservation Zone. The transfer encompasses the Arlington National
    Cemetery Interment Zone and the portions of the Robert E. Lee Memorial
    Preservation Zone that do not have historical significance and are not
    needed for the maintenance of nearby lands and facilities.
        The Superintendent of Arlington National Cemetery has visited other
    cemeteries to gain information on design options for facilities which
    would be fully compatible with the environmental and historical values
    of the surrounding areas.
        The Secretary of the Interior is to base the determination of which
    portion of the Preservation Zone will be transferred primarily on a
    cultural resources study. This study is to consider whether
    archeological resources are likely to be located on the land, whether
    portions of the property are eligible for inclusion in the National
    Register of Historic Places, and whether property has forest cover that
    contributes to the setting of the Preservation Zone. The cost of the
    study was split evenly between the Department of Interior and
    Department of the Army. In addition, the Secretary of the Interior will
    provide the Committee on Armed Services of the Senate and the Committee
    on National Security of the House of Representatives with environmental
    and cultural resources information and analysis. Completion of this
    study was initially scheduled for July 1997, but has been delayed.
        The transfer will be carried out under the Interagency Agreement
    between the Department of the Interior, National Park Service, and the
    Department of the Army, dated February 22, 1995. The transfer is to
    occur no sooner than 60 days after the Secretary of the Interior has
    submitted the information and analysis to the Committees.
        Visitors Center/Old Administration Building.--The second part of
    Section 2821 of the 1997 Authorization Act instructs the Secretary of
    the Interior to transfer to the Secretary of the Army 2.43 acres of
    land and the Visitors Center, which is constructed on the land. In
    return, the Secretary of the Army will transfer to the Secretary of the
    Interior 0.17 acres of land and the Old Administration Building, which
    is constructed on the site. Section 2821 provides the authority by
    which this agreed-upon exchange of lands may take place.
                                   conclusion
        The funds included in the fiscal year 1999 budget, along with the
    prior year funds recovered and available for use in fiscal year 1999,
    are necessary to permit the Department of the Army to continue the high
    standards of maintenance and stewardship that Arlington National
    Cemetery deserves. I urge the Subcommittee to approve this program and
    to join us in meeting the challenges that face Arlington and Soldiers'
    and Airmen's Home National Cemeteries.
        Mr. Chairman, this concludes my remarks. We will be pleased to
    respond to questions from the Subcommittee.
    [GRAPHIC] [TIFF OMITTED] TMA19.048

                           transfer of responsibility

        Senator Bond. Thank you, Mr. Secretary.
        The veterans really are very much concerned about running
    out of land at Arlington National Cemetery, and we are very
    interested in seeing the results of the National Planning
    Commission. You have outlined some of the land available. We
    look forward to going through that with you because this is of
    great concern.
        A broader question. Does it make sense to consider
    transferring the responsibility for the Arlington National
    Cemetery and the U.S. Soldiers' and Airmen's Home National
    Cemetery to the VA cemetery services? What kind of impact would
    that have on Arlington?
        Mr. Zirschky. We have never done a formal analysis, sir. I
    do not believe the Department of the Army has an official
    position, so I will give you my personal position. I believe it
    should stay with the U.S. Army. I think we have done a very
    good job of managing it. There are over 2,000 ceremonies that
    involve the Army at that cemetery every year, mostly involving
    resources under the direction of Major General Foley. It is
    much easier to do that kind of coordination if the cemetery
    remains in the Army. I think we have done a very good job of
    managing it. We tried very hard to develop master plans to keep
    it open. I would hope that it would stay with the Department of
    the Army. That is just my personal opinion.

                                contracting out

        Senator Bond. I notice that the fiscal year 1999 budget
    assumes a decrease of some 28 FTE's below the 1992 level of
    140. How is reliance on private contractors to maintain the
    cemetery working out? How do you find that in terms of
    management? Is that working well?
        Mr. Zirschky. I will let both myself and either General
    Foley or Mr. Metzler answer that. But generally I think it is
    working fairly well. I am worried about the future ability to
    keep the cemetery open with more cuts below where we are. We
    have reduced a few more FTE's, but it is going to get
    increasingly difficult to do that.
        Our contract program has worked fairly well. For the most
    part, we have been able to avoid protests or bid problems,
    although we have a contract now that the bid, quite frankly, is
    much lower than what we are used to, so we are watching that
    one closely.
        I think we are doing fine so far. I am very worried about
    future reductions in our FTE's because demand for use of the
    cemetery is growing, and we do need people to monitor the
    contractors.
        I do not know if General Foley or Mr. Metzler----
        General Foley. Mr. Chairman, I would only add to that that
    the Superintendent and I are constantly looking at ways in
    which we can reengineer the process of how we do business, and
    one thing that I have done just recently has been looking at,
    with the Superintendent, the possibility of leasing as oppose
    to purchase of various pieces of equipment, vehicles, and vans
    and so forth. I owe Dr. Zirschky a briefing here in the next
    several weeks on possible cost savings on an annual basis that
    we would achieve through that. So, we are constantly looking at
    those out-sourcing ways.
        Senator Bond. I am not suggesting a further reduction. I
    was just asking whether the contracting out for the maintenance
    has been a good management tool, has it been efficient and
    effective and accomplish your objectives at a lesser cost.
        Mr. Zirschky. Yes, sir; I would say so.

                               lieutenant blassie

        Senator Bond. We have a question that is of particular
    interest to a family in St. Louis, whether Lieutenant Blassie
    is actually buried in the Tomb of the Unknown Soldier. That
    issue has been of grave concern to the family and all of the
    friends in that area.
        What is being done about that, the issues raised there? I
    am sure you are familiar with it.
        Mr. Zirschky. Yes, I am familiar with the issues. For the
    Army, that issue is being handled by Mr. Jay Spiegel, who is
    the Acting Assistant Secretary for Manpower and Reserve
    Affairs. The laboratories that do identification of remains are
    under Mr. Spiegel's purview. The Department of Defense is also
    involved, and I believe they put together a task force to try
    and resolve issues about how to handle that. This has never
    arisen before.
        It also raises interesting points that with the DNA testing
    we do on soldiers, it is probably unlikely that we will ever
    have another unknown soldier.
        Senator Bond. That is what my staff has suggested, and that
    I think will bring peace of mind to many families in the
    future. But still the Tomb of the Unknown is very, very
    important for many families who have not been able to find
    certainty about their loved ones.

                              eligibility criteria

        There are a lot of questions that have been raised on
    eligibility requirements for Arlington National Cemetery, and
    the use of waivers has been discussed exhaustively over the
    last few months. I do not plan to get into that today, but to
    help us complete the record so we have a complete record in
    this committee on this issue, would you please provide for the
    record a summary of the requirements for eligibility for burial
    at Arlington National Cemetery, including a summary of waivers
    that have been approved to allow burials at Arlington. I assume
    it has probably already been compiled and you submitted it a
    number of times. We want to include it in our record.
        [The information follows:]

                         Burial Eligibility and Waivers

        Individuals eligible for burial at Arlington include the following:
        (a) Any active duty member of the Armed Forces (except those
    members serving on active duty for training only),
        (b) Any retired member of the Armed Forces who has served on active
    duty (other than for training), is carried on an official retired list,
    and is entitled to receive retired pay stemming from service in the
    Armed Forces. If, at the time of death, a retired member is not
    entitled to receive retirement pay, he or she will not be eligible for
    burial,
        (c) Any former member of the Armed Forces separated for physical
    disability prior to October 1, 1949, who has served on active duty
    (other than for training) and who would have been eligible for
    retirement under the provisions of 10 U.S.C. 1201 had that statute been
    in effect on the date of separation,
        (d) Any former member of the Armed Forces whose last active duty
    (other than for training) military service terminated honorably and who
    has been awarded one of the following decorations: Medal of Honor,
    Distinguished Service Cross (Air Force Cross or Navy Cross),
    Distinguished Service Medal, Silver Star, or Purple Heart,
        (e) Persons who have held any of the following positions, provided
    their last period of active duty (other than for training) as a member
    of the Armed Forces terminated honorably: an elective office of the
    U.S. Government; Chief Justice of the United States or Associate
    Justice of the Supreme Court of the United States; an office listed in
    5 U.S.C. 5312 or 5 U.S.C. 5313 (level I and II executives); and chief
    of a mission who was, at any time during his or her tenure, classified
    in class I under the provisions of 411 of the Act of August 13, 1946,
    60 Stat. 1002, as amended (22 U.S.C. 866, 1964 ed.),
        (f) Any former prisoner of war who, while a prisoner of war, served
    honorably in the active military, naval, or air service, whose last
    period of active military, naval, or air service terminated honorably,
    and who died on or after November 30, 1993,
        (g) the spouse, widow or widower, minor child, and, at the
    discretion of the Secretary of the Army, unmarried adult child of any
    of the persons listed above.
              (1) The term spouse refers to a widow or widower of an
            eligible member, including the widow or widower of a member of
            the Armed Forces who was lost or buried at sea or officially
            determined to be permanently absent in a status of missing or
            missing in action. A surviving spouse who has remarried and
            whose remarriage is void, terminated by death, or dissolved by
            annulment or divorce by a court regains eligibility for burial
            in Arlington.
              (2) An unmarried adult child may be interred in the same
            grave in which the parent has been or will be interred,
            provided that child was incapable of self-support up to the
            time of death because of physical or mental condition,
        (h) Widows or widowers of service members who are interred in
    Arlington as part of a group burial may be interred in the same
    cemetery but not in the same grave,
        (i) The surviving spouse, minor child, and, at the discretion of
    the Secretary of the Army, unmarried adult child of any person already
    buried at Arlington,
        (j) The parents of a minor child or unmarried adult child whose
    remains, based on the eligibility of a parent, are already buried at
    Arlington.
        Requests for exceptions to eligibility criteria are received in the
    Superintendent's office and are reviewed. A recommendation is
    formulated and forwarded with supporting documentation through the
    Assistant Secretary of the Army (Manpower and Reserve Affairs) to the
    Secretary of the Army for a decision. Prior to the rendering of a
    decision, a staffing action is completed within the Army to ensure a
    thorough review of the request. This process takes approximately 24 to
    48 hours.
        Since 1967, approximately 196 waivers have been granted for burial
    at Arlington, and at least 144 documented requests have been denied. Of
    the granted waivers, about 63 percent involved burial of an individual
    in the same grave site as a family member already interred or expected
    to be interred. In the majority of the cases, the Secretary of the Army
    was the responsible official.

        Mr. Zirschky. Yes, sir.
        Senator Bond. We see from the Army Times representatives--I
    am not sure they are named. Yes; they are named in here--saying
    the efforts in the House to revise Arlington burial rules are
    too strict. What is the position of the administration on this
    legislation, and are there issues that need to be addressed in
    legislation relating to eligibility?
        Mr. Zirschky. Sir, again that is under the Assistant
    Secretary for Manpower and Reserve Affairs.
        The administration would like to keep the ability to have
    waivers for people of national significance.
        My personal view on eligibility is that I would like to
    continue to have Members, for example, of Congress who have
    served the Nation honorably as veterans still remain eligible,
    other high administration officials who have served the Nation
    remain eligible for burial at Arlington. I think constitutional
    officers of the United States, such as Members of Congress,
    Supreme Court Justices, honor the men and women of the U.S.
    military by their presence there.

                                computer systems

        Senator Bond. Just for the record here, are you on track
    for converting your computer systems for the year 2000
    problems?
        Mr. Zirschky. I believe so, sir. After listening to some of
    the discussion on the first panel, I probably want to double
    check, but to my knowledge, we do not have any systems at
    Arlington itself that will be affected by that. We do use
    systems of the Army's that might be affected by that, but the
    cemetery itself uses I believe commercial, off-the-shelf word
    processing and similar types of systems.

                         Additional committee question

        Senator Bond. Well, that is good. We are asking that of all
    agencies just to make sure we are not surprised by a crisis
    next spring when somebody figures out that they are 9 months
    away from a crash. We would like to know now if there is a
    problem.
        [The following question was not asked at the hearing, but
    was submitted to the Department for response subsequent to the
    hearing:]

                      Question Submitted by Senator Craig

                 veteran affairs state cemetery grants program
        Question. For a number of years, Idaho has tried to provide a
    national cemetery for our State's veterans. As you know, the VA has
    proposed to cover the entire cost of construction national cemeteries
    around the country, if in return, the States agree to pay all required
    maintenance. Do you believe this is a fair burden for the States to
    incur for a national cemetery?
        Answer. The State Cemetery Grants Program, which is administered by
    the Department of Veterans Affairs (VA), was established to complement
    the VA National Cemetery System. We have referred your question to the
    National Cemetery System for a full response.

        Senator Bond. Thank you very much, Mr. Zirschky, General,
    and gentlemen. Thank you very much.
        The hearing is recessed.
        [Whereupon, at 11:04 a.m., Thursday, March 19, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

     DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
            INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1999

                                  ----------

                             THURSDAY, MAY 7, 1998

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 9:35 a.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Christopher S. Bond (chairman)
    presiding.
        Present: Senators Bond, Burns, and Mikulski.

                          NATIONAL SCIENCE FOUNDATION

    STATEMENTS OF:
            NEAL LANE, PH.D., DIRECTOR
            RICHARD ZARE, PH.D., CHAIRMAN, NATIONAL SCIENCE BOARD

                    OPENING STATEMENT OF CHRISTOPHER S. BOND

        Senator Bond. The hearing will come to order.
        The subcommittee meets today to review the budget request
    of the Office of Science and Technology Policy [OSTP], and the
    National Science Foundation [NSF]. I welcome Dr. Neal Lane,
    Director of the National Science Foundation, and I am sure soon
    to be the President's Science Advisor and Director of the
    Office of Science and Technology Policy. We also welcome Dr.
    Richard Zare, the Chairman of the National Science Board, and
    Dr. Kerri-Ann Jones, currently the acting Director of OSTP.
        I congratulate you, Dr. Lane, on your promotion to the
    position of the President's Science Advisor. Or are you being
    kicked upstairs? [Laughter.]
        I do not know which. In any event, you have done a great
    job as Director of NSF. It has been a pleasure to work with
    you, and I look forward to working with you as the Director of
    OSTP.
        We also are happy to have you here today, and feel
    particularly fortunate in having the benefit of your expertise
    and perspective on the funding needs and priorities of NSF, as
    well as your views on the role of OSTP in formulating the
    science and research development priorities of the
    administration.
        OSTP's budget request for fiscal year 1999 totals $5.026
    million, a $94,000 increase over fiscal years 1997 and 1998
    enacted levels. NSF's budget request for fiscal year 1999 is
    $3.773 billion, a $344 million increase, or a 10-percent
    increase over the fiscal year 1998 enacted level.
        I am very pleased to convene the hearing this morning on
    the OSTP and NSF. Under both Senator Mikulski's leadership and
    mine, this subcommittee has always been committed to providing
    the strongest possible support for a Federal commitment and
    role in our Nation's scientific endeavors. I believe we all
    agree, at least on this subcommittee, that research and
    development is a good and necessary investment for the economic
    and intellectual growth and well-being of our Nation.
        We also know that you, Dr. Lane, Dr. Zare and Dr. Jones,
    agree with us, as well.
        First, I applaud the continuing efforts of OSTP to provide
    policy leadership on the important issues facing the scientific
    community. I also applaud NSF for pushing the boundaries of
    what we know about ourselves, our environment, our world, and
    the universe, as well as being on the cutting edge of science,
    research and development.
        The examples of NSF's leadership in R&D are almost endless,
    and I will note only a few: NSF's investment in nanotechnology
    and thin films are expected to generate a one thousand-fold
    reduction in size for semiconductor devices, which will make
    computers, telecommunications and other advanced technologies
    even more powerful, more portable, more affordable, and more
    useful.
        In terms of life in extreme environments, the unique
    properties of a microbe found in the thermal pools and geysers
    at Yellowstone Park some 30 years ago has led to the
    development of the polymerized chain reaction, or PCR, that has
    led to DNA fingerprinting, enzymes for nonpolluting detergents,
    and a variety of other state-of-the-art applications. And I am
    very proud that the new plant genome initiative is already
    bearing fruit. This is a very important new thrust of research
    at NSF which I believe could lead to a revolution in how we
    develop new and better sources of food and food-related
    products.
        Finally, I speak for all of us in acknowledging and
    applauding your efforts to communicate the wonder and awe that
    scientific endeavors can inspire in the American public. It is
    so important to encourage scientists to talk about their work
    to public groups and to plant the seed, through education
    grants, that will help spark the interest and fascination in
    science that will lead to a new generation of scientists,
    researchers, and teachers.
        As the father of a 17-year-old who is struggling with A.P.
    biology, I am always glad that there is something out there
    that can motivate and inspire him, and let him know that all
    that hard work and the things that he talks about that I do not
    understand may lead to something very productive in the future.
    And it really makes a big difference in encouraging young
    people to pursue a scientific education.
        As chair of this subcommittee, I have a particular interest
    in providing the necessary Federal investment in biotechnology,
    particularly as it applies to agriculture. I believe the plant
    genome initiative, and related research, will help ensure the
    long-term sustainability and competitiveness of U.S.
    agriculture. And I know we can count on both OSTP and NSF to
    continue to spearhead and support the efforts of this important
    initiative.
        Nevertheless, that is all the good news. The tough news is
    that this is another difficult year for funding decisions for
    the subcommittee. The President has submitted a budget that
    raises expectations by not structuring spending decisions
    according to fiscal requirements and program needs. In
    particular, the President's budget proposes a Research Fund for
    America, which is intended to reflect the President's
    commitment to nondefense research programs.
        The Research Fund for America is essentially a title for
    existing research and development programs which proposes a
    total of $31 billion for all programs in the fund in fiscal
    year 1999, an increase of 8 percent over the fiscal year 1998
    level; and a total of $38 billion for all programs in the fund
    in fiscal year 2003, a 32-percent increase from the 1998 level.
    This includes a 10-percent increase for NSF in fiscal year
    1999, and a 24-percent increase from the 1998 level for the NSF
    in fiscal year 2003.
        Unfortunately, these funding proposals depend on budget
    contrivances and unrecognized revenue, such as the tobacco
    settlement. And I fear they raise expectations which may set
    the stage for disappointment.
        In particular, the subcommittee has significant funding
    needs that we must address, ranging from medical care for
    veterans, to climbing costs associated with section 8 housing
    for low-income Americans, to relief for victims of disaster.
    While it is premature to discuss absolute levels of funding
    that may be available to NSF because we do not know what
    allocation our subcommittee will receive, we know, if past
    experience is a guide, that it will be very tight.
        Consequently, it is important for us to understand NSF's
    funding priorities and how these priorities are reflected in
    your agency's activities. We are particularly interested in the
    implementation of the Results Act, which requires agencies,
    through the fiscal year 1999 budget, to think strategically
    about their goals and to measure their performance against the
    goals they have set.
        Although we appreciate the difficulty of setting goals in
    basic scientific research, where the goal is to explore the
    unknown, we have to hold you and ourselves responsible for how
    we spend Federal dollars. I want to raise one additional
    concern about how NSF funds are distributed to universities and
    colleges, as well as to various areas of the country.
        I understand that a recent NSF survey of Federal R&D
    expenditures based on data collected through fiscal year 1996
    indicated that the top 50 recipients of university-based
    research receive about 60 percent of all available research
    dollars--some $8.3 billion out of $13.8 billion.
        In addition, a number of these top 50 schools received an
    additional $4.3 billion because they manage large federally
    funded research and development centers for various Federal
    agencies. For example, MIT receives $271 million annually in
    academic R&D expenditures, plus an additional $334 million for
    its DOD-supported Lincoln Lab. Likewise, Stanford receives $282
    million in academic R&D dollars, plus an additional $120
    million through its DOE-supported Stanford Linear Accelerator
    Facility.
        Consequently, we seem to have a chicken and the egg
    program. I am sure the argument is going to be made that we
    have to do science where we put the money, where we already
    conduct the scientific research. But if we have not put money
    in other areas and schools, then there is no basis on which to
    invest more money. While the Experimental Program to Stimulate
    Competitive Research, or EPSCoR, is an attempt to stimulate R&D
    competitiveness in universities in States which receive
    relatively little Federal R&D funds, the program receives very
    little funding within the overall NSF budget request, totalling
    only $53 million for fiscal year 1999. As such, it does seem
    that the rich get richer.
        Nevertheless, I believe it is worth considering ways to
    invest in research and development throughout the country, so
    that all areas and schools have an opportunity to prosper.
        I will have additional questions and comments, but let me
    now call on my distinguished ranking member, Senator Mikulski,
    for her opening statement.
        Senator Mikulski.

                        STATEMENT OF BARBARA A. MIKULSKI

        Senator Mikulski. Thank you very much, Mr. Chairman.
        And I am going to condense my opening statement, and ask
    unanimous consent that its entirety be placed in the record, so
    that we could move ahead to our opening statements before we
    need to vote.
        Senator Bond. Without objection.
        Senator Mikulski. I really do want to welcome Dr. Neal
    Lane, the Director of the National Science Foundation, as well
    as Dr. Kerri-Ann Jones, the acting Director of OSTP, and Dr.
    Richard Zare, the Chair of the National Science Board.
        Dr. Lane, we wish you well. We know that this is an
    appropriations in transition. But we are going to be seeing
    you. And I know we really hope that the confirmation of both,
    for you to be head of OSTP and the confirmation of our very
    distinguished Marylander, Dr. Rita Colwell, is expeditiously
    approved in Education and Labor. And you can count on me to
    really work with Senator Jeffords to move those nominations
    forward.
        Dr. Lane. Thank you.
        Senator Mikulski. I know we are in a transition in terms of
    leadership. But if we have clear goals, a specific budget and a
    direction, this should continue along the lines that we have
    essentially done the ground work.
        As you know, I have been a long advocate for Federal
    investment in research and development. And for the last
    several years, reports have been issued by various experts on
    our competitiveness to outline the critical technologies that
    will be needed for the 21st century.
        We know, Dr. Lane, when we started out, I advocated that
    rather controversial proposal for the National Science
    Foundation to engage in--strategic research. I think everybody
    got very clear that I was very much for basic science, that my
    model was really, in some ways, the NIH model, but different
    because of the way the NSF is structured. And I want to thank
    you for the way that NSF now organizes itself, along something
    called highlights and priorities, knowledge and distribution
    intelligence, life and environmental science, as well as
    education for the future.
        I think it is in those kinds of areas that we can move
    ahead. Because I am concerned that while we win the Nobel
    Prizes, we lose the markets. And at the same time, we have to
    get our young people ready for the new world economy, which
    will be information driven and knowledge driven.
        So, therefore, we want to ensure that the National Science
    Foundation directs energy and resources into science that the
    United States of America is the premier science and technology
    nation, generates high-wage jobs for its own people, but has
    that work force readiness from K through Ph.D. I mean, that is
    really the way we need to think about it.
        I want to hear the progress that has been made in
    developing the national goals to stimulate new ideas and new
    opportunities in research and development for our economic
    growth and the advancement of our intellectual infrastructure.
    Fortunately, this year NSF has submitted a budget that
    highlights several research themes. And I believe that this is
    a good start. I would be interested in hearing the progress
    that has been made in those areas.
        Also, last year the former Director of OSTP, Dr. Gibbons,
    referred to a gap between university research and the private
    sector as the valley of death. So we want to make sure there is
    no valley of death between the creation of new ideas and the
    development of new products.
        I am pleased the President's budget has requested a 10-
    percent increase for the National Science Foundation. And I
    believe the administration is on the right track in maintaining
    leadership in science, engineering, and math, promoting long-
    term economic growth that creates, sustains a healthy and
    educated citizenry, harnesses information technology, improves
    environmental quality, enhances our national security, and, of
    course, expands our continued wonderful breakthroughs in life
    science.
        Whether it is the National Science Foundation or NIH or its
    wonderful extramural programs, I think we are all heartened,
    over the last 72 hours, to hear of the breakthrough that has
    come out of Maryland on the new breakthroughs on stopping the
    growth of cancerous tumors by limiting or terminating the blood
    supply that would feed the growth.
        Well, you and I know that that came out of basic science.
    But then the basic science at a university-based system then,
    also working with the private sector biotech company, has led
    to something that would save lives. We know it is very
    preliminary. But even there it shows the triad I think that we
    are talking about: Strong support in Federal laboratories;
    extramural programs, whether they be the great academic centers
    like Hopkins or EPSCoR; and at the same time then working with
    the private sector in a way that is collaborative and ethically
    appropriate and so on.
        This is, I think, what America wants. But it took a lot of
    work in basic science. It took a lot of people, from the lab
    tech to the doctoral-level people who do this. So we can
    elaborate on this in our hearing. I see by the clock it is 10
    of 10:00. So we look forward to hearing what you want your
    leadership to be through this appropriations and also the
    coordination that must occur at OSTP, and, of course, our
    Board.
        Thank you.
        Senator Bond. Thank you very much, Senator Mikulski. I
    started to say Dr. Mikulski.
        Senator Mikulski. Well, I have got a bunch of them, even
    one from Hopkins. I have the Dean's Medal and the School of
    Public Health, and that gets me one little ketchup container at
    Jimmy's diner. [Laughter.]
        Senator Bond. Well, doesn't it get you a title? Shouldn't
    we call you ``Your Worthiness'' or something like that?
        Senator Mikulski. No; we do not want to get into this. I
    want to be called Chairman, but I do not think that is what we
    want to bring up. [Laughter.]
        Senator Bond. No; we will work on that elsewhere.
    [Laughter.]
        Let me turn to Dr. Lane and Dr. Zare. Welcome, gentlemen.
        Dr. Lane. Thank you very much, Mr. Chairman, Senator
    Mikulski. And I appreciate those kind words.
        I would appreciate, before my very brief opening statement,
    if Dr. Zare could make his comments. Thank you.
        Senator Bond. Yes; thank you.

                           statement of richard zare

        Dr. Zare. Thank you. Chairman Bond, Senator Mikulski, and
    members of the subcommittee, I appreciate the opportunity to
    testify before you today. I am Dr. Richard Zare, Chairman of
    the National Science Board, and Marguerite Blake Wilbur
    Professor of Natural Science at Stanford University.

                         national science board's roles

        The National Science Board has two roles. It is the
    governing board of the National Science Foundation and it
    serves as a national science policy board, with the
    responsibility for monitoring the health of science and
    engineering in the United States, and for advising the Congress
    and the President on national science policy issues.
        First, I would like to thank the subcommittee for its
    strong support of the Foundation in the past. Your continuing
    commitment to a strong national effort in research and
    education is extremely important to the NSF as we carry out our
    various responsibilities. Given the shortness of time, I would
    like to have your permission to submit my written statement in
    full for the record.
        Senator Bond. The full statements of all three of you will
    be made a part of the record. We appreciate your submitting
    them and giving us a summary.
        Dr. Zare. Thank you.
        And following the testimony of my colleagues, I would be
    pleased to respond to any questions that might illuminate the
    Board's positions on the NSF budget or national science policy.

                               prepared statement

        I would like to cede the remainder of my time to Dr. Neal
    Lane, the NSF Director.
        [The statement follows:]

                     Prepared Statement of Dr. Richard Zare

        Mr. Chairman, Senator Mikulski, and members of the Subcommittee, I
    appreciate the opportunity to testify before you. I am Dr. Richard
    Zare, Chairman of the National Science Board and Marguerite Blake
    Wilbur Professor of Chemistry at Stanford University. I would like to
    convey to you today some of the excitement and value to the Nation of
    the research and education activities that will be supported by the
    National Science Foundation's fiscal year 1999 budget request. I will
    also mention some of the work of the Board in helping to develop this
    budget, and in trying to understand possible effects of changes in
    Federal agency research programs on the broader picture of Federal
    support for research.
        First, however, I would like to thank the Subcommittee for its
    strong support of the Foundation in the past. Your continuing
    commitment to a strong national effort in research and education is
    extremely important to the NSF as we carry out our various
    responsibilities.
        The National Science Board is a 24-member body appointed by the
    President for six-year terms. We represent a broad cross-section of the
    Nation's leaders in science, engineering, and education, and include
    full-time researchers, educators, university officials, and industry
    executives. Since the founding of the NSF in 1950, the Board has
    exercised two roles: that of a national policy body, and that of a
    governing body for the Foundation. In many respects the latter role is
    similar to that of a corporate board of directors, but as a Federal
    entity we operate within the framework of policy guidance established
    by the Congress and the Administration.
        The Board approves NSF's policies, budget proposals, new programs,
    and major multimillion-dollar awards, and generally oversees the fiscal
    and management operations of NSF as a whole. We work very hard to make
    sure that all of the Foundation's policies, systems, programs, and
    awards are of the highest quality, incorporate our best thinking, and
    reflect the perspectives of the communities we represent.
        We continue to provide oversight to NSF as it develops methods and
    processes to comply with the present and forthcoming requirements of
    the Government Performance and Results Act. To provide oversight to the
    development of the GPRA strategic plan and the performance plan by the
    National Science Foundation, I established an NSB Task Force on GPRA.
    This task force reports to the NSB Committee on Audit and Oversight and
    has provided constructive guidance for these important documents.
        In addition to our close and continuing oversight of NSF, the Board
    has a special role in monitoring the health of science and engineering
    in the U.S. and in providing advice on national policy in research and
    education. Last year the Board was asked by Presidential Science
    Advisor Jack Gibbons to contribute to the response of the National
    Science and Technology Council to the Presidential Review Directive on
    the Government/University Partnership.
        The resulting NSB report on the ``Federal Role in Science and
    Engineering Graduate and Postdoctoral Education'' affirmed the critical
    importance of Federal support to graduate and postdoctoral education
    and offered more than a dozen recommendations to strengthen this
    overwhelmingly successful partnership in advanced science and
    engineering education for the future. With your permission, I would
    like to submit this report for the record.
        The Board further, as part of its national policy role, has drawn
    attention to the need for improved coordination and decision making at
    the Federal level in funding of science and engineering research. Such
    improvements are needed to avoid gaps, overlaps, and a failure to meet
    priorities that may otherwise occur. To further this objective, the
    NSB, in its recently released ``Working Paper on Government Funding of
    Scientific Research'', urged initiation of a national dialogue among
    stakeholders in Federally-supported research to develop a broadly
    accepted methodology for priority-setting across fields of science.
    With your permission, I would like to submit this document to the
    record also.
        Mr. Chairman, the budget before you has the wholehearted approval
    of the Board. In the face of very tight constraints on Federal
    discretionary spending, President Clinton has stepped forward to
    champion a 10 percent increase in NSF's 1999 budget. This important
    commitment to the strength of our national scientific infrastructure--
    which I hope will be shared by Congress--would enable NSF to help
    maintain U.S. world leadership in all aspects of science, mathematics,
    and engineering.
        NSF funding is a vital investment in the Nation's future. The
    budget you are considering today will provide the means to fund
    thousands of worthwhile projects across the exciting frontiers of all
    fields of research, and it will fund important efforts to improve the
    Nation's education in science, mathematics, engineering, and
    technology.
        As we enter the 21st Century and the third millennium, there is so
    much we don't know and need to explore and discover. You might think
    about the state of the world 1,000 years ago, when we were entering the
    second millennium and Leif Erickson and the Vikings sailed the oceans.
    Until recently, however, our understanding of the very deep ocean
    environment has remained the same as in the days of the Vikings.
        NSF investments under the agency's Life and Earth's Environment
    theme hold tremendous possibilities for probing the mysteries of our
    natural world like the very deep ocean. Unidentified new life forms
    found thriving in the Earth's most extreme environments--like
    Yellowstone's hot springs, the sea ice of Antarctica, or the ocean
    depths--might revolutionize medicine, produce new materials for use in
    everyday life, and further our understanding of the origins of life
    itself.
        Over this past century alone, incredible advances have occurred in
    fields like telecommunications. In 1898 telecommunications meant Morse
    code and Western Union. Today we are grappling with challenges
    unimagined at that time: how to handle the outpouring of information
    and data flowing from satellites, fiber optics, the Web, and other
    advanced telecommunications.
        NSF has responded to these challenges by investing in a wide-
    ranging set of activities we call Knowledge and Distributed
    Intelligence, or KDI. Greater knowledge about how we learn and
    remember, or how we think and communicate, and the machine-human
    interface, could advance computers and communication technology beyond
    the current astonishing state. Such advancements hold immense potential
    as a driver of progress--an opportunity for all Americans. KDI is not
    simply about hardware; KDI is not simply about software; KDI is about
    the wherewithal to change and expand the way we communicate, research,
    and learn.
        Knowledge and Distributed Intelligence as well as Life and Earth's
    Environment are exciting programs that cut across numerous fields of
    inquiry. While NSF continues, appropriately, to promote
    interdisciplinary activities, these activities are unlikely to be
    successful without strong disciplines at their core. The NSF fiscal
    year 1999 budget will allow NSF to maintain core competency while
    pursuing exciting initiatives that cut across disciplines. We need both
    the core investments and the flexibility to pursue emerging research
    opportunities.
        The Foundation's fiscal year 1999 budget also is important for
    improving education in science and mathematics at all grade levels. The
    Board strongly believes that we must engage all children in inquiry-
    based, hands-on learning so that the next generation of workers,
    researchers, and leaders has the necessary science, mathematics,
    technology, and problem-solving skills to keep the United States a
    world leader in the 21st Century.
        High standards with high accountability for student performance is
    the path to improved achievement in K-12 math and science. We must act
    on our high expectations, however, not just declare them. Indeed, the
    National Science Board's response to the recent 12th grade results of
    the Third International Mathematics and Science Study (TIMSS) was
    swift. We have created a Task Force on Mathematics and Science
    Achievement to consider the issues raised by the TIMSS report.
        Later this year, building on a series of hearings organized by its
    Committee on Education and Human Resources, the Board will issue a
    policy report that clarifies the role of the science and engineering
    communities, especially higher education, in rallying as well as
    supporting schools, teachers, students, and families to the literacy
    and numeracy demands that all citizens now face. The next generation of
    workers, researchers, and leaders must have the necessary science,
    mathematics, technology, and problem-solving skills to keep the United
    States a world leader in the 21st century.
        This proposed NSF budget would help keep America at the cutting
    edge of science. It would enable new discovery and educate the world's
    best scientists and engineers--setting the stage for the next
    millennium. It is good for the country, good for science, and good for
    economic growth. But most important, it is also good for the American
    people.
        Strong support for NSF is clearly a keystone of our investment in
    the future. And strong support for the research performed or supported
    by other Federal agencies, in connection with their missions, is vital
    as well. Just taking the example of nanoscale science and engineering
    mentioned by Neal Lane demonstrates that this cutting-edge research
    supported by NSF has applications for the R&D mission of many agencies,
    including DOD, NIH, DOE, and NASA.
        The Board is very concerned about the funding of science and
    engineering research in the future. Indeed, we concluded our ``Working
    Paper on Government Funding of Scientific Research'', mentioned
    previously, by stating that changed global and domestic circumstances
    `` * * * do not reduce the desirability of continued government funding
    of scientific research * * *. A nation requires a robust high-tech
    industry, a scientific talent base, and a vigorous research activity to
    prosper over the long term.''
        We are concerned as well for the possible fate of many research
    programs in other Federal agencies that complement those of NSF but
    which are currently being challenged. We urge the Congress, when
    considering funding for Federal agencies that have science,
    engineering, and education programs, to do so with explicit regard for
    the relationships among those programs across the government and with
    industrial research and development. It is important to take actions,
    in the national interest, that fortify the vitality of U.S. science and
    engineering.
        Thank you, Mr. Chairman. I would be glad to take any questions.
                                     ______

                           The National Science Board

     the federal role in science and engineering graduate and postdoctoral
                                   education
                                    abstract
        In response \1\ to the request from the President's Science
    Adviser, John Gibbons, for a National Science Board contribution to the
    Presidential Review Directive on the Government/University Partnership
    (GUPPRD), the Board offered to provide its views on the role of the
    Federal government in graduate and postdoctoral education. In this
    paper, the Board examines the general framework of the partnership in
    graduate education established after World War II, affirms that the
    partnership has been highly successful for the Nation, and concludes
    that the Federal role in the partnership remains critical. The Board
    urges that the general principles of the partnership be maintained, but
    offers some recommendations on adjustments to increase the
    effectiveness of Federal policies and programs in advancing the
    objectives of this partnership.
    ---------------------------------------------------------------------------
        \1\ This report was originally prepared as a contribution to the
    Government/University Partnership Presidential Review /directive
    (GUPPRD). It has been revised and issued as a report of the National
    Science Board.
    ---------------------------------------------------------------------------
        The Board identifies some troubling issues that have emerged as a
    result of changes over the last fifty years, and offers recommendations
    to improve the effectiveness of the partnership for all concerned. The
    Board suggests new opportunities, particularly those offered by
    advances in communications technology, to expand the benefits of the
    partnership to a wider range of institutions in the academic research
    and engineering ecosystem, and to broaden the options for graduate
    students to experience environments outside the research university to
    supplement their core Ph.D. training. In addition, the Board draws
    attention to serious stresses in the partnership arising from
    administrative and accounting changes implemented by Federal funding
    and regulatory agencies. The Board provides recommendations in several
    areas: Federal support to the enterprise, breadth versus narrowness of
    graduate education, human resource policies, impact of Federal
    regulatory and funding practices on the culture of institutions.
    Finally, the Board comments on outstanding issues to be negotiated
    between the Federal and university partners.
                                i. introduction
        The education of graduate and post-doctoral students in a
    discovery-rich university research environment is at the heart of the
    post-World War II compact between the Federal government and
    universities. Federal support of U.S. graduate education in science and
    engineering has insured the global leadership of the United States in
    science and engineering and contributed robustly to our country's
    innovation and economic growth. In a time of extraordinary political
    and economic changes worldwide since the end of the Cold War,
    understanding the current status and clarifying the principles of
    Federal support for graduate education in science and engineering are
    matters of high priority.
        This paper responds to the request of the Assistant to the
    President for Science and Technology that the National Science Board
    provide its views on the status of graduate and postdoctoral education
    and the Federal role. It contributes to the ongoing review of the
    Federal/university partnership being conducted by the National Science
    and Technology Council in response to the Presidential Review Directive
    of September 26, 1996. In developing the views presented in this paper,
    the Board benefited greatly from a ``Convocation on Graduate and
    Postdoctoral Education: The Federal Role,'' held at the October 8-10,
    1997, NSB meeting in Houston, Texas. This symposium, which included
    presentations by a number of invited speakers, provided rich insights
    for the development by the Board of the comments and recommendations
    that follow.\2\
    ---------------------------------------------------------------------------
        \2\ The agenda for the Convocation on Graduate and Postdoctoral
    Education: The Federal Role, is attached as Appendex II.
    ---------------------------------------------------------------------------
    Principles of the Federal/University Partnership in Graduate Education
        At the conclusion of World War II in 1945, Vannevar Bush argued
    persuasively in his report, ``Science--the Endless Frontier'', that the
    Federal government should continue to support science and engineering
    research and post-secondary education in peacetime and that this
    investment would contribute to national security, economic growth,
    health, and the quality of life. The principal instruments of the
    Federal investment in research were to be colleges and universities,
    which would generate new knowledge in an environment of free and open
    inquiry and at the same time develop science and engineering talent.
    The proximity and integration of the two functions of research and
    education would insure a process of continuous mutual enrichment
    between them.
        Bush argued that the Nation could not rely on government agencies,
    the private sector, or foreign nations to produce the fundamental
    knowledge necessary for the continued improvement of the quality of
    life in the United States. Bush approvingly quoted James B. Conant:
    ``We shall have rapid or slow advance on any scientific frontier
    depending on the number of highly qualified and trained scientists
    exploring it * * *. So in the last analysis, the future of science in
    this country will be determined by our basic education policy.'' \3\ In
    short, Bush's report defined a national education policy for
    university- and college-trained science and engineering personnel that:
    ---------------------------------------------------------------------------
        \3\ Vannevar Bush. Science, the Endless Frontier, 40th Anniversary
    Edition (Washington DC: National Science Foundation, 1990) 23.
    ---------------------------------------------------------------------------
      --is based on the national interest in advancement of knowledge in an
            environment of free and open inquiry, such as that provided by
            the university sector;
      --explicitly integrates fundamental research and advanced training in
            science \4\ in universities and colleges;
    ---------------------------------------------------------------------------
        \4\ Bush's proposal was for advancing basic scientific knowledge,
    which in today's use would include basic research in engineering.
    ---------------------------------------------------------------------------
      --supports students on the basis of their exceptional ability, i.e.,
            student merit;
      --is sensitive to the needs of the scientific and technical
            workforce; and
      --is responsive to the needs of society.
        The Federal/university partnership in research and graduate
    education has been an extraordinary success for the United States.
    Public investment in academic science and engineering research and
    education in an environment of free and open inquiry has indeed been a
    major contributor to U.S. economic growth and quality of life.
        Therefore:
        The National Science Board strongly affirms the fundamental
    soundness of the principles of the Government/university partnership
    for the academic science and engineering enterprise established after
    World War II.
        The Board concludes that the application of those principles in
    academic science and engineering research and advanced education has
    enabled the enterprise to lead the world in quality and productivity.
        The Board affirms that the Federal role is critical to advanced
    science and engineering education at both the graduate and postdoctoral
    levels. It urges a re-examination of the Federal/university partnership
    in graduate and postdoctoral education as it has evolved, to identify
    areas where adjustments may enhance the capacity of the enterprise to
    serve the national interest in a changing global environment.
    Current Status of the Partnership
        Since the Bush report, U.S. society has become larger, more
    diverse, and more urban and the economy has become increasingly global.
    With the end of the Cold War, greater national attention can be devoted
    to other concerns, such as environmental and social needs. Once the
    privilege of a small elite, post-secondary education responded to a
    changing marketplace. Market demand for higher-level training and the
    decline in the value of a high school diploma, both to the employer and
    high school graduate, have resulted in expansion of the share and
    diversity of the working age population who pursue college-level and
    graduate education. The Federal responsibility to insure, in
    partnership with the universities, ``constantly improving quality at
    every level of scientific activity'' \5\ has become broader and more
    varied as science and technology have become more central to the
    economy and society.
    ---------------------------------------------------------------------------
        \5\ Ibid., 25.
    ---------------------------------------------------------------------------
        Universities confront stresses that result from increasing demands
    and associated rises in costs without offsetting increases in revenues.
    These stresses reflect the impact of more and broader-based demands
    from an expanding group of stakeholders; budget constraints on
    traditional sources of funds, including Federal sources; globalization
    of advanced education; the need to respond to technological changes,
    especially to advances in communications and information technology;
    and unintended consequences of Federal policies. The Board has
    identified several broad areas of concern in the Federal/university
    partnership in graduate education that deserve special attention.
        Changes in the Federal/University Relationship.--Agencies of the
    Federal government support research in universities through a variety
    of mechanisms, including grants, cooperative agreements, and contracts.
    Regardless of purpose or mechanism, the research activities serve to
    enrich the learning environment and expand opportunities for graduate
    student and postdoctoral participation in frontier research. Some
    Federal research funding to academic institutions is public investment
    in the advancement of fundamental knowledge and in the education of the
    next generation of scientists and engineers. This kind of relationship
    may be described as an ``investigator-initiated'' activity performed by
    the university. Other Federal research funding responds to an objective
    related to an agency's mission. This activity, also performed by a
    university, may be described as ``agency-initiated.'' Federal funding
    falls along a continuum between these two poles.
        As the research and education enterprise has grown and as the
    Federal investment has increased, emphasis on accountability for public
    funds has also increased, resulting at times in unintended but serious
    stresses on the university partners. The growing Federal focus on
    accountability tends to emphasize short-term research ``products'' and
    to deemphasize benefits to graduate education from engaging in research
    at the frontiers of knowledge. Increased emphasis on accountability
    also may result in an increase in the perceived value of postdoctoral
    researchers compared with graduate students on research grants, thus
    reducing options for cutting-edge research experience during graduate
    training.
        There are also unintended consequences of some of the new cost
    accounting methodologies and standards which, with the best intentions
    of fully accounting for taxpayer money, are resulting in serious
    stresses on the academic research and education enterprise. There is a
    growing tendency to treat all research activities equally for
    accounting purposes, whether for an agency-initiated product or for
    investigator-initiated research that provides cutting-edge research
    experience for graduate students. This trend has been marked by the
    adoption of adversarial administrative procedures inconsistent with the
    trust and cooperation that should characterize the Federal/university
    partnership in research and education. Moreover, relationships between
    faculty researchers and the university administration may be adversely
    affected by such procedures, resulting in stresses within the
    university community.
        In addition to the lack of coherence between objectives of the
    Federal/university partnership and Federal cost-accounting practices,
    there is an inconsistency in administrative and regulatory requirements
    of different Federal funding agencies. This inconsistency results in a
    mushrooming of paperwork for the administration of federally-funded
    research. Some portion of the paperwork burden falls on faculty,
    absorbing time that could otherwise be devoted to teaching, mentoring,
    and research. Unnecessary costs for administrative overhead may also
    mean less money available to support valuable research and education
    activities, equipment, and physical facilities.
        The Changing Higher Education Context.--Stresses on the
    universities represent pressures that are a product of growth and
    change in the research enterprise and its environment over the last
    fifty years. One area of stress comes from the diversity that is a
    strength of our system of higher education. The academic science and
    engineering research and education system is an ecosystem,
    differentiated along functional lines to meet a wide variety of
    education and research needs. Within this system, research institutions
    produce, in addition to a share of science and engineering
    undergraduate degrees, the great majority of Ph.D.'s in science and
    engineering. Liberal arts colleges, state universities, and two-year
    colleges that provide undergraduate preparation for scientists and
    engineers employ as faculty Ph.D.'s trained at research institutions.
        The Ph.D. is and should remain a research degree. The most
    important function of a Ph.D. program is to educate talented students
    to a level of mastery of a chosen discipline and its methods of
    research and scholarship. Graduates of the Ph.D. program, as members of
    their disciplinary communities, are prepared to make independent
    contributions to the store of human knowledge through research,
    information exchange with colleagues, and educating the next generation
    of scientists and engineers. Nonetheless it has always been the case
    that many Ph.D.'s who pursue academic careers fill faculty positions
    that are primarily teaching positions, often involving little or no
    research. \6\ Moreover, Ph.D.'s who pursue research positions in
    industrial or government laboratories may well move into non-research
    positions over time. These are by no means inappropriate outcomes of
    Ph.D. education: Ph.D. recipients have broadly applicable skills; and
    the problem-solving abilities they acquire enrich their capacities in
    teaching, research and management positions.
    ---------------------------------------------------------------------------
        \6\ Forty-six percent of Ph.D.'s were employed in the academic
    sector in 1995; of those, 59 percent were employed by non-research
    institutions.
    ---------------------------------------------------------------------------
        Those who take faculty positions following completion of their
    education, regardless of the type of institution, have an obligation to
    remain current in and to contribute to their fields of specialization.
    The research university offers the greatest opportunities for
    fundamental research within the field of specialization. Today,
    however, rapidly advancing communications and information technologies
    are opening and expanding opportunities for inter-institutional
    cooperation in research and education within the academic sector, and
    also between academic institutions and other sectors. These
    opportunities for expanded collaboration, in addition to increasing
    faculty opportunities to contribute to fundamental knowledge, promise
    to enrich graduate and postdoctoral education by broadening options to
    experience a range of educational and research environments in
    preparation for a variety of future careers.
    ii. the government/university partnership in graduate and postdoctoral
               education: principles and practices for the future
    1. Federal Support to the Enterprise
        Federal support to research in the academic environment may
    contribute to fundamental knowledge and enrich the education of the
    next generation of scientists and engineers, regardless of funding
    mechanism or agency objective. The Federal role in support of broad-
    based fundamental research and graduate education in universities,
    medical schools, research institutes and colleges remains crucial to
    the national interest. Graduate education is a long-term commitment,
    requiring substantial investment of time and money by the student,
    institution, and other funding sources.
        A major objective of the Federal/university partnership in research
    and education historically has been to attract high-ability youth into
    science and engineering careers by providing significant multiyear
    financial support that is competitively allocated and based on the
    student's past achievement and future promise. This policy insures the
    quality of the science and engineering workforce and offers
    opportunities for careers in science and engineering to all individuals
    of high ability.
        The Board recommends that:
        The Federal government reward and recognize institutions that
    initiate model programs for the integration of research and education.
        Mission agencies funding agency-initiated research in academic
    institutions recognize the intimate connection between research and
    graduate education in universities. They should adopt principles and
    practices exploiting that interconnection and insure that their funding
    reaps the dual benefits of simultaneously advancing both research and
    graduate education.
        The Federal government contribute to promoting closer collaboration
    between faculty in non-research and research institutions. Such
    collaboration in research offers opportunities for greater exposure to
    a variety of career options for graduate students. It can also improve
    the transition from undergraduate to graduate programs across
    institutions. The improvement of that transition is especially
    important for reaching minority undergraduates. Federal investments,
    particularly in communications infrastructure, can expand the scope of
    these programs.
    2. Breadth vs. Narrowness of Graduate Education
        The core training for the Ph.D. requires the candidate to acquire
    the knowledge base and tools in a chosen area of science and
    engineering and to make an original contribution to the base of
    knowledge through an in-depth investigation in a specialized area. With
    this experience the candidate develops skills as a creative problem
    solver. In addition to this core training, universities can offer a
    range of opportunities for the student to consider in preparation for
    careers outside the research university, including those within the
    academic sector in primarily teaching institutions, and in government
    and industry.
        The Federal government and universities are responsible for
    developing relevant experience and training to meet expanding workforce
    needs and to prepare the student for his or her chosen career. More
    should be done to inform graduate students of the full range of
    employment opportunities and careers and to offer a choice of options
    for expanding career-related training.
        The Board recommends that:
        University programs and Federal support policies continue to
    encourage exceptionally talented students to pursue Ph.D. programs and
    to develop their capacities to advance knowledge in their chosen
    disciplines.
        The Federal partner recognize and reward institutions that, in
    addition to the core Ph.D. education, provide a range of educational
    and training options to graduate students, options tailored to the
    career interests of the individual Ph.D. candidate. These might include
    interdisciplinary emphasis, teamwork, business management skills, and
    information technologies.
    3. Human Resource Policies
        In spite of Federal and university efforts to increase the
    participation of underrepresented populations in graduate education and
    academic careers, the participation of these groups in graduate
    programs and on university faculties remains low, particularly in
    science and engineering fields.
        Also of concern is the status of postdoctoral researchers in
    academe. After the Ph.D., many students continue their specialized
    training in postdoctoral appointments. The training they receive
    substantially enhances their preparation for careers in research in
    their area of specialization. These researchers are a significant
    component of the academic research and graduate education system,
    serving in some programs as an important component of the mentoring
    system for graduate students. Nonetheless, these researchers' status
    may be ambiguous during the period they spend in postdoctoral
    appointments, because they are neither graduate student nor faculty
    member in the institution where they are performing the research. There
    is a need for institutions to clarify the status of these important
    personnel.
        The Board recommends that:
        The Federal and university partners seek more effective ways of
    promoting diversity and full access to graduate education, guarding
    against strategies that inadvertently keep underrepresented groups from
    the mainstream of research and graduate education. Efforts should
    emphasize identification of high-ability students earlier in the
    educational experience, including the precollege level, and encouraging
    them to consider careers in science and engineering.
        The Board recommends the attention of universities to the following
    areas:
        To assure access for high ability students, examine the current use
    and possible misuse of assessment tools for entry to, and financial
    support or, graduate education, e.g. the Graduate Record Examination
    scores (GRE's); and
        Recognize postdoctoral researchers as a significant component of
    the system of graduate research and education in some areas, and better
    integrate postdoctoral scholars into the university community.
    4. Impact of Federal Regulatory and Funding Practices on the Culture of
            Institutions
        Federal rules and regulations for the administration of Federal
    funds for research and education, and the competitive grant system
    itself, help shape the culture and working environment in universities.
    The Federal government must recognize in its policies and
    administrative requirements that research and education are integrated
    in the academic environment and insure that accounting requirements for
    academic research support objectives of the Federal/university
    partnership in advanced science and engineering education.
        Negative impacts on education of some Federal regulations and
    practices for research administration may be cumulative. For example,
    the administrative separation of education from research may have a
    growing, unintended negative impacts on the university mission in
    graduate education. At the same time, emphasis on success in research
    by Federal funders may encourage a parallel emphasis in faculty reward
    systems in departments and institutions, in some cases to the detriment
    of education.
        The Board recommends that the Federal government:
        Support university-initiated efforts to insure in the science and
    engineering faculty reward systems an appropriate balance between
    recognition for excellence in research and excellence in teaching,
    mentoring, and other areas of faculty responsibility.
        Examine how it can prevent unnecessary and unintentional
    interruptions in academic research programs and in associated support
    to graduate students that may result from the vagaries of the Federal
    research funding environment.
        Review conflicting or confusing treatment of graduate students and
    postdoctoral researchers--as students or empoyees--in Federal
    regulations and policies. The review should entail consideration of
    both consistency across agencies and coherence between the purposes of
    regulations and administrative requirements and Federal objectives for
    supporting and integrating research and education in academic
    institutions.
               iii. issues to be negotiated between the partners
        Over the last fifty years, some issues in the partnership have
    emerged as gray areas, whose resolution is not clearly the
    responsibility of one partner or the other. An issue of particular
    concern is the broad impact of current funding patterns and practices
    on the national science and engineering workforce for the future. This
    consideration includes the responsibility to support a continued,
    adequate infusion of talented students from across the population
    spectrum into graduate programs in the broad range of science and
    engineering fields. There is a need to clarify the roles of the
    partners so that a strategy to address this and other gray areas can be
    framed.
        The Board recommends that the following areas be explored:
        Strategies to attract and retain talented students from
    underrepresented groups. These strategies might include consideration,
    in some cases, of criteria for support on research grants.
        The respective Federal and university responsibilities for reducing
    the administrative burden on faculty researchers/teachers to increase
    time available for mentoring and other educational and service
    activities that enrich the learning environment. This reduction in
    administrative burden needs to be coupled with the alignment of faculty
    reward systems, as described in Section II.4.
        Improved policy data to assess the effectiveness of current Federal
    support for graduate education including attention to attrition and
    time-to-degree, and to identify current and emerging national needs for
    the science and engineering workforce.
        This exploration should include input from a broad range of
    stakeholders in graduate education and be attentive to maintaining the
    benefits of graduate and postdoctoral research and education in science
    and engineering for the Nation.
                                     ______

                                   Appendix I

         current issues with regard to the federal role in science and
                  engineering graduate/postdoctoral education
        Issues that have been raised in other recent discussions of
    graduate education include: What are the principles of Federal support
    of graduate education today? \7\
    ---------------------------------------------------------------------------
        \7\ The COSEPUP report, Reshaping the Graduate Education of
    Scientists and Engineers (1995), concluded that there is no coherent
    national policy that guides the advanced education of S&E's today. It
    suggested a national discussion group--including representatives of
    government, universities, industries, and professional organizations--
    should deliberately examine the goals, policies, conditions, and
    unresolved issues of graduate-level human resources in S&E.
    ---------------------------------------------------------------------------
      --Is there a common purpose or purposes among Federal agencies in
            supporting research that involves graduate and postdoctoral
            students in universities and colleges? In what programs is the
            impact on science and engineering education an explicit
            consideration?
      --What are the qualifications or requirements for S&E graduate and
            postdoctoral students to be supported on research grants by
            Federal agencies? What data are available to measure the
            impacts of support from research grants? (e.g., student
            demographics, retention, time to degree, field of degree,
            career after graduation).
      --What programs are expressly directed to graduate/post-doctoral
            student support? (e.g., fellowships). By which agencies? In
            which fields? For what purposes? How successful are these
            programs in comparison with support from research projects?
        Does the Federal role in the current partnership encourage the
    production of highly able scientists and engineers from the broad
    spectrum of the U.S. population who, in the aggregate, meet national
    needs for the S&E workforce?
      --Does Federal support of graduate/postdoctoral students on research
            grants and/or directly on fellowships and traineeships help to
            attract and retain talented youth in science and engineering
            careers across the broad spectrum of the U.S. population?
        --Are there special barriers to underrepresented groups in
                graduate/postdoctoral education in S&E that can be reduced
                through the Federal/university partnership?
        --Are the Federal support modes, or mix of those modes, for
                graduate education effective in achieving Federal
                objectives for the science and engineering workforce? \8\
    ---------------------------------------------------------------------------
        \8\ The NSB Task Force on Graduate and Postdoctoral Education
    (1995) after careful and thorough review concluded there were
    insufficient data to support a change in NSF policy on the mix of
    support for graduate education, i.e., research assistantships,
    fellowships and traineeships. It therefore recommended limited studies
    with defined goals and assessment criteria be conducted on alternative
    modes of graduate support; and that NSF support data collection and/or
    research on funding mechanisms and various aspects of graduate student
    education and employment of Ph.D. scientists and engineers.
    ---------------------------------------------------------------------------
        --Do Federal policies and programs affect or contribute to
                increasing time to degree?
      --What is the national interest/impact of supporting foreign students
            on Federally-funded research grants?
        --Is the current reliance on foreign students to meet the personnel
                needs for certain fields, supported in part by Federal
                research grants, a viable long-term strategy?
        --Do foreign students compete with U.S. students for support on
                Federal research grants?
        --Do large numbers of foreign students in some programs discourage
                talented U.S. students from pursuing graduate studies; are
                underrepresented groups impacted more by this factor?
        Do Federal programs and policies for support of research in
    universities enrich the learning environment and support free and open
    inquiry? \9\
    ---------------------------------------------------------------------------
        \9\ ``The current graduate paradigm can be characterized best as an
    apprenticeship, in which the dissertation advisor has significant
    responsibility for not only the content but as well the duration of the
    program * * * stressing specialization and depth of investigation [it]
    is frequently accused of cloning the current cadre of research
    faculty.'' (James Duderstadt, Remarks to the National Science Board,
    August 1997).
    ---------------------------------------------------------------------------
      --To what extent does Federal support encourage narrow specialization
            in areas related to the immediate needs of mission agencies or
            faculty mentors?
      --Does Federal support for graduate/postdoctoral research and
            education in universities encourage acquisition of skills and
            knowledge to prepare graduates for a broad range of research
            and teaching careers?
      --Do Federal policies and support methods encourage dissemination of
            knowledge, and sharing of the benefits of research and graduate
            education throughout the host institution, and synergy among
            academic researchers, faculty and students, and researchers in
            other sectors?
      --Is Federal support for graduate and postdoctoral research and
            education sufficiently sensitive to the important contributions
            to the national science and engineering research and education
            enterprise by the comprehensive universities, liberal arts
            colleges and other institutions not among the major research
            universities?
                                     ______

       Government Funding of Scientific Research: A Working Paper of the
                             National Science Board

                                  introduction
        With the end of the Cold War and the need to reduce the size of the
    Federal deficit, all facets of the Federal budget have come under
    scrutiny, including the Nation's investment in research and development
    (R&D). There has been considerable discussion on proposals to reduce
    the Federal R&D budget and to reorder its priorities. The National
    Science Board (NSB) is specifically charged with assessing the health
    of science in the Nation and with advising the President and Congress
    on matters of national science policy.\1\ The Board therefore offers
    its perspective on the important issues this country confronts today
    concerning the funding of scientific research by the Federal
    government. Consistent with its charge, the Board has focused its
    efforts on issues affecting scientific research as distinct from
    development.
    ---------------------------------------------------------------------------
        \1\ National Science Foundation Act of 1950, as amended, 42 U.S.C.
    Sec. 1861, et.seq. A particular responsibility of the Board in
    implementing this mandate is the biennial publication of Science and
    Engineering Indicators.
    ---------------------------------------------------------------------------
        Peer review of proposals has long assured the funding of the best
    researchers with the best ideas. However, presently there is no widely
    accepted way for the Federal government in conjunction with the
    scientific community to make priority decisions about the allocation of
    resources in and across scientific disciplines.\2\ We examine this
    complex issue and offer our views on this challenging task with two
    purposes in mind. The first is to guide future actions of the Board in
    reaching priority decisions about the budget of the National Science
    Foundation (NSF). The second is to engage the attention and
    participation of others in meeting this challenge by supplementing
    present procedures with other systematic ways to reach and prioritize
    decisions.
    ---------------------------------------------------------------------------
        \2\ Throughout this paper, ``science'' includes mathematics,
    engineering, and materials research.
    ---------------------------------------------------------------------------
        The rationale for the major Federal role in funding scientific
    research goes back some fifty years to the time after the end of World
    War II, when realization of the impact of science-based technology on
    the course of the war was keenly felt. The mood was expressed in
    Vannevar Bush's July 1945 report, ``Science--The Endless Frontier''.\3\
    It is natural to question the validity of the philosophy for today and,
    particularly, to examine the question of the coordination of federally-
    financed research.
    ---------------------------------------------------------------------------
        \3\ Vannevar Bush, ``Science--The Endless Frontier'' (40th
    Anniversary Edition, Washington, DC: National Science Foundation,
    1990).
    ---------------------------------------------------------------------------
        The Board has studied the report, ``Allocating Federal Funds for
    Science and Technology'', issued in 1995 by a committee of the National
    Research Council chaired by Frank Press.\4\ (We refer to this as the
    ``Press report.'') A major theme of that report is the need for some
    degree of coordination of federally-financed research. This idea is not
    totally new but was particularly well developed in the report. This
    timely and critical but highly controversial proposal merits careful
    attention at this time.
    ---------------------------------------------------------------------------
        \4\ National Research council, Committee on Criteria for Federal
    Support of Research and Development ``Allocating Federal Funds for
    Science and Technology'' (Washington, DC: National Academy Press,
    1995).
    ---------------------------------------------------------------------------
        If it is in the Nation's interest for there to be some form of
    ``comprehensive'' and ``coherent'' coordination of federally-financed
    research,\5\ it is necessary to have guidelines to provide clear
    direction on setting priorities within the Federal research budget. The
    Press report pointed out that guidelines were offered in the 1993
    report of the National Research Council's Committee on Science,
    Engineering, and Public Policy (COSEPUP) ``Science, Technology and the
    Federal Government--National Goals for a New Era.'' \6\ The Board has
    considered the adequacy of the COSEPUP guidelines.
    ---------------------------------------------------------------------------
        \5\ Ibid, p. 5.
        \6\ National Research Council, Committee on Science, Engineering,
    and Public Policy, ``Science, Technology, and the Federal Government:
    National Goals for a New Era'' (Washington, DC: National Academy Press,
    1993).
    ---------------------------------------------------------------------------
        This working paper presents the Board's thinking on these subjects.
    With this paper, the Board hopes to encourage a much needed dialogue
    among appropriate stakeholders. The document is divided into four
    sections. The first section addresses the definitions of ``research''
    and ``development'' and highlights the essential differences between
    them, particularly as they affect the possible government role in
    funding. Considerable confusion has been created by imprecise and
    sometimes improper use of the term R&D. The Board feels it is important
    to clarify this issue.
        The second section revisits the justification articulated by
    Vannevar Bush for government funding of scientific research. It
    addresses some of the changes in the past fifty years that may have
    altered the justification but concludes that the need for government
    funding of research is just as critical today as it was at the height
    of the Cold War.
        The third section examines the need for comprehensive coordination
    of federally-financed research. It concludes that such coordination
    could assist the President and Congress by providing a valuable
    addition to and improvement over the processes presently in place.
    However, implementation of such a policy would involve the difficult
    task of developing acceptable procedures.
        The final section addresses the availability of guidelines to
    provide clear direction on setting priorities. It concludes that
    further study of priority setting methodologies involving appropriate
    stakeholders should be undertaken. The NSB recommends such a study and
    pledges its support for this effort.
           section i: definitions of ``research'' and ``development"
        Because this document focuses on research, it is appropriate to
    define ``research'' as distinct from ``development,'' recognizing that
    there are instances where the boundaries blur.\7\
    ---------------------------------------------------------------------------
        \7\ Definitions of ``research'' and ``development'' are congruent
    with operational definitions for the National Science Foundation Survey
    of Industrial Research and Development.
    ---------------------------------------------------------------------------
    Research
        Research is the search for new knowledge and concepts that unify
    and extend that knowledge. The work, stimulated by theoretical or
    practical questions, is conducted in the context of existing knowledge
    and paradigms. A paradigm is a guiding concept or model, based on
    accumulated knowledge, which is generally accepted as valid and useful.
        Typically, research is designed to answer specific questions to
    fill gaps within the existing body of knowledge or to test the paradigm
    itself. Work which is intended to confirm or refine an existing
    paradigm may, in fact, contradict it, thus opening the way for a
    scientific revolution.
        Practical applications of knowledge may range from new products and
    processes to the information base needed for management or policy
    decisions. An investigator may or may not have specific, practical
    applications for the results of his/her work when designing the
    research. However, extensive history has documented the fact that the
    most important applications and policy implications are not envisioned
    at the time of the research. This fact is most especially true of work
    that leads to new or greatly modified paradigms.
    Development
        Development is the process by which a new product or process is
    brought into being or improved based largely on existing knowledge and
    theory. In an industrial setting, development encompasses a wide range
    of activities, such as scale-up, packaging, or cost analysis. Here we
    will consider only the technical development by which the concept may
    be reduced to feasible practice. We have chosen not to address
    development efforts outside of the commercial sector, that is,
    development directed to achieving the mission of a sponsoring agency.
        In general, development cannot occur based on existing knowledge
    and theory only, for there are inevitable gaps in the knowledge base.
    Experiments are typically designed in the development process to
    address these specific gaps. Thus development has some important
    features in common with research, though the questions in a technical
    development program tend to be of narrower scope than in research.
        While there are research aspects to technical development, research
    does not naturally lead to development in any linear way. Rather,
    research and development are iterative, with development dependent on
    research, and often vice versa. Taken together, research and
    development may be defined as ``technical innovation.'' Invention is
    possible at any stage in the technical innovation process and success
    is necessary at every stage to produce a commercially viable product or
    process.
    Observations on the R&D Definitions
        Research and development, as here defined, are related: not every
    activity can be clearly classified as one or the other. Additional
    phrases such as ``applied research'' or ``exploratory development''
    have been created to provide finer definition of the gray areas between
    research and development. The above definitions are simpler and
    adequate for present purposes.
        It should also be noted that success in technical innovation is
    necessary, but not sufficient, for commercial success. Many other
    factors influence the ultimate commercial success or failure of a new
    product or process. Some factors, such as marketing, distribution,
    design for manufacturability, and testing, are primarily the
    responsibility of industry. Other factors, such as the cost of capital,
    liability laws, environmental regulations, and tax policy are dependent
    on government actions and general economic conditions. It is, in fact,
    these interdependencies that necessitate close cooperation among the
    sectors--academy, industry, and government--to ensure the economic
    well-being of the Nation.
        Our definitions distinguish research from development and also
    indicate the relationship between them. Discussion of support by the
    government must deal carefully with this relationship, while
    recognizing that the rationales for supporting the two are quite
    different.
        It further should be noted that research and education are
    inexorably linked in U.S. higher education in science and engineering.
    During the undergraduate and graduate years, students learn the
    fundamentals of their fields. However, because the knowledge base is
    growing explosively, students must also learn how to learn, lest their
    education become obsolete. It is in this realm that research becomes a
    powerful part of both undergraduate and graduate education, which is
    one of the great strengths of the American higher education system. In
    research, students learn how to gather current knowledge, how to pose
    significant questions to further that knowledge base, and how to frame
    and implement an approach to address their questions. This research/
    education experience is invaluable training, not only for those
    continuing in research, but for the broader workforce and an informed
    public.
    section ii: justification for government support of scientific research
        Prior to World War II, support for research by the government of
    the United States was largely focused on government missions and
    carried out by Federal employees in Federal establishments. The
    experience with weapons development during the war highlighted the
    enormous potential impact of the results of scientific research on
    national needs. It was also realized that academic research was a
    powerful engine for generating such results.
        The government role in supporting research in the scientific
    community at large was greatly stimulated by the vision enunciated by
    Vannevar Bush. Bush wrote, ``The Government should accept new
    responsibilities for promoting the flow of new scientific knowledge and
    the development of scientific talent in our youth. These
    responsibilities are the proper concern of the Government for they
    vitally affect our health, our jobs, and our national security.'' \8\
    Bush used the word ``jobs'' to describe what elsewhere he referred to
    as ``prosperity'' or ``public welfare.'' The concept is now commonly
    referred to as ``economic security.'' The three areas identified by
    Bush were those of most concern at the time. Were Bush writing today,
    he would probably add others, including ``the environment,'' ``green
    manufacturing,'' and ``clean energy sources.''
    ---------------------------------------------------------------------------
        \8\ p. 8.
    ---------------------------------------------------------------------------
        Bush saw the benefits of research accruing to a wide range of
    national needs rather than to a single objective, such as defense.
    Indeed, he concluded his letter to President Truman transmitting his
    report with a broad vision of the impact of science on quality of life:
    ``Scientific progress is one essential key to our security as a nation,
    to our better health, to more jobs, to a higher standard of living, and
    to our cultural progress.'' \9\
    ---------------------------------------------------------------------------
        \9\ p. 2.
    ---------------------------------------------------------------------------
        Vannevar Bush clearly recognized that applications of research
    results often appear many years after the work is started and that
    there is no certainty as to which of the many national needs will
    benefit from this work. He also observed that `` * * * basic research
    is essentially non-commercial in nature. It will not receive the
    attention it requires if left to industry.'' \10\ Today this concept is
    recognized as a lack of ``appropriability.'' Because of the long-term
    nature of research and the uncertainties in predicting its practical
    applications, a company cannot be certain that investment in research
    will result in a competitive advantage in the worldwide marketplace.
    Indeed, the increase in global competition has exacerbated the
    ``appropriability'' issue. It consequently has increased the need for
    government support of research.
    ---------------------------------------------------------------------------
        \10\ p. 22.
    ---------------------------------------------------------------------------
        The Bush vision encouraged the mission agencies to support research
    universities in fields that were deemed to have probable long-term
    relevance to their missions. It also led to the establishment of the
    National Science Foundation and the gradual building of its budget to
    the point that it has become a major source of support for science and
    engineering in our universities. The National Science Board was created
    with its dual mission of overseeing the activities of NSF and
    monitoring the health of science in the Nation.
        As a result of implementing the Bush vision, our research
    universities have become the envy of the world. The application of new
    knowledge and talent in science has indeed created handsome benefits in
    the three areas Bush identified. We will cite just one example in each
    area. The understanding of the structure and properties of DNA opened
    up totally new opportunities to address health issues and provided the
    basis for the vibrant new biotechnology industry. Polymer and
    photochemical research led to the creation of photoresists that are key
    to the success of the microelectronics industry, which accounts for
    well over a quarter of a million jobs in the U.S. today. The atomic
    clock, which was based on research in atomic physics and was stimulated
    by needs in astronomy, provided a foundation for the development of the
    Global Positioning System to satisfy a critical defense need. More
    recently, it is creating a large commercial marketplace for everything
    from ships to backpackers.
        In the fifty years since the end of World War II, major changes
    have occurred here and overseas that might have an impact on the
    rationale for government support of scientific research. Two of the
    most frequently cited are the end of the Cold War and the emergence of
    a global technological marketplace. Another is the increasing need for
    information and knowledge as a basis for policy and management
    decisions by institutions and individuals, to enable them to contend
    with the modification of natural and social environments that is
    occurring at increasing rates, over larger scales, and in fundamentally
    new ways.
        Do these changes call for a major change in our attitude toward
    research? We believe that none would invalidate the justification for
    wise government support of research. Health, economic security, and
    national security remain as imperatives, and are now joined by social
    and environmental concerns. Only the sense of priority has changed.
    Defense priorities have decreased but competition from global science-
    based technological industry and environmental and social concerns have
    increased as no one would have dreamed in 1945.
        Some Asian nations, most prominently Japan, have succeeded in
    building excellent high-tech industries in the absence of a publicly-
    accessible academic research base. At the same time, U.S. industry
    appeared to be faltering in areas such as consumer electronics and in
    fundamental research in manufacturing engineering. These observations
    have been used to suggest to some that government funding of science
    might not be required to enhance national prosperity. We believe that
    this is an incorrect conclusion stemming from a number of
    misunderstandings of the characteristics of research and development
    and their role in the total innovation process.
        First, as discussed in the section on definitions, success in
    bringing high-tech products and services to the marketplace involves a
    total innovation process including functions such as research,
    development, manufacturing, marketing, and others. All of the functions
    involved must work well. The problems with the U.S. consumer
    electronics industry have been thoroughly studied and are well
    understood.\11\ American firms lost market share to competitors with
    shorter product cycles, lower costs, and superior quality. Even
    excellent science will not compensate for such a weakness in the
    industrial environment.
    ---------------------------------------------------------------------------
        \11\ Richard S. Rosenbloom and William J. Abernathy, ``The Climate
    for Innovation in Industry: The Role of Management Attitudes and
    Practices in Consumer Electronics,'' Research Policy, 11, no. 6
    (1982):209-25.
    ---------------------------------------------------------------------------
        Second, as also discussed in the section on definitions, the
    innovation process is an iterative, not a linear, process. While some
    very important product developments are triggered by new knowledge from
    research, the majority are stimulated elsewhere--by market needs, by
    manufacturing advances, and by ideas from the development laboratory.
    These product developments can proceed largely on the foundation of
    existing and widely understood scientific and technical knowledge. The
    consumer electronics industry fits this model as does the mature
    semiconductor industry. Thus, even nations without ready access to
    research capabilities can prosper and excel in these product lines.
        The most obvious situation in which research can lead to a
    competitive edge for industry is where there is a fundamental
    breakthrough, a paradigm change. Here there may be opportunities to
    create whole new industries. The understanding of DNA was surely one
    such paradigm change. When this occurs, a nation with both a strong
    industry and a leading scientific capability can capitalize on its
    closer access to knowledge and talent to become first in the world
    market with the most innovative, profitable products and services. It
    is under these less frequent and highly unpredictable circumstances
    that research makes a critical contribution to industrial
    competitiveness.
        There are other research benefits that can be at least as valuable.
    Basic expertise is needed to evaluate new technical opportunities
    regardless of their source. Whatever the extent of a nation's
    investment in research, some breakthroughs are bound to occur
    elsewhere. Having expertise in a field makes it possible to catch up
    with the originator in the implementation phase and even get to market
    ahead of the originator. In planning technical programs, whether in
    research or development, it is valuable to understand what can work and
    it can be even more valuable to know what cannot work. Finally, ready
    access to the talent in research universities, whether as employees or
    consultants, is an asset to industry in all facets of the innovation
    process. These benefits from research can be seen in the strength of
    our information, chemical, and pharmaceutical industries and the
    competitive advantage they have gained from close access to basic
    science.
        We conclude that changed circumstances in recent years do not
    reduce the desirability of continued government funding of scientific
    research. Changes in national priorities do not negate the potential of
    research benefits which are long term and uncertain in detail but have
    proved over time to be substantial. In the presence of global
    competition a nation should be strong in all facets of technical
    innovation and should have available a continuously renewed base of
    knowledge to inform its decisions and those of its citizens. A nation
    requires a robust high-tech industry, a scientific talent base, and a
    vigorous research activity to prosper over the long term.
            section iii: coordination of federally-financed research
        We recognize that a degree of coordination of Federal research
    spending exists across disciplines and that during the last decade the
    Executive branch has taken steps to improve coordination of research
    across agencies in key areas. Indeed, the Office of Management and
    Budget in consultation with the Office of Science and Technology Policy
    provides annual budget guidance to all agencies participating in
    support of priority research areas in preparing the Federal budget for
    submission to Congress. Too, agency budget submissions must be
    developed in the context of the Government Performance and Results Act,
    which requires that agency supported research activities have
    measurable outcomes toward achieving agency missions. We note in
    particular that the committees of the National Science and Technology
    Council (NSTC) provide coordination in areas of special national
    interest, such as global change, the development of less polluting
    transportation, energy, specific health areas, childhood development,
    and the future of the U.S. program in the Antarctic.\12\
    ---------------------------------------------------------------------------
        \12\ National Science and Technology Council, Technology for a
    Sustainable Future/A Framework for Action. Washington DC: U.S.
    Government Printing Office, 1994, and Infectious Disease--A Global
    Health Treat. Washington, DC: September 1995.
    ---------------------------------------------------------------------------
        These efforts benefit from special Administration studies,
    including reports of the President's Committee of Advisors on Science
    and Technology (PCAST) and the NSTC.\13\ But, beyond those special
    areas, coordination depends on individual agency-to-agency agreements,
    informal cooperation across agencies at the program level, and the
    memories of Congressional committees. Sometimes important decisions
    about the allocation of limited resources happen by default, without
    explicit weighing of alternatives. There remains a need to examine and
    coordinate the science and engineering research budget as a whole.
    ---------------------------------------------------------------------------
        \13\ President's Committee of Advisors on Science and Technology,
    Federal Energy Research and Development for the Challenges of the
    Twenty-First Century. Washington, DC: November 5, 1997. National
    Science and Technology Council, National Security Science and
    Technology Strategy. Washington, DC: OSTP, 1995.
    ---------------------------------------------------------------------------
        We are proposing that the Federal government take upon itself the
    high-level coordination of the diffuse sources of Federal funds for
    research as suggested in the Press report. Improved coordination and
    decision-making at the Federal level could lead to a better alignment
    of expenditures with respect to national priorities without in any way
    replacing the spontaneous generation of ideas and proposals by
    individual research workers and teams. Such coordination could correct
    deficiencies that will inevitably surface in its absence. The main
    deficiencies are gaps, overlaps, and failures to meet priorities.
        Decentralized allocation will sometimes result in separate agencies
    unintentionally pursuing the same agenda.\14\ Duplication of research
    efforts is not always a bad thing, even when funds are scarce. It may
    encourage competition among investigators and advances in knowledge
    across a broad front. Whether or not any particular duplication is
    desirable competition or wasteful overlap has to be decided explicitly.
    There is no reason to expect the optimum answer to arise by
    happenstance.
    ---------------------------------------------------------------------------
        \14\ The funding environment is an ecosystem. Changes in a
    particular agency's budgets and programs may have unintended
    consequences by creating gaps in significant areas of research and
    increased pressure on other agencies that may not be in a position to
    respond.
    ---------------------------------------------------------------------------
        In exactly the same way, decentralized allocation will sometimes
    leave important areas of research inadequately covered. Individual
    funding agencies and individual researchers may incorrectly presume
    that others are pursuing particular topics and related areas. Although
    such gaps may correct themselves over time as the writers and readers
    of proposals see what has happened, this can be a wasteful process, and
    even quite destructive if young researchers decide to leave important
    unfunded fields. Coordination would allow one to see gaps in advance
    and judge whether they should be eliminated.
        Sometimes there will be a clear sense within the Federal government
    that some areas of research merit particularly high priority for social
    or economic reasons (examples: climate, hydrology, violence, materials,
    transportation, etc.). The uncoordinated generation of research
    proposals will not completely ignore such priorities, but cannot be
    expected to reflect them with great fidelity. It was already noted that
    important applications of research are not always foreseen when the
    research is planned. This observation does not deny that research aimed
    at a particular application is more likely to achieve it than research
    aimed in some other direction. Comprehensive coordination can achieve a
    rough conformity between accepted priorities and the allocation of
    resources. This fact becomes increasingly important when funds are
    scarce. As an extreme example, it is a common observation that
    completely decentralized modes of allocation run into particular
    trouble when budgets must be cut. At such a time it is easy for the
    general interest to be overridden by parochial interests.
        Whenever there is some amount of comprehensive coordination and
    decision-making, it is supremely important that the criteria of choice
    be appropriate. There is no virtue in doing the wrong thing
    efficiently. Any scheme of oversight must begin with explicit
    discussion of and agreement about the goals to be achieved.
                     section iv: federal science priorities
        Within the Federal budget, there should be an overall strategy for
    research, with areas of increased and areas of decreased emphasis. The
    budget as a whole should be adequate both to serve national priorities
    and to foster a world-class scientific and technical enterprise. To
    this end, Congress and the Administration need to establish a process
    that examines the complete Federal research budget before the total
    Federal budget is disaggregated. Departments and agencies should make
    decisions based on clearly articulated criteria that are congruent with
    the overall strategy.
        Within the Executive branch, the interagency NSTC, and before it
    the Federal Coordinating Council for Science, Engineering and
    Technology (FCCSET), have successfully organized crosscutting research
    areas of national interest, such as global change, energy,
    transportation science, environmental science and technology, and human
    resources for the twenty-first century. However, in order for broader
    coordination and priority setting to be successful, general guidelines
    are required to provide clear direction.
        The most recent effort by the scientific community to recommend
    guidelines for the allocation of research resources across all fields
    of science and engineering appears to be the COSEPUP report. That
    report proposes that Federal research resources be allocated among
    different scientific fields and Federal agencies and departments so
    that the United States will be among the leaders in all major fields of
    science and the leader in selected major fields.\15\
    ---------------------------------------------------------------------------
        \15\ pp. 18-24.
    ---------------------------------------------------------------------------
        The National Science Board supports the spirit of the COSEPUP
    recommendations but believes that they may not go far enough. The
    COSEPUP criteria would assure that the United States would be
    competitive with, indeed somewhat ahead of, other nations. This, we
    believe, is highly desirable but may not be sufficient. In addition to
    questions of world leadership, one must also ask what is the
    appropriate scale of the investment to meet the needs of the greatest
    economic power in the world. Given the broad range of national needs
    that can benefit from the results of scientific research, the Nation
    may choose, and may be able to afford, to invest beyond the levels that
    the COSEPUP criteria would suggest. Thus the Board believes that
    further study is needed before a particular methodology for setting
    priorities is adopted.
        To ensure the most effective use of Federal discretionary funding
    it is essential that agreement be reached on which fields and which
    investment strategies hold the greatest promise for new knowledge that
    will contribute most effectively to better health, greater equity and
    social justice, improved living standards, a sustainable environment, a
    secure national defense, and to extending our understanding of nature.
    It is intrinsic to research that particular outcomes cannot be
    foretold; but it is possible, indeed necessary, to make informed
    choices and to invest wisely. The need for better coordination and
    priority-setting is not related to cycles of fiscal constraint alone.
    It is, rather, an integral aspect of a sound, future-oriented strategy
    for the investment of limited Federal dollars.
        Although the need for establishment of research priorities has been
    discussed often, no agreed upon method exists for carrying out this
    task. Moreover, no consensus has been built to support such a
    methodology. Several subfields of science have long-established
    methodologies for producing ranked lists of new construction projects:
    for example, the Decadal Studies in Astronomy, the periodic reports of
    the High Energy Physics Advisory Panel (HEPAP) ranking accelerator
    projects, and the occasional reports ranking investments in x-ray and
    neutron scattering sources.
        However, these priority-setting exercises have been within fields
    and subfields of science. We are aware of no examples of the scientific
    community agreeing on the relative priorities for investment across
    scientific fields. Although many scientists consider the task both
    undesirable and undoable, the National Science Board believes that this
    difficult task will become increasingly important and must be faced
    over the next few years.
        The Board has concluded that an appropriate next step is to
    initiate a study of guidelines that go beyond those proposed in the
    COSEPUP report. The purpose of this task would be not to set
    priorities, but rather to undertake a study of how they might best be
    set. Specific charges would be to: [a] review, in light of changing
    circumstances, the goals for Federal investment in scientific research
    as stated in the Administration report, ``Science in the National
    Interest;'' \16\ [b] examine what methodology and criteria might best
    be used to set priorities across different scientific fields and
    disciplines toward the attainment of those goals; and [c] consider what
    mechanisms will be effective in building broad public and scientific
    support for, and involvement in, priority setting. The study should
    involve the opinions of a diverse group including, among others, active
    researchers with breadth of vision.
    ---------------------------------------------------------------------------
        \16\ William J. Clinton and Albert Gore, Jr., Science in the
    National Interest (Washington, DC: Office of Science and Technology
    Policy, 1994).
    ---------------------------------------------------------------------------
        The National Science Board recommends further study of priority-
    setting methodologies involving appropriate stakeholders. The Board
    believes that this task is of paramount importance to the future health
    of U.S. science and technology. It should be undertaken to assure the
    continued flow of wide-ranging benefits to society from Federal
    investments in science and engineering research. The Board offers its
    assistance on this critical task in any way that the President and the
    Congress would find helpful.

                             statement of neal lane

        Senator Bond. Dr. Lane.
        Dr. Lane. Mr. Chairman, Senator Mikulski, I really want to
    begin by thanking you and the subcommittee most sincerely for
    your consistent, bipartisan support of NSF science and
    engineering activities. I would especially like to thank you
    for your support of NSF's NGI activities in the recently
    completed settlement legislation which provided funding to help
    us play a leadership role in advancing networking in this
    country.

                        plant genome research initiative

        I am also pleased to note that many of the other
    initiatives championed by the subcommittee are integral parts
    of the fiscal year 1999 NSF budget request, such as the plant
    genome research initiative and significant increases in Arctic
    research and education.
        Mr. Chairman, the fiscal year 1999 budget request for NSF
    represents an unprecedented vote of confidence from the
    President. If enacted, this budget would be the largest dollar
    increase the Foundation has ever received, as the President
    noted in his State of the Union Address. This investment will
    help set the stage for a new century of progress, through
    learning and discovery.
        For the coming fiscal year, NSF requests $3.773 billion.
    And this represents roughly a 10-percent increase. Overall,
    that is over $340 million. This investment, part of the
    President's 21st century Research Fund for America, is all
    about keeping U.S. science and engineering at the very leading
    edge of learning and discovery.

              investment in knowledge and distributed intelligence

        I have attached to my testimony a more detailed summary of
    our budget request. So instead let me focus on a major theme in
    the request: NSF's continued investment in knowledge and
    distributed intelligence, or what we call KDI.
        NSF's KDI investments aim to turn today's deluge of
    information into a wellspring of discovery, learning and
    progress. A great example of KDI's influence can be seen in the
    challenge of generating the massive sets of data needed to map
    the genomes of key crops like rice and corn, genomes that are
    as large or larger than the human genome. The generating of
    this data is the relatively easy part. The next and most
    important step will be to turn this information into useful
    knowledge--knowledge of how the different pieces of the genome
    do business and affect resistance to drought and diseases,
    yields, growth cycles, and other plant processes.
        All of this will require developing networks and
    collaboratories of electronically connected scientists, to help
    us pick out key patterns from the underlying volumes of data
    and information. The power of KDI is enabling exciting
    discoveries in nearly all areas of science and engineering. For
    example, using interconnected facilities, located all over the
    country, scientists and engineers are able to remotely create,
    design and manipulate ordinary objects, like ceramics and
    metals, one molecule or even one atom at a time.

                                 nanotechnology

        This manipulation of materials at the smallest scales is
    commonly referred to as nanotechnology, the prefix ``nano''
    meaning one-billionth of a meter, the scale at which most
    nanoscientists and nanoengineers work. NSF's support over the
    years has allowed nanoscale science and engineering to go from
    the realm of science fiction to science fact. Some scientists
    even envision nanofabricated objects that can change their
    properties automatically, or repair themselves. And when you
    think about it, it is not so outlandish. DNA molecules in our
    own bodies can replicate themselves with incredibly small rates
    of error.
        Much of the inspiration for nanoscale science and
    engineering comes from the biosciences and bioengineering,
    making nanoscale science a perfect example of the integration
    of the physical sciences and the biosciences, the dry world and
    the wet world. These connections, across seemingly unrelated
    areas of science and engineering, highlight a central feature
    of NSF's fiscal year 1999 request, three integrating themes--
    KDI, life and Earth's environment, and educating for the
    future--provide a framework for the Foundation's investment
    strategy. And these are each discussed in greater detail in my
    written statement.
        In conclusion, Mr. Chairman, let me emphasize that the
    entire NSF investment portfolio sets the stage for the 21st
    century research and education enterprise, focused on national
    priorities. Guiding all these activities is the Foundation's
    longstanding commitment to merit-based investments in learning
    and discovery that adhere to the highest standards of
    excellence. This request marks a significant step forward for
    U.S. science and engineering.

                               prepared statement

        The requested increase of 10 percent provides a level of
    investment in keeping with the wealth of opportunity that
    science and engineering offer to society. In addition, it will
    help position America to remain a world leader in the
    information-driven economy of the 21st century.
        Thank you.
        Senator Bond. Thank you very much, Dr. Lane.
        [The statement follows:]

                      Prepared Statement of Dr. Neal Lane

        Mr. Chairman, Senator Mikulski, members of the Subcommittee, thank
    you for allowing me the opportunity to testify on the budget request
    for fiscal year 1999 for the National Science Foundation. I want to
    begin by thanking you and the subcommittee for your generous show of
    support for NSF over the years. We appreciate the subcommittee's
    consistent, bipartisan support for NSF's science and engineering
    activities and we look forward to working with you during this year's
    appropriations process.
        The fiscal year 1999 budget request for NSF represents an
    unprecedented vote of confidence from the President. If enacted, this
    budget would be the largest dollar increase the Foundation has ever
    received--as the President noted in his State of the Union address.
    This investment will help set the stage for a new century of progress
    through learning and discovery.
        For the coming fiscal year, the NSF requests $3.773 billion. This
    represents a substantial increase--10 percent overall--over $340
    million. This investment, part of the President's 21st Century Research
    Fund for America, is motivated by a clear vision of how science and
    technology can shape our future as a nation and drive progress,
    productivity and innovation across our society.
        This budget request will allow NSF to continue our tradition of
    supporting a diverse array of excellent research and education
    activities ranging from individuals working on their own, to large,
    collaborative activities involving groups and teams of scientists and
    engineers. This investment in the best people and the best ideas will
    advance research and education across the frontiers and help keep U.S.
    science and engineering at the leading edge.
        I have attached to my testimony a more detailed summary of our
    budget request, so let me instead focus on the major themes within our
    proposal.
                     nsf major themes for fiscal year 1999
        NSF proposes to continue our investment in broad thematic areas
    that combine exciting opportunities in research and education with
    immense potential for benefits to society. These are not budgetary
    categories but integrating themes that help us coordinate activities
    across the Foundation and better articulate the connections between
    discovery and service to society. For fiscal year 1999 the major themes
    include Knowledge and Distributed Intelligence (KDI), Life and Earth's
    Environment (LEE), and Educating for the Future (EFF).
    Knowledge and Distributed Intelligence
        The explosive growth in computing power and communications
    connectivity has brought forth unprecedented opportunities for
    providing rapid and efficient access to knowledge and information, for
    studying complex systems, and for advancing our understanding of
    learning and intelligent behavior of people and machines. KDI is a
    Foundation-wide effort that aims to improve our ability to discover,
    collect, represent, transmit, and apply information.
        Within the KDI theme we intend to emphasize research on knowledge
    networking, learning and intelligent systems, and new challenges to
    computation. Also included is a request for $25 million to continue our
    support for research and infrastructure related to the interagency Next
    Generation Internet program. The request also continues investments in
    the very high-speed backbone network, which has brought new levels of
    networking capabilities to many of the nation's research universities.
    Life and Earth's Environment
        The fiscal year 1999 request looks to expand support for specific
    activities that relate to our second theme of Life and Earth's
    Environment. LEE encompasses a wide range of activities on the complex
    interdependencies among living organisms and the environments that
    affect, sustain, and are modified by them.
        Fiscal year 1999 investments will emphasize research on life in
    extreme environments, urban communities, environmental technologies,
    global change, integrated environmental research challenges, and
    environmental observatories. Within LEE, funding for the U.S. Global
    Change Research Program will emphasize climate modeling, earth system
    history, human dimensions of global change, and global ecology.
    Educating for the Future
        The request also includes continued support for innovative
    approaches aimed at meeting the challenge of educating students for the
    21st Century. For example we intend to provide:
      --$25 million to initiate a program on Research on Education and
            Training Technology--a joint research initiative with the U.S.
            Department of Education. This program is a direct outgrowth of
            the recommendations by the President's Committee of Advisors on
            Science and Technology (PCAST) for a research program focused
            on ``the efficacy and cost-effectiveness of technology use
            within our nation's schools.'' The program will include support
            for efforts such as basic research on educationally relevant
            technologies, research aimed at developing new forms of
            educational software, and studies to determine the best and
            most effective ways to use new technologies in the classroom.
      --$28 million for joint efforts with the U.S. Department of Education
            to fund peer reviewed proposals in K-8 mathematics education to
            focus on the professional development of teachers and on the
            implementation of standards-based instructional materials.
      --Nearly $9 million to initiate a Children's Research Initiative that
            focuses on children's cognitive development and readiness to
            learn.
      --Significant increases for NSF-wide programs that stimulate the
            integration of research and education including a 14.5 percent
            increase for the REU (Research Experiences for Undergraduates)
            program, a 16 percent increase for the CAREER (Faculty Early
            Career Development) program, and a nearly 35 percent increase
            for the IGERT (Integrative Graduate Education and Research
            Training) program.
          nsf investments: meeting the challenges of the 21st century
        As I mentioned at the outset of my remarks, NSF investments in the
    best people and the best ideas will help keep U.S. science and
    engineering at the leading edge. Above all, however, I believe that
    these activities will enable new discoveries that result in the new
    knowledge that will help our nation address some of the most critical
    challenges of the 21st Century. These challenges include better health,
    increased economic well-being and opportunity for all citizens, a
    cleaner environment and better schools for our children.
        We are also facing critical challenges relating to the information
    age. ``Drinking from a firehose'' is how many people describe the
    challenge of coping with the information deluge flooding our society
    today. As recently reported in the San Jose Mercury News, `` * * * only
    seven percent of the information expansively collected in corporate
    databases is used--the rest just sits there, gathering the electronic
    equivalent of dust.'' \1\
    ---------------------------------------------------------------------------
        \1\ Robert S. Boyd, ``Project aims to make what's available on the
    Net manageable,'' San Jose Mercy News, February 10, 1998.
    ---------------------------------------------------------------------------
        NSF investments in Knowledge and Distributed Intelligence (KDI) aim
    to turn this information deluge into a wellspring of discovery,
    learning and progress. Doing this requires much more than just building
    bigger and better machines. It requires addressing some of the most
    fundamental questions and challenges in all of science and engineering
    such as the workings of the brain, how we learn and the nature of
    intelligent behavior.
        I have long felt that the questions and challenges of KDI are best
    exemplified by the NECK-top computer, not by the desktop computer. Our
    own brains are among the most complex, efficient and powerful
    instruments on Earth, yet we are just beginning to understand how our
    brains operate or understand how we learn.
        Understanding the workings of the brain is critical if we are to
    treat disorders like dyslexia, Alzheimer's and Parkinson's. But solving
    the mysteries of the brain requires answers to more than just medical
    questions, it requires fundamental breakthroughs across a number of
    scientific and engineering fields.
        To better understand the brain's secrets, researchers have to be
    able to view it functioning in real time. NSF support has enabled the
    first real-time magnetic resonance imaging (MRI) of the brain. This
    required bringing together cutting-edge work in statistics,
    neuroscience, and computer science. Because the imaging process shows
    how areas of the brain ``light up'' when in use, it is yielding
    invaluable insights into our understanding of learning and other
    cognitive processes. Of course MRI technology came out of physics--
    another reminder that the physical sciences underpin much of biomedical
    research and medical technology.
        Another area that gets a great deal of attention is NSF's support
    of faster and more experimental computer and communications networks
    that will better link researchers and educators at colleges and
    universities. The use of high-speed networks to enable distributed
    groups of scientists and engineers to work together as one--in almost
    real time--is transforming the way discoveries and innovations are
    occurring. Their use of these cutting edge experimental systems will
    also lead to more powerful communications tools for society.
        The NSF-supported National Nanofabrication Users Network is a good
    example of such a distributed network or ``virtual center'' as some
    like to describe the arrangement. In the ``virtual center'' concept,
    high speed connections allow any researcher--regardless of where he or
    she may be located--to remotely use the capabilities and instruments of
    each of the five locations across the country \2\ that constitute the
    users network.
    ---------------------------------------------------------------------------
        \2\ The five NNUN sites are: Stanford University, UC Santa Barbara,
    Cornell University, Penn. State, and Howard University.
    ---------------------------------------------------------------------------
        And while the Nanofabrication Users Network is an exciting example
    of how KDI can transform discovery, the actual research conducted over
    the network is probably even more exciting. By using the facilities
    connected through the network, scientists and engineers are able to
    create, design and manipulate ordinary objects like ceramics or metals
    one molecule or even one atom at a time. This is research and
    engineering at incredibly small scales--a nanometer--often the measure
    used in this research--is one billionth of a meter, about the length of
    3 or 4 atoms. If I were asked for an area of science and engineering
    that will most likely produce the breakthroughs of tomorrow, I would
    point to nanoscale science and engineering, often called simply
    ``nanotechnology''. The general idea of nanotechnology is not new--it
    has been studied since Nobel laureate Richard Feynman outlined the idea
    in a speech in 1959--but only recently have scientists been able to
    glimpse Feynman's vision by creating rudimentary nanostructures.
        NSF support over the years has allowed nanoscale science and
    engineering to go from the realm of science fiction to science fact.
    One of the most notable NSF-supported discoveries was the Nobel Prize
    winning discovery by Richard Smalley and Robert Curl at Rice University
    and Harry Kroto of Sussex University in England of a hollow form of
    carbon known as Buckyballs. Subsequent research has shown that a
    related class of molecules--the fullerenes--can form ``nanotubes'' only
    a few atoms in diameter \3\ that could be the basis for a stunning
    array of new environmentally friendly, carbon based materials never
    known before.
    ---------------------------------------------------------------------------
        \3\ ``Next Electronics Breakthrough: Power-Packed Carbon Atoms,''
    The New York Times, February 17, 1998, Malcolm W. Browne.
    ---------------------------------------------------------------------------
        The possibilities of nanotechnology are endless. Entirely new
    classes of incredibly strong, extremely light and environmentally
    benign materials could be created. Other possibilities include:
      --New generations of metals and ceramics several times harder and
            more ductile that today. This could enable the creation of
            inexpensive and readily available superconductive materials;
      --medical implants that are constructed to be accepted by the body;
            and
      --medical probes so small that they won't damage the tissue.
        Some nanoscale scientists and engineers even envision
    nanomanufactured objects that could change their properties
    automatically or repair themselves. When you think about it, this idea
    is not so outlandish--DNA molecules in our own bodies can replicate
    themselves with incredibly small rates of error. Much of the
    inspiration for nanoscale scientists and engineers comes from the
    biosciences and bioengineering--making nanoscale science a perfect
    example of the integration of the physical sciences and biosciences.
                                the bottom line
        Through these and other investments described in our budget
    request, NSF's portfolio sets the stage for a 21st Century research and
    education enterprise that continues to lead and shape the information
    revolution, addresses key national priorities in such areas as the
    environment and nanotechnology, improves teaching and learning at all
    levels of education, and commits itself to reaching out and advancing
    public understanding of science and technology. Guiding all of these
    activities is the Foundation's longstanding commitment to merit-based
    investments in learning and discovery that adhere to the highest
    standards of excellence.
        A wealth of evidence testifies to the impressive returns generated
    by these investments. One ground-breaking study funded by NSF and
    published in the Fall 1997 issue of the journal Research Policy found a
    rapidly growing linkage between industrial innovation and scientific
    research. The study examined patents in key areas of industrial
    technology, including biomedicine, chemistry, and electrical
    components. It found that nearly three-fourths of the research papers
    cited by U.S. industry patents are what the study termed ``public
    science''--papers authored at universities, government laboratories,
    and other public and non-profit centers. Furthermore, the research
    underlying the cited papers was found to be heavily supported by NSF
    and other federal agencies.
        These latest findings add to an already compelling body of evidence
    on the contributions of fundamental science and engineering to economic
    growth, productivity and innovation. As President Clinton noted in a
    speech given on December 16, 1997: ``Half our economic growth in the
    last half-century has come from technological innovation and the
    science that supports it.''
        This request marks a significant step forward for U.S. science and
    engineering. The requested increase of 10 percent provides a level of
    investment in keeping with the wealth of opportunity that science and
    engineering offer to our society. In addition, rigorous priority
    setting within the investment framework, with its emphasis on
    multidisciplinary approaches and the integration of research and
    education, will help position America to remain a world leader in the
    information-driven economy of the 21st Century.
        Thank you.
                                     ______

      National Science Foundation Fiscal Year 1999 Budget Request Overview
        The National Science Foundation requests $3.8 billion for fiscal
    year 1999, a 10 percent increase over fiscal year 1998, to invest in
    nearly 20,000 research and education projects in science and
    engineering. This investment, part of the President's Research Fund for
    America, is motivated by a clear vision of how science and technology
    can shape our future as a nation and drive progress, productivity and
    innovation across our society.
        The discovery 100 years ago of the electron led to a broad range of
    industrial technologies. The transistor--first developed 50 years ago--
    was foremost among these, as it ushered in what has become the
    ``information revolution.'' Today, 3 million transistors can fit on a
    chip no larger than those first fingernail-sized individual transistor
    devices, with cost-savings of a similar scale. The future holds the
    possibility of even greater gains. NSF's investments in nanotechnology
    and ``thin films'' are expected to help generate a further 1,000-fold
    reduction in size for semiconductor devices, which will make computers,
    telecommunications and other advanced technologies even more powerful,
    more portable, more affordable, and more useful.
        Technology is beginning to live up to its promise in education. NSF
    today invests in a number of efforts that give students at all levels
    the chance to witness the leading-edge of science and engineering.
    Writing in the July 28, 1997 issue of Business Week magazine, a teacher
    from Lamar County, Georgia credited these NSF-supported activities with
    helping to ``show rural kids * * * that they can become scientists.''
    The students ``get to know working researchers. They read their
    journals on line, have their questions answered, and watch researchers
    on closed-circuit TV from such places as Antarctica [and] aboard
    aircraft flying in the stratosphere.''
        This winter, a team of researchers is living on an icebreaker that
    is frozen into the pack ice in the Arctic Ocean, drifting with the ice
    floes as a floating science station. The project is part of a set of
    activities known as SHEBA (Surface Heat Budget of the Arctic Ocean),
    which pulls together data and information on how the sun, clouds, air,
    ice, and ocean interact and affect the annual melting and refreezing of
    the Arctic ice cap. This has long been a major uncertainty in climate
    models, and the SHEBA project has already helped to fill what one
    observer termed ``embarrassing holes'' in our understanding of climate
    change.
        More and more practical benefits are emerging from science and
    engineering ``at the extremes.'' Just over 30 years ago, researchers
    discovered a hot-water-loving microbe living in the thermal pools and
    geysers at Yellowstone National Park. The unique properties of this
    ``hyperthermophile'' were key to the development of the polymerase
    chain reaction, or PCR, the so-called Swiss army knife of molecular
    biology that has led to DNA fingerprinting, enzymes for non-polluting
    detergents' and a myriad of state-of-the-art materials.
        These striking examples speak to the priorities and directions
    contained in NSF's fiscal year 1999 Budget Request. The request is
    built upon NSF's strength--a broad base of research and education in
    science and engineering that enables people and ideas to flourish. This
    strength is derived from the agency's effective use of merit review to
    identify the most promising ideas and most capable researchers and
    educators. NSF's investment strategy also emphasizes focused emerging
    areas that hold great promise both from a research and education
    standpoint and as drivers of economic growth and societal benefit.

                          NSF FUNDING BY APPROPRIATION
                            [In millions of dollars]
    ------------------------------------------------------------------------
                                                   Fiscal year
                                            ------------------------
                                                1998                 Percent
                                               Current      1999      change
                                              plan \1\     Request
    ------------------------------------------------------------------------
    Research and Related Activities........    2,545.70    2,846.80     11.8
    Education and Human Resources..........      632.50      683.00      8.0
    Major Research Equipment...............      109.00       94.00    -13.8
    Salaries and Expenses..................      136.95      144.00      5.1
    Office of Inspector General............        4.85        5.20      7.2
                                            --------------------------------
          Total, National Science              3,429.00    3,773.00    10.0
           Foundation......................
    ------------------------------------------------------------------------
    \1\ In addition, in fiscal year 1998 NSF was provided $23 million from
      the Internet domain name registration fees.

                           highlights and priorities
        The fiscal year 1999 request provides over $2.1 billion, a 12.0
    percent increase, for investments in research project support across
    NSF's appropriations. Education and training activities across the
    Foundation increase by 10.7 percent to a level of $737 million. Funding
    priorities throughout this request are shaped by NSF's ongoing
    strategic planning process which identifies research and education
    activities to advance science and engineering across all fields and
    disciplines.
        NSF will provide significant resources for efforts to address
    serious concerns about grant sizes. The substantial increase will
    enable NSF to support forefront research activities across the
    Foundation by increasing award sizes and award durations, with
    particular attention to new investigators. These efforts will
    contribute to increasing the efficiency of the Foundation's merit
    review process and achieving greater cost-effectiveness for both NSF
    and the university community.
        Among the priorities for fiscal year 1999 are activities associated
    with the areas of Knowledge and Distributed Intelligence (KDI), Life
    and Earth's Environment (LEE), and Educating for the Future (EFF).
    These represent areas for focused investment which combine exciting
    opportunities in research and education with immense potential for
    benefits to society.
        Knowledge and Distributed Intelligence.--The explosive growth in
    computing power and communications connectivity has brought forth
    unprecedented opportunities for providing rapid and efficient access to
    knowledge and information, for studying complex systems, and for
    advancing our understanding of learning and intelligent behavior. KDI
    is a Foundation-wide effort that aims to improve our ability to
    discover, collect, represent, transmit, and apply information.
        The fiscal year 1999 request includes an increase of almost $78
    million to substantially enhance specific activities that relate to
    Knowledge and Distributed Intelligence. Key emphases in fiscal year
    1999 include research on knowledge networking, learning and intelligent
    systems and new challenges to computation. Also included are activities
    related to the Next Generation Internet to increase basic understanding
    and usability of networks. The request also continues investments in
    the very high-speed Backbone Network Service, which has brought new
    levels of networking capabilities to the nation's research
    universities.
        Life and Earth's Environment.--The fiscal year 1999 request
    includes an increment of more than $88 million for specific activities
    that relate to the theme of Life and Earth's Environment. LEE
    encompasses a wide range of activities designed to foster research on
    the complex interdependencies among living organisms and the
    environments that affect, sustain, and are modified by them.
        Fiscal year 1999 investments will emphasize research on life in
    extreme environments, urban communities, environmental technologies,
    global change, integrated environmental research challenges, and
    environmental observatories. Within LEE, funding for the U.S. Global
    Change Research Program increases by 12 percent, with emphases on
    climate modeling, earth system history, human dimensions of global
    change, and global ecology.
        Education for the Future.--The request includes continued support
    for innovative approaches that are intended to meet the challenge of
    educating students for the 21st Century. NSF's fiscal year 1999
    investments in EFF activities increase by $107 million and include:
      --$25 million to initiate a program on Research on Education and
            Training Technology--a joint research initiative with the U.S.
            Department of Education.
        --This program is a direct outgrowth of the recommendations by the
                President's Committee of Advisors on Science and Technology
                (PCAST) for a research program focused on ``the efficacy
                and cost-effectiveness of technology use within our
                nation's schools.''
        --The program will include support for efforts such as basic
                research on educationally relevant technologies, research
                aimed at developing new forms of educational software, and
                studies to determine the most effective educational
                approaches and practices.
      --A $28 million increase for a joint effort with the U.S. Department
            of Education in K-8 mathematics education to focus on the
            professional development of teachers and on the implementation
            of standards-based instructional materials.
      --Nearly $9 million to initiate a Children's Research Initiative that
            focuses on children's cognitive development and readiness to
            learn.
      --Significant increases for NSF-wide programs that stimulate the
            integration of research and education including a 14.5 percent
            increase for the REU (Research Experiences for Undergraduates)
            program, a 16 percent increase for the CAREER (Faculty Early
            Career Development) program, and a nearly 35 percent increase
            for the IGERT (Integrative Graduate Education and Research
            Training) program.
                   additional highlights for fiscal year 1999
        Complementing activities related to these themes are a number of
    other Foundation-wide programs designed to address particularly
    important elements of the support of research and education.
        Arctic Research and Education.--Recognizing the importance of the
    Arctic to studies of resource development and global phenomena such as
    climate change and ocean circulation, NSF's fiscal year 1999 Request
    includes more than $80 million for investments in Arctic research and
    education across the Foundation. Within this amount, funding for Arctic
    logistics more than doubles.
        Emphases of NSF's enhanced activities in the Arctic include:
    expansion of logistical capabilities, research platforms and
    facilities; extension of education and outreach activities, especially
    those exploring new technology venues and distance learning;
    connections to Year of the Ocean activities; increased scientific
    cooperation at international levels; and further development of
    research programs on the human dimensions of global change.
        Major Research Equipment.--The Request includes $94 million for
    Major Research Equipment, which will support:
      --Initial investments in the construction of detectors for the Large
            Hadron Collider,
      --Support for the ongoing modernization of South Pole Station,
      --Continued prototype development for the Millimeter Array,
      --Construction of the Polar Cap Observatory, and
      --Reconfiguration of polar support aircraft.
        Plant Genome Research.--NSF will provide $40 million to continue
    investments in the Plant Genome Research Program begun in fiscal year
    1998. This effort is built upon an existing base of genome research
    supported by NSF. The overall goals of the NSF Plant Genome Research
    Program are to support research that will advance our understanding of
    the structure, organization and function of plant genomes, with
    particular attention to economically significant plants, and to
    accelerate utilization of new knowledge and innovative technologies
    toward a more complete understanding of basic biological processes in
    plants.
        GOALI.--Support for the GOALI program (Grant Opportunities for
    Academic Liaison with Industry) will total almost $34 million, an
    increase of 13 percent, to facilitate collaborative research activities
    between academe and industry.
        EPSCoR.--Funding for EPSCoR (the Experimental Program to Stimulate
    Competitive Research) will total more than $50 million. This includes
    $38 million provided through the Education and Human Resources
    appropriation, and approximately $15 million through NSF's research
    programs, to enable researchers supported through EPSCoR to participate
    more fully in other Foundation-wide activities.
        Other Areas of Opportunity.--NSF will enhance investments in areas
    of opportunity across NSF, in priority areas such as nanoscale science
    and nanoengineering, bioengineering, research on the quantum realm,
    active tectonics, and innovative human/computer interfaces to aid
    persons with disabilities.
        GLOBE.--NSF continues its participation in the interagency Global
    Learning and Observations to Benefit the Environment Initiative
    (GLOBE). The GLOBE Program provides environmental science education to
    K-12 students in more than 3,500 schools and 45 countries.
                                the bottom line
        Through these investments, NSF's portfolio sets the stage for a
    21st Century research and education enterprise that continues to lead
    and shape the information revolution, addresses key national priorities
    in such areas as global change and the environment, improves teaching
    and learning at all levels of education, and commits itself to reaching
    out and advancing public understanding of science and technology.
    Guiding all of these activities is the Foundation's longstanding
    commitment to merit-based investments in learning and discovery that
    adhere to the highest standards of excellence.
        A wealth of evidence testifies to the impressive returns generated
    by these investments. One ground-breaking study funded by NSF and
    published in the Fall 1997 issue of the journal Research Policy found a
    rapidly growing linkage between industrial innovation and scientific
    research. The study examined patents in key areas of industrial
    technology, including biomedicine, chemistry, and electrical
    components. It found that nearly three-fourths of the research papers
    cited by U.S. industry patents are what the study termed ``public
    science''--papers authored at universities, government laboratories,
    and other public and non-profit centers. Furthermore, the research
    underlying the cited papers was found to be heavily supported by NSF
    and other federal agencies.
        These latest findings add to an already compelling body of evidence
    on the contributions of fundamental science and engineering to economic
    growth, productivity and innovation. As President Clinton noted in a
    speech given on December 16, 1997: ``Half our economic growth in the
    last half-century has come from technological innovation and the
    science that supports it.''
        Recent NSF-supported work, for example, has led to:
      --Identification of genes that control flowering and self-
            fertilization in crops;
      --Environmentally-friendly processes for manufacturing the aluminum-
            based ceramics used in circuit boards and car parts;
      --An ``optical resonator'' that could increase the capacity of fiber
            optic cables by a factor of 10;
      --New approaches to drug development that can aid in the fight
            against antibiotic-resistant bacteria, and
      --Computer-aided text and speech generation and recognition systems
            to aid persons with disabilities.
        NSF's fiscal year 1999 request seeks to increase the already high
    returns on the taxpayer's investment. A special emphasis is placed on
    activities that improve the productivity and efficiency of research and
    education. Providing larger award sizes with longer award durations,
    for example, can enable forefront research, improve research
    productivity, and contribute to reducing the administrative burden on
    both NSF and the university community. Similarly, priority is given
    throughout the Foundation to activities--such as the GOALI program--
    with strong ties to industry and other potential users of the results
    generated by NSF-supported activities.
        This request marks a significant step forward for U.S. science and
    engineering. The requested increase of 10 percent provides a level of
    investment in keeping with the wealth of opportunity that science and
    engineering offer to our society. In addition, rigorous priority
    setting within the investment framework, with its emphasis on
    multidisciplinary approaches and the integration of research and
    education, will help position America to remain a world leader in the
    information-driven economy of the 21st Century.
                       EXECUTIVE OFFICE OF THE PRESIDENT

                    Office of Science and Technology Policy

    STATEMENT OF KERRI-ANN JONES, PH.D., ACTING DIRECTOR
        Senator Bond. Dr. Jones.
        Dr. Jones. Thank you. Mr. Chairman, Senator Mikulski, I am
    pleased to appear before you today to discuss OSTP's budget
    request for fiscal year 1999.
        The administration is encouraged and welcomes the current
    efforts in Congress to establish targets for growth in science
    and technology funding. As you well know and have stated in
    your opening statements, funding for science and technology is
    an extremely high-leverage investment for our country.
        My written testimony discusses the state of the entire
    science and technology enterprise during the past year. I would
    like to take this time to briefly describe the mission of OSTP
    and our fiscal year 1999 request.

                            responsibilities of OSTP

        OSTP has two primary responsibilities: The first, advising
    the President on science and technology; and the second,
    providing leadership and coordination of our Federal S&T
    effort. In the 1950's, President Eisenhower recognized the need
    for expert science and technology counsel. He invited James
    Killian, then the president of MIT, to Washington, to head the
    first President's Science Advisory Committee, an OSTP
    predecessor. Since then, our Nation's Presidents have drawn on
    the expertise of our office for science and technology policy
    advice.
        Within our agency, a small staff of professionals analyzes
    developments at the frontiers of scientific knowledge and
    provides advice to the President. OSTP also provides scientific
    and technical information and recommendations to the Vice
    President, other offices of the White House, executive branch
    agencies, and to Congress.
        A second responsibility of OSTP is to provide leadership
    and coordination across the Federal S&T enterprise. The
    National Science and Technology Council is an invaluable
    partner with OSTP in developing interagency coordination,
    evaluations and new initiatives.
        I ask today for your continued support of OSTP's role in
    coordinating S&T policy for the executive branch and for our
    Nation at large. OSTP's budget request of $5.026 million for
    fiscal year 1999 represents an increase of less than 2 percent.
    This will allow OSTP to fulfill its responsibilities.
        After freezing our request at the fiscal year 1996 enacted
    level for 2 consecutive years, this increase is essential to
    continue to provide quality support to the President and
    information to the Congress. Since personnel costs constitute
    the largest portion of the OSTP budget, our fiscal year 1999
    budget request reflects our commitment to operate more
    efficiently and cost effectively, without compromising the
    essential element of a top-caliber science and technology
    policy office--that is, high-quality personnel.
        OSTP, in meeting its mission of advice, leadership and
    coordination, oversees two distinct organizations for
    developing policy. These are the National Science and
    Technology Council [NSTC] and the President's Committee of
    Advisors on Science and Technology [PCAST].

                    national science and technology council

        To meet the administration's priority goals in science and
    technology, we must combine the efforts and the expertise of
    multiple agencies. OSTP personnel support NSTC, the cabinet-
    level council that coordinates interagency efforts and
    initiatives. Our distributed system of research funding places
    a premium on coordination between complementary agency
    programs. NSTC, now in its fifth year, is improving such
    coordination.
        NSTC membership includes cabinet secretaries, heads of
    science and technology agencies, and key White House officials.
    In the process of generating specific budgetary and policy
    recommendations, NSTC routinely reaches out beyond the Federal
    Government to the private sector and public interests.

          president's committee of advisors on science and technology

        As Assistant to the President for Science and Technology,
    the Director of OSTP cochairs the PCAST committee with John
    Young, former CEO of Hewlett-Packard. PCAST consists of
    distinguished individuals from industry, education, research
    institutes, and other nongovernmental organizations. This
    serves as the highest level of private-sector advice for the
    President and for the NSTC.
        Mr. Chairman and Senator Burns, I hope that this provides a
    brief overview, combined with my written statement. And I hope
    it conveys to you the importance of S&T to our national
    interest, the extent of this administration's commitment to
    this effort, and the role of OSTP. Regardless of party
    affiliation, we all agree that the investments in science and
    technology are in our Nation's interest. I ask for your support
    for OSTP's fiscal year 1999 budget.

                               prepared statement

        I also wish to express my appreciation to this committee
    for its longstanding bipartisan leadership and support.
        Thank you very much.
        [The statement follows:]

                     Prepared Statement of Kerri Ann Jones

        Mr. Chairman, Members of the Committee, I am pleased to appear
    before you today to discuss the Office of Science and Technology
    Policy's (OSTP) budget request for fiscal year 1999.
        I very much welcome, and am encouraged by the current efforts in
    Congress to establish targets for growth in S&T funding. As you know,
    funding for S&T, like funding for education, is a high leverage
    investment in our continued quest for peace and prosperity. Support for
    such investments has traditionally been a matter of bipartisan
    agreement. It is imperative that we build common ground in support of a
    shared vision--a commitment to keep America the world's leader in S&T.
        As we approach the turn of the century, it seems appropriate to
    take stock of the Nation's science and technology (S&T) enterprise, and
    to look to the future--to the opportunities that lie ahead as well as
    the challenges that we face. The Information Age, driven by rapidly
    advancing S&T, is bringing changes to our society that are only
    beginning to unfold. Already, new communications technologies are
    transforming the way we work, where we work, and what we need to know
    to be successful in tomorrow's competitive environment. Five years ago,
    ``Internet'' was still a word known mostly to those in S&T. Today, this
    offspring of federal research activities is the backbone of a new
    industry and a window to a tremendous world of information for all
    segments of our society, from business executives to school children.
        The rapid economic growth of other nations means a future with
    greatly expanded markets for U.S. goods and services. Our ability to
    move our ideas, our goods, and ourselves swiftly to any place on the
    planet, with the help of new technologies, enhances our ability to
    share in the growth of global wealth. On the other hand, the increasing
    availability of these same capabilities throughout the world also means
    greater competition; it means increasing pressures on our shared
    environment, health, and natural resources; and it means more diverse
    dangers to our security from threats such as terrorism and the spread
    of nuclear and other materials of mass destruction.
             driving economic growth and improving quality of life
        Sustaining U.S. leadership in science and technology has been a
    cornerstone of President Clinton's economic and national security
    strategy. Investments in science and technology--both public and
    private--have driven economic growth and improvements in the quality of
    life in America for the last 200 years. They have generated new
    knowledge and new industries, created new jobs, ensured economic and
    national security, reduced pollution and increased energy efficiency,
    provided better and safer transportation, improved medical care, and
    increased living standards for the American people.
        Investments in research and development are among the highest-
    payback investments a Nation can make. Over the past 50 years, for
    example, according to a study by the Council of Economic Advisers,
    technological innovation has been responsible as much as half of the
    nation's growth in productivity.\1\
    ---------------------------------------------------------------------------
        \1\ Supporting Research and Development to Promote Economic Growth:
    The Federal Government's Role The Council of Economic Advisers, October
    1995.
    ---------------------------------------------------------------------------
        We see the fruits of this innovation every day. Many of the
    products and services we have come to depend on for our way of life in
    America--lasers, computers, magnetic resonance imaging (MRI), teflon
    and other advanced materials and composites, communications satellites,
    jet aircraft, microwave ovens, solar-electric cells, modems,
    semiconductors, storm windows, human insulin, and others--are the
    product of U.S. science support and technology policies.
        These innovations also mean jobs and economic prosperity for
    America. They've built some of these key industries:
        Computers and Communications.--A creative partnership among the
    Federal agencies, industry, and academia that led to what has become
    the Internet, the backbone of a global electronic communication system.
    The Internet has driven the evolution of a $590 billion domestic
    telecommunications and information technology industry, which supports
    more than 3.6 million American jobs. In just the past 10 years,
    American employment in the computer and software industries has almost
    tripled.
        Semiconductors.--During the 1980's, the U.S. companies lost their
    lead in semiconductor manufacturing, resulting by some estimates in $2
    billion in lost earnings and 27,000 American jobs between 1980 and
    1986. Today, American semiconductor manufacturers are back on top
    supplying 46 percent of the world's market for microchips while the
    Japanese supply 41 percent. Industry experts credit much of this
    resurgence to Sematech, a joint industry-government research
    consortium.
        Biotechnology.--Discoveries in biology, food science, agriculture,
    genetics, and drugs upon which the private sector has been able to
    build and expand a world-class industry today support $7 billion in
    annual sales and more than 100,000 American jobs.
        Aerospace.--Aerospace leads all other industry sectors in net
    exports. In 1997, the U.S. Aircraft industry shipped nearly $40 billion
    worth of commercial aircraft and employed more than half a million
    people.
        Environmental Technologies.--Almost unheard of 10 years ago, more
    than 30,000 environmental technology and services businesses employ
    over 1 million Americans in high-growth, high-wage jobs. The
    environmental technology industry has annual sales approaching $134
    billion, a number that is expected to grow to $500 billion by the year
    2000.
        Energy Efficiency.--Consumers and businesses spend some $500
    billion per year on energy. If energy intensity had remained at the
    same level as in 1970, the country would be spending $150 to $200
    billion more on energy each year. Many of the innovations that have
    boosted our energy efficiency are the product of partnerships between
    the Federal government and private industry. These partnership efforts
    produced energy-saving light bulbs and other lighting products, which
    alone generate $200 million in annual sales and have saved American
    consumers $400 million in energy costs. New designs and materials for
    windows have saved consumers another $760 million in energy costs while
    simultaneously providing more comfortable living.
        Every one of these industries has been built on federal investments
    in R&D, and they are not isolated occurrences. From satellites, to
    software, to superconductivity the government has supported--and must
    continue to support--exploratory research, experimentation and
    innovation that would be difficult, if not impossible, for individual
    companies or even whole industries to afford.
    Recent Advances in Science and Technology
        Over the past year there have been numerous scientific and
    technological advances, reminding us of how much there is yet to know,
    and of the potential of S&T to further enrich and improve our lives. It
    is important to note that federal funding was a key to virtually all of
    the scientific breakthroughs of 1997, which included:
        Synchrotron light sources.--DOE and NSF provide these advanced,
    powerful tools that are yielding striking research breakthroughs in
    increasingly diverse fields, including revealing the structure of
    materials and biological molecules.
        Identifying and mapping genes.--Particularly the isolation of genes
    involved in the biological clocks of several organisms, from fruit
    flies to mammals; analysis of a snippet of DNA from a Neanderthal
    skeleton; and the explosion of microbial genetic data, including the
    analysis of whole genomes of several microbes, pathogens, and archeons.
    This work is funded by NIH, DOE, and NSF.
        Understanding the workings of the central nervous system.--Work
    funded by NIH leading to significant developments related to
    Parkinson's disease, Alzheimer's disease, and regrowing severed spinal-
    cord nerves was recognized.
        Identification of the most violent events in the universe.--
    Specifically, provocative clues to the nature of gamma-ray bursts and
    black holes, were obtained using observations in different regions of
    the spectrum by space and ground-based instruments operated by several
    countries. American participants are sponsored by NSF, NASA, and
    private organizations.
        Liquid ocean beneath Europa's icy surface.--Detailed views by
    NASA's Galileo spacecraft strongly suggest the possibility of liquid
    water--key to the chance that living organisms might be found there.
        Advances in the production, manipulation, understanding, and
    variety of nanometer-sized tubes of carbon.--The structural cousins of
    ``buckeyballs'' can behave like semiconductors or metals and are
    important steps toward future electronic devices and ultrastrong
    materials. NSF, DOE and DOD help fund this work.
        Forecasting of El Nino.--Capitalizing on a decade of research and
    investment in modeling and monitoring technologies, we produced the
    first accurate forecast of the El Nino phenomena in the first accurate
    prediction of a large-scale onset climate event.
                president clinton's fiscal year 1999 r&d budget
        The President and the Vice President remain unwavering in their
    support for science and technology as crucial investments in our
    future. They maintain that such investments enable our nation to
    compete aggressively in the global marketplace, protect our environment
    and manage our natural resources in a sustainable manner, safeguard our
    national security from emerging threats, and spur the technological
    innovation that has contributed so much to our economic prosperity and
    quality of life. They have brought the budget to balance. They have
    increased the investment in science and technology. We all, but
    especially our children and our grandchildren, will reap the rewards.
        S&T funding is a high-stakes, high-leverage investment in the
    Nation's continued stability and prosperity. The President's economic
    plan has worked. For the first time in 30 years a budget has been
    submitted to Congress that is in balance--it also contains the largest
    civilian R&D increase since President Carter's fiscal year 1981 budget.
    Additionally, the fiscal year 1999 budget is the sixth budget year in a
    row that the President has proposed increased investments in research
    and development--to a total of $78.2 billion.
        The fiscal year 1999 budget continues the important R&D trends
    established by this Administration. It boosts funding for basic
    research to $17 billion, an increase of 8 percent ($1.2 billion) over
    fiscal year 1998. It provides $16.4 billion for applied research, an
    increase of 5 percent ($848 million) over fiscal year 1998. Under this
    budget civilian R&D will constitute 48 percent of total R&D; our
    emphasis increases on university-based research and on scientific user
    facilities that serve all of American science and technology. The
    impact of these substantial increases in R&D investments on America's
    research productivity is amplified by the Administration's concurrent
    focus on improving cost effectiveness of R&D by reducing administrative
    burdens on researchers in universities and Federal laboratories.
        The centerpiece of the President's R&D proposal is the 21st Century
    Research Fund. The $31 billion Research Fund is deficit-neutral. It
    provides for increases in most of the Federal government's civilian
    research programs, which will grow at an overall rate of 8 percent in
    fiscal year 1999, and climb by 32 percent over the next five years.
        Increases in R&D funding will enable our major S&T agencies to
    focus more intensely on the President's goals for science and
    technology: promote long-term economic growth that creates jobs;
    sustain a healthy, educated citizenry; harness information technology;
    improve environmental quality; enhance national security and global
    stability; and maintain world leadership in science, engineering, and
    mathematics. For example:
        National Institutes of Health (NIH).--The budget reflects an
    unprecedented commitment to biomedical research with the largest
    increase ever for NIH, which is up 8 percent ($1.15 billion) to $14.8
    billion. This funding will support expanded research on cancer,
    diabetes, brain disorders, drug demand reduction, genetic medicine,
    disease prevention strategies, and the development of an AIDS vaccine.
        National Science Foundation (NSF).--NSF, which supports much of the
    research that trains the next generation of America's scientists and
    engineers, increases by 10 percent ($344 million) to $3.8 billion. The
    increase is the largest ever for NSF, and includes more than a 16
    percent boost for computer science research.
        Department of Energy (DOE).--The budget provides $7.2 billion in
    R&D funding for DOE--an 11 percent ($697 million) increase over fiscal
    year 1998. The budget includes resources for basic research, for
    constructing the Spallation Neutron Source, for the international
    partnership on the Large Hadron Collider, for DOE research on energy
    efficiency and renewable energy under the Climate Change Technology
    Initiative, and for maintaining the safety and reliability of our
    nuclear deterrent without nuclear testing.
        Department of Defense (DOD).--Together, DOD's 6.1 and 6.2 accounts
    increase by 5 percent, to $4.3 billion; basic research alone increases
    by 6.6 percent. This increase continues the President's commitment to
    advancing our defense capabilities efficiently and cost-effectively.
        National Aeronautics and Space Administration (NASA).--NASA will
    make a $2.1 billion investment in Space Science in fiscal year 1999,
    and add another $700 million for these activities over the next five
    years. These additional funds will be used to initiate a new mission to
    Jupiter's moon Europa and a series of probes to study the Sun.
        Department of Agriculture (USDA).--The Agricultural Research
    Service receives a 3 percent increase to $770 million to intensify
    research on food safety and the plant genome. The National Research
    Initiative competitive grants program increases by 34 percent to $130
    million.
        Department of Commerce (DOC).--The budget provides $1.08 billion
    for R&D activities at DOC, including the Advanced Technology Program
    and construction of an Advanced Measurement Laboratory on the NIST
    campus in Gaithersburg, MD, and for oceanic and atmospheric research
    activities at the National Oceanic and Atmospheric Administration.
        University Research.--R&D support to Universities increases by 6
    percent, to $14.5 billion, recognizing the integration of research and
    education in the U.S. University system is its distinctive and vital
    feature. The Administration's increased emphasis on university-based
    research advances not only cutting edge research, but is also central
    to the education and training of the next generation of scientists and
    engineers. Highly trained scientists and engineers are prepared to
    contribute to public health and safety, national security,
    environmental quality, agricultural productivity, and international
    economic competitiveness.
    Cross-Cutting Initiatives
        Increases in the R&D budget also target national priorities
    requiring investments across agencies. For example:
        Climate Change Technology Initiative.--Following the historic Kyoto
    agreement, the Administration is proposing a dramatic new program of
    tax cuts and R&D aimed at pursuing relevant science and generic
    technologies for cutting greenhouse gas emissions. The R&D portion--
    $2.7 billion over the next five years--covers the four major carbon-
    emitting sectors of the economy (buildings, industry, transportation,
    and electricity), plus carbon removal and sequestration, greater energy
    efficiency at Federal facilities, and cross-cutting analysis and
    research.
        Education Research Initiative.--A new partnership between the
    Education Department and the National Science Foundation receives $75
    million per year for research aimed at raising student achievement
    through learning technologies and at research on brain function and
    learning to develop innovative approaches to reading and mathematics
    instruction.
        Large Scale Networking and High-End Computing and Computation.--The
    budget provides $850 million for what was formerly known as High
    Performance Computing and Communications, which has been restructured
    to focus on ambitious goals, milestones, and performance measures. This
    undertaking will help to support new efforts such as telemedicine,
    distance learning, and real-time collaboration. Included in this effort
    is $107 million for the Next Generation Internet Initiative, which will
    develop generic technologies needed for a research network that is 100
    to 1,000 times faster than today's Internet.
        Emerging Infectious Diseases.--The budget provides an increase of
    over 9 percent in R&D to aid in the fight against emerging infectious
    diseases, up from $339 million to $370 million (excluding the budget
    for HIV/AIDS).
        U.S. Global Change Research Program.--The budget maintains strong
    support of global change research activities, which are furthering our
    understanding of climate change and its impacts, climate variability
    such as the El Nino phenomenon, Ozone depletion and other atmospheric
    chemistry, and changes in ecosystems and the Earth's land cover.
                                the ostp mission
        In support of our Nation's science and technology priorities, OSTP
    has two primary responsibilities: advising the President on S&T; and
    providing leadership and coordination for our government's role in the
    national S&T enterprise.
        In the 1950's, in response to Soviet advances, highlighted by the
    launch of Sputnik, President Eisenhower saw the need for expert S&T
    counsel, and he invited James Killian, then president of MIT, to
    Washington to serve as the head of the first President's Science
    Advisory Committee, an OSTP predecessor. Since then our Nation's
    Presidents have drawn on the expertise of our office for S&T policy
    advice, and I see this as a contribution that will continue to grow in
    value as the challenges we face become increasingly complex.
        Within our agency, a small staff of professionals analyzes
    developments at the frontiers of scientific knowledge, and aids the
    President in shaping policy. OSTP also provides scientific and
    technical information and recommendations to the Vice President, the
    White House Offices, the Executive Branch Agencies, and to Congress.
        A second responsibility of OSTP is to provide leadership and
    coordination across the Administration. OSTP plays this role for a
    range of Administration priorities, including national security and
    global stability, environment, science, and technology. The National
    Science and Technology Council (NSTC) has been an invaluable partner
    with OSTP in developing interagency evaluations and forging consensus
    on many crucial S&T issues.
    OSTP Budget Request
        I ask today for your continued support of OSTP's role in
    coordinating S&T policy for the Executive Branch and for our Nation at
    large. OSTP's budget request of $5,026,000 for fiscal year 1999,
    representing an increase of less than 2 percent, will allow OSTP to
    fulfill its responsibilities in a White House that emphasizes the
    importance of science and technology in national and international
    affairs.
        After freezing our requests at the fiscal year 1996 enacted level
    for two consecutive years, this increase is essential to continue to
    provide quality support to the President and information to the
    Congress. Since personnel costs constitute the largest portion of
    OSTP's budget, our fiscal year 1999 budget request reflects our
    commitment to operate more efficiently and cost-effectively without
    compromising the essential element of a top caliber science and
    technology agency--high quality personnel.
    National Science and Technology Council
        To meet the Administration's priority S&T goals we must combine the
    efforts and the expertise of multiple agencies. OSTP personnel support
    the work of NSTC, a Cabinet-level Council that sponsors interagency
    initiatives to advance key S&T objectives.
        Our distributed system of research funding also places a premium on
    coordination between complementary agency programs. The NSTC, now in
    its fifth year, is improving such coordination.
        NSTC membership includes Cabinet Secretaries, heads of science and
    technology agencies, and key White House officials with significant S&T
    responsibilities. In the process of generating specific budgetary and
    policy recommendations, NSTC routinely reaches beyond the federal
    government to seek input from a wide spectrum of stakeholders in the
    public and private sectors.
        An important objective of the NSTC is to guide individual agency
    budget priorities for R&D and to orient the S&T spending of each
    Federal mission agency toward achieving national goals. To meet this
    objective, the NSTC has established five goal-oriented committees, each
    of which is chaired jointly by a senior agency official and an OSTP
    Associate Director. These standing committees, along with ad hoc
    working groups within the NSTC, provide an effective forum to resolve
    cross-cutting issues such as the future role of the U.S. national
    laboratories, or providing a program guide to federally funded
    environment and natural resources (see Appendix A for a full list of
    NSTC generated reports from 1997.)
    The President's Committee of Advisors on Science and Technology
        As Assistant to the President for Science and Technology, the
    Director of OSTP co-chairs the President's Committee of Advisors on
    Science and Technology (PCAST) with John Young, former President and
    CEO of Hewlett-Packard Co. The PCAST, which consists of distinguished
    individuals from industry, education, and research institutions, and
    other non-governmental organizations, serves as the highest level
    private sector advisory group for the President and the NSTC. (see
    Appendix B for a full list of NSTC generated reports from 1997.)
    President Clinton established the President's Committee of Advisors on
    Science and Technology (PCAST) at the same time that he established the
    NSTC to advise the President on matters involving S&T and to assist the
    NSTC in securing private sector involvement in its activities.
        Mr. Chairman and Members of the Committee, I hope that this brief
    overview has conveyed to you the extent of this Administration's
    commitment to advancing S&T in the national interest. We are delighted
    that the fiscal discipline exercised over the past five years has put
    in reach the opportunity to place more emphasis on investments that can
    assure future economic progress, environmental protection, and other
    national priorities which depend so heavily on strong and sustained
    R&D.
        Regardless of party affiliation, in the end we can all agree that
    investments in S&T are investments in our Nation's future. I look
    forward to achieving bipartisan support for a national S&T strategy
    that will combine the resources of industry, academia, non-profit
    organizations, and all levels of government to advance knowledge,
    promote education, strengthen institutions, and develop human
    potential.
        I ask not only for your support for OSTP's fiscal year 1999 budget
    request, but also want you to know how much I appreciate the long-
    standing bipartisan support of the committee for OSTP and for the S&T
    research enterprise. I would be happy to answer any questions that you
    have.
                                     ______

                                   Appendix A

                                    reports
        1. National Environmental Monitoring and Research Workshop, NSTC
    Committee on Environment and Natural Resources, February 1997.
        2. Program Guide to Federally Funded Environment and Natural
    Resources, NSTC Committee on Environmental and Natural Resources,
    February 1997.
        3. Status of Federal Laboratory Reforms, NSTC, March 1997.
        4. 1996 Accomplishments of the National Science and Technology
    Council, NSTC, March 1997.
        5. Integrating The Nation's Environmental Monitoring and Research
    Networks and Programs: A Proposed Framework, Committee on Environment
    and Natural Resources, March 1997.
        6. National Environmental Technology Strategy: Status and Action,
    Committee on Science (Committee on Technological Innovation), April
    1997.
        7. Manufacturing Infrastructure: Enabling the Nation's
    Manufacturing Capacity, Committee on Science (Committee on
    Technological Innovation), April 1997.
        8. Natural Disaster Reduction: A Plan for the Nation, Committee on
    Environment and Natural Resources, April 1997.
        9. Computing, Information and Communications (CCIC) Brochure:
    Technologies for the 21st Century, Committee on Technology (Committee
    on Communications Information and Computing), April 1997.
        10. Investing in Our Future: A National Research Initiative for
    America's Children for the 21st Century, Committee on Science
    (Committee on Healthy, Safety and Food R&D), April 1997.
        11. Our Changing Planet: The fiscal year 1998 U.S. Global Change
    Research Program, Committee on Environment and Natural Resources, June
    1997.
        12. Interagency Assessment of Oxygenated Fuels, Committee on
    Environment and Natural Resources, June 1997.
        13. Transportation Science and Technology Strategy, Committee on
    Technology (Committee on Transportation R&D), September 1997.
        14. Technologies for the 21st Century, Supplement to the
    President's Budget (Fiscal Year 1998 Blue Book), Committee of
    Technology (Committee on Computing, Information, and Communications),
    November 1997.
        15. Annual Report to the President on Presidential Decision
    Directive (PDD)/NSTC-7, U.S. Policy on Emerging Infectious Diseases
    (EID), NSTC Committee on International Science, Engineering, and
    Technology, EID Task Force, December 1997.
        Reports and Further Information may be obtained by calling: 202-
    456-6100 (phone) or 202-456-6026 (fax). Reports are Also Available on
    the NSTC Home Page via Link from the OSTP Home Page at: http://
    www.whitehouse.gov/WH/EOP/OSTP/html/OSTP--Home.html.
                                     ______

                                   Appendix B

      activities of the president's committee of advisors on science and
                               technology (pcast)
        In 1997, PCAST provided the following reports:
        R&D Priorities for Sustainable Development.--Released in January
    1997, reports that the rapid growth in the world's population and its
    rates of consumption of natural resources has led to a deterioration of
    environmental conditions which threaten global stability and limit
    future human prospects. Five interrelated areas--climate change,
    biodiversity, energy, ecosystems, and food supplies are recommended as
    S&T investments that would have substantial returns for the health,
    economic prosperity, security, and well being of all Americans.
        Report to the President on the Use of Technology to Strengthen K-12
    Education in the United States.--Released in March 1997. The panel's
    findings and recommendations are: (1) focus on learning with
    technology, not about technology; (2) emphasize content and pedagogy,
    and not just hardware; (3) give special attention to professional
    development; (4) engage in realistic budgeting; (5) ensure equitable,
    universal access; and (6) initiate a major program of experimental
    research.
        Letter Report on Cloning Technology.--Released April 11, 1997. The
    report endorsed the Administration's prohibition on Federal funding for
    cloning of human beings and the request that the private-sector adopt a
    self-imposed moratorium on cloning human beings. PCAST also supports
    the important and continuing contributions of biotechnology to
    agriculture and biomedical science and the request of the NBAC for
    advice on legal and ethical implications of extending the animal
    experiments to human studies. PCAST recommended that the National
    Academy of Sciences, Institutes of Medicine ensure that the public
    understands the complexities surrounding cloning.
        Federal Energy Research and Development for the Challenges of the
    Twenty-First Century.--Released November 1997. The report recommended
    focusing the government's energy R&D on projects where high potential
    pay-offs for society as a whole justify bigger R&D investments than
    industry would be likely to make on the basis of expected private
    returns and where modest government investments can effectively
    complement, leverage, or catalyze work in the private sector.

        Senator Bond. Thank you very much, Dr. Jones.
        Let me ask Senator Burns if he would like to make an
    opening statement.
        Senator Burns. No, sir.
        Senator Bond. All right.
        Senator Burns. Does that surprise you?
        Senator Bond. It is going to be a good day.
        Senator Burns. Whatever they want, just give it to them.
    [Laughter.]
        Senator Bond. I believe that was a cheap shot. [Laughter.]
        Senator Burns. We have got to get an airplane on one leg of
    the trip, however. [Laughter.]
        Senator Bond. I think Senator Mikulski has gone to vote.
    And I will ask her to reconvene the hearing as soon as she
    returns, and begin the questioning. But I have a number of
    things I want to go through, so I will start at least the first
    round.
        Senator Burns. I will go vote, then.
        Senator Bond. Well, maybe you all can have at it until I
    get back.
        Senator Burns. I will go save America. [Laughter.]
        Senator Bond. Just vote. [Laughter.]

                             nsf budget priorities

        Dr. Lane, we appreciate the job that you have done at NSF
    and wish you the best. As I mentioned, we face a very tight
    budget allocation. And the funding sources that have been
    included in the budget are speculative at best. So we are
    faced, from a budget standpoint, with some major challenges.
        Because of these fiscal concerns, what I would like to hear
    from you, and I would like to ask both you, Dr. Lane and Dr.
    Zare, to identify your key priorities for 1999. If we cannot
    provide the full request, what programmatic advice would you
    offer this subcommittee as we go about making funding
    allocations?
        Dr. Lane. Mr. Chairman, we recognize that this is a very
    large request for NSF. And we believe that if the funds can be
    provided, it will be very well invested because of the way NSF
    does business. In particular, we will use these funds to
    increase our encouragement of science and engineering to work
    across disciplinary lines, in such areas as KDI and life and
    Earth's environment, and such projects as the genome
    initiative, and many others.
        We also recognize, as has been the case for many years,
    that every year we leave on the table on the order of 7,500
    grant applications, proposals, that could be funded in a
    minute, that are reviewed to be excellent or very good, that
    certainly meet our standards for funding. That amounts to about
    $900 million. So it means that there is a considerable cushion
    of excellence there that is unrealized. So with the additional
    money, we would be able to address that.
        In addition, we would be able to make the whole process
    more efficient and more effective. We, at the present time,
    have an average grant size of about $83,000. It is really a bit
    small. And with the increased money, we would increase that on
    the order of 7 percent. We would also increase the duration of
    the grants. And that would lower the burden on the community
    for writing proposals and reviewing proposals. And, in
    addition, we would be able to fund more of these grants that
    otherwise are going to stay on the table.
        So with the funds, we will do good things. Without the
    funds, where would we cut?
        Senator Bond. That is the question. I understand the
    preamble. Now, for the question.
        Dr. Lane. First of all, let me say, we put the budget
    request together, working with our directorates and our
    programs, in a bottom-up manner. You know, if you only got 90
    percent of the funds you had last year, what would you do? That
    is how we built up the budget. So the priorities that are
    present and reflected in the budget work from that kind of a
    base.
        And, therefore, if we were unable to receive the 10-percent
    increase, the relative priorities in the budget would remain.
    We would still expect to emphasize as best we could these
    interdisciplinary areas. We would not be able to increase the
    average grant size or the duration of the grants or make the
    system more efficient. But we would make every effort to meet
    the priorities that are in the same relative description that
    you find in the budget request.
        Senator Bond. Dr. Zare?
        Dr. Zare. And that is very much the Board's opinion, in
    terms of putting together the budget and approving it.
        Let us look at the situation. Thirty thousand proposals
    come in, approximately; 10,000 get funded--1 in 3. Easily 7,500
    are left that could be funded. They meet our standards. If we
    had funds, we would do it.
        We fund within a median of about $62,000 for a grant.
    Compare that, for example, to the NIH basic research grants,
    which average $240,000. Our average duration is not as long. We
    already are, in my opinion, underfunded. We are going to lose
    more if we are cut back.
        The idea of keeping the NSF budget, as it has been
    constructed, is really very much a bottom-up approach, with
    top-down priorities imposed on what comes together. This is the
    process that goes on in this. Because you are asking how this
    happens. We would try to preserve what we could with what funds
    we are able to get.

                         major policy issues facing nsf

        Senator Bond. Let me try to ask one last, quick question.
    Dr. Lane, as you are in transition--and I wish you luck--what
    major policy issues do you expect NSF to have to face over the
    next few years? What are the tough questions that you are going
    to be leaving behind?
        Dr. Lane. Well, Mr. Chairman, I would like to say that
    everything is just fine, and all of the issues that faced me
    when I came in are now taken care of. But I would not be
    telling the truth if I said that.
        I believe the first thing to say is that the Foundation is
    in excellent shape. It has a level of credibility that is very
    high. It is unique in its mission and its ability to perform
    that mission. So whatever challenges the Foundation faces with
    its new Director--and I am delighted that Rita Colwell has been
    nominated and I look forward to her confirmation--the
    Foundation will be able to handle them very well.
        But in direct answer to your question, what I am most
    concerned about is that because the Foundation has such a
    wonderful record of achievement, it is asked to do more and
    more. Increasingly, the Foundation is being asked to take on
    larger challenges, of course, with a strong scientific and
    engineering basis, but somewhat larger than its tradition has
    been. The most recent questions coming to us on the National
    Institute for the Environment are just an example of many.
        So I think that it is very good that the Foundation is
    asked to do those things. The expectations are high. And the
    Foundation will undoubtedly do an excellent job. But the more
    of these other things it does, the less it is able to invest in
    what we are really calling the fabric, or the core, of the
    disciplines. And if those do not remain strong, then the Nation
    is not as able to use that knowledge for societal benefit.
        So it is a balance issue. And I think that is the major
    programmatic challenge that the Foundation faces.
        Senator Bond. Thank you all very much. I am going to have
    to adjourn the hearing temporarily. And whoever returns first,
    Senator Mikulski or Senator Burns or anybody else, will start
    up. I will be back as quickly as I can. We will temporarily
    stand in recess.
        [A brief recess was taken.]
        Senator Mikulski [presiding]. Senator Bond heard me this
    morning when I said I wanted to be the chairman. So here I am.
    [Laughter.]

                                   nsf themes

        Now, that is bipartisan cooperation. But the Senator,
    because of the vote, he needed to finish something on the
    floor. But we do not want to inhibit the flow of this hearing,
    so I am going to announce that the committee is reconvened and
    officially in session. And I will do my questions while we are
    waiting for Senator Bond's return.
        One of the issues--well, I will wait for Senator Bond to
    come on this. I would like to go to my question on strategic
    initiatives. As you know, I was instrumental in directing NSF
    to develop those. You now have organized yourself along certain
    themes. And I understand from this, the budget has been set up
    to reflect those strategic themes. Can you describe how these
    will advance science and engineering across all fields of
    discipline and how this will then move in a strategic way?
        Dr. Lane. Thank you, Madam Chair.
        Senator Mikulski. Because you are essentially reorganizing
    the way you do your budget; am I correct?
        Dr. Lane. That is a very good way to describe what these
    themes are--a way to coordinate activities all across the
    Foundation in areas that we feel are strategic in nature. They
    are larger than just the fundamental questions of science and
    engineering. So I talked about KDI in my testimony. And I think
    that is a particularly good example.
        What it really does is to illustrate that if this Nation is
    going to remain on the leading edge in information technology
    and provide that technology for the benefit of all Americans,
    so that everybody can benefit in their homes and their schools
    and in their jobs, we have got a lot more to learn.
        There are fundamental research questions that have to be
    answered. But they cannot be answered by just the computer
    scientists or just the chemists or just the engineers. It takes
    scientists and engineers from many different disciplines,
    willing to work together, to make this happen.
        So that is what KDI is all about. It is an investment of an
    additional about $78 million in the fiscal year 1999 budget.
    And we spend probably just under a one-half-a-billion dollars
    across the whole agency in research and education activities
    that relate broadly to this area of KDI. So it is an
    integrating theme. It is not a budget category in itself. It is
    not a new division of the Foundation.
        The way we make it happen is to pull together program
    officers or division directors from all over the Foundation,
    get them in a room, and get them to flesh out this
    multidisciplinary program. And then we go out to the community
    and we say, give us your best ideas and send us your proposals.
    Once we get those proposals in, we have them reviewed, and then
    we put this group together again and decide where the funds are
    going to be allocated to support the work.
        Senator Mikulski. So is then, really, the coordination of
    every aspect related to math, science and engineering, which
    are, if you will, the traditional categories of the National
    Science Foundation and one of the primary purposes for which it
    was founded?
        Dr. Lane. Yes; that is correct.

                     knowledge and distributed intelligence

        Senator Mikulski. Then, by your internal coordination, you
    are then maximizing where you think the breakthroughs will come
    in what you call the distributed intelligence. What is
    distributed intelligence? We think it is randomly distributed
    here. [Laughter.]
        I am really interested in it, and in how you are going to
    do it.
        Dr. Zare. Well, I am delighted you were willing to grant
    that there is any intelligence at all. [Laughter.]
        Dr. Lane. Senator, what knowledge and distributed
    intelligence means--why we use those words--is the fact that
    information is now spread out all over the world in all kinds
    of different forms. It is hard to access. What we need to be
    able to do is, each of us, get at that information to generate
    knowledge that we can then use. And so we do that by building
    smart systems, new software, new hardware, to get into
    databases and find what we want, to bring it forward so that we
    can make use of it.
        So we use distributed intelligence--we use the word
    intelligence because it is not just raw data that we want out
    there, we have got a hard question and we want the answer to
    it. We want to be able to go to the network and say, Find me
    who makes a thingamajig that is about this big and does the
    following sorts of things. That is not very specific. But we
    ought to be able to ask that kind of question, go out all over
    the world, and find the information necessary to answer it. And
    we do not know how to do that right now.
        So we use the word intelligence because it is more----
        Senator Mikulski. You say you do not know how to do it, or
    you are in the process of learning how to do it?
        Dr. Lane. We are in the process of learning how to do it.
    We have not given up. There are fundamental research questions
    that have to be addressed in order to enable us to develop the
    systems to allow us to do what I just described.
        Senator Mikulski. Well, this is exactly the model--not
    exactly, but I mean this is very similar to what I was hoping
    would be accomplished. Because from what I--and we need to
    quickly garner this--is from the most fundamental research in
    physics, then into also I am sure fields like fiber optics and
    other transmissions of data, is one area which is enormously
    technical. But then the other is that if you can do high-speed
    data transmission, what does it mean?
        Dr. Lane. That is right.

                 nsf research relationship with private sector

        Senator Mikulski. And then could you tell me, though, in
    this organizing of this then, what would be your relationship--
    you meaning the National Science Foundation and the research
    you fund--with the private sector?
        Dr. Lane. We relate to the private sector in many ways.
    There are a number of centers that we support on university
    campuses that do research in this general area. And they have
    industrial partnerships. And so people from industry come and
    spend time in the laboratory, meet the students, bring their
    ideas from industry. So it is a real, genuine partnership where
    both sides benefit and both sides provide some of the support.
        Another way we work with the private sector is to, wherever
    we can, call on the private sector to provide the
    infrastructure that we need to do the experiments on. So, for
    example, the Internet itself.

               information technology and private sector linkages

        Senator Mikulski. Well, let me raise this, because again I
    know the time is limited and this will be an ongoing
    conversation, particularly then as you move to OSTP. And I am
    going to stick strictly now to information technology. I think
    we are all clear, again, if we go back to those original
    competitive reports that sparked the thinking and the critical
    technologies of the 21st century, information technology was
    the fundamental one. Life science was certainly up there
    because of its consequences and breakthroughs.
        Now, so much of the breakthroughs in information technology
    are coming from the private sector. And, therefore, I am
    wondering what are the appropriate linkages where one maximizes
    the other, and in a way that we also benefit from the
    breakthroughs that the private sector is doing, who, quite
    frankly, can put more into it than you can. I mean, $3 billion,
    whether we find it from other sources, as Senator Bond said, a
    10-percent increase is really heartening. But $3 billion, in
    terms of the technology that will determine the--we could put
    $3 billion just in information technology; am I right?
        Dr. Lane. Of course, you are right, Senator.
        Senator Mikulski. I mean, I am maybe overstating it.
        So you see how I am looking at leveraging--not leveraging--
    how the linkages need to be made.
        Dr. Lane. Well, one example I think is the Internet itself.
    We estimate that, sort of through the recent history of the
    NSF, we probably invested as much as maybe a half-a-billion
    dollars in the whole general area of networking, the research
    activities and the infrastructure. The whole Federal Government
    may have invested as much as a few billion dollars. But that
    has blossomed quickly into a $200 billion industry, with the
    jobs and the profits and the benefits to education and to the
    economy and to health and to every other area that is provided
    by these breakthroughs.
        So even though the amount of money at the front end was a
    relatively small part of the whole, and industry certainly
    added substantial investments on top of that, it was a critical
    piece. It was at the front end. It was high risk. It was at a
    time and a place when industry was not willing to make the
    investment.
        We ought to be in early. We ought to be in at the front
    end. We ought to be highly leveraged. And we ought to be
    connected, as our strategic plan says--we ought to connect our
    discovery and our researchers with the people in the industry
    and in other walks of life who can take advantage of it.
        Senator Mikulski. Well, we are looking forward on how you
    want to develop those plans. Because I understand this is
    taking the traditional role and putting it in a new framework
    both internally and externally.
        Dr. Zare.
        Dr. Zare. I would like to add another aspect to KDI, and it
    is also relevant to what Senator Bond asked about how we
    support researchers in all types of universities, community
    colleges, elsewhere. KDI allows people to be connected together
    in a way that has not been possible before, so that they can
    participate in doing things.
        Let us take an example. Namely, the plant genome project.
    And now I would like to ask, if I might, Mary Clutter to make
    sure of my facts.
        Senator Mikulski. Well, before you talk to Mary Clutter, I
    have got a limited amount of time. And maybe Mary Clutter could
    answer the genome project with Senator Bond. I mean I
    appreciate that. Or could we be crisp? Because I get 10 minutes
    here.
        Dr. Zare. Thank you. I will just point out that this allows
    you to go from an egosystem of individual pillars of excellence
    to an ecosystem in which many types of scientists can
    participate in doing research. Like 400 scientists in the plant
    genome project scattered in more than a hundred institutions.

                            educating for the future

        Senator Mikulski. Well, that is fascinating. That is
    fascinating. And I know we want to hear more about it. But
    while we are looking at KDI, which does that, I want to go to
    Educating for the Future. Could you tell me in a more detailed
    way what your plans are in terms of--because as we do these
    enormous--the work force shortage now in technical fields is
    astounding. And we need to also be promoting at the earliest
    level, whether someone picks a field in math or science or not,
    essentially we all need to be scientifically literate.
        Dr. Lane. Senator, actually we are all scientists. However,
    we are not as good scientists as we would like to be, as we
    need to be, for the increasingly technological jobs of the
    future. And that is where the challenge really is.
        Educating for the Future, one could well ask, ``Well, if it
    is not for the future, what is it?'' So what do these words
    mean? The reason we write it that way is to say we are going to
    try to invest in high-risk activities that anticipate that
    people are going to need different job skills and different
    bases of knowledge in the future than they do right now. And we
    are going to try to work with the experts to anticipate that.
        We have stressed for many years the integration of research
    and education, because we believe that the way young people and
    not so young people learn about anything is by experiencing.
    They need skills. You have got to know the times tables. There
    are fundamental basic things that you have to know.
        But the way you really learn how to use your mathematics
    and your science is by doing. You ask questions. You do
    experiments. And you learn.
        That is the basis of everything we are doing. Our systemic
    reform programs in K through 12 education are relatively new
    initiatives with community colleges, to help link those
    community colleges with high schools on the one end and 4-year
    schools on the other end. It is an immensely powerful effort
    that is so important to the work force.
        And in many other ways, we are trying to focus on those
    activities that will assure that our young people are ready to
    compete in the global environment of the 21st century.

                  nsf interaction with department of education

        Senator Mikulski. First of all, we are very heartened by
    this. And, again, I am going to ask you to look ahead to both
    not only what you are doing here at the Science Foundation
    but--and perhaps Dr. Jones could participate--I do believe that
    people learn by doing. And that is how I like best to learn, by
    being out in my State, going to visit projects, seeing hands-on
    things. And we have the great Federal laboratories in our State
    that enables me to do it.
        But I am thinking about a 9-year-old, whether it is in
    Baltimore or Bethesda or in St. Louis. And I am wondering what
    is the coordination that is going on both with the Department
    of Education to do this and, No. 2, also because I know both
    sides of the aisles are tremendously interested in structured
    after-school activities as well as summer school activities,
    which in and of itself could provide opportunities for
    learning--the Girl Scout that is working on a Mission to Planet
    Earth Badge is learning about that. The Boy Scout working on
    blazing a new trail has to do math, computers, even maybe early
    elements of celestial navigation--not quite the way the
    computations they would be doing at the Naval Academy, but
    still learning how to look at the stars, see the stars, and
    know how to get back home.
        And what I am looking at is not that the National Science
    Foundation be all and whatever, but how we can be supportive in
    a way that promotes lifetime learning--learning before and
    after school, and recognizing that not all learning occurs in a
    classroom, or the integration of learning occurs most through
    play and creative activity.
        Dr. Lane. I believe, Senator, as you do, that people learn
    by doing. And that if in their early years, particularly pre-K
    even through 12, they are taught science, mathematics and other
    things by inquiry, then they will learn how to learn. They will
    be much better as they get older in accessing the knowledge
    that they are going to need as they develop their own careers.
        With regard to NSF and the Department of Education, let me
    just say very quickly, to be sure that you know about this
    program, we are working with the Department of Education
    primarily in two areas. First, to try to improve the delivery
    of middle school mathematics. This concern was stimulated by
    the TIMSS test, the results of which were quite disappointing.
    And the Department of Education and the NSF were asked by the
    President to work together to address this issue.
        The effort will primarily address teacher education, but
    there will be other aspects to that effort as well.
        We will do what we do well. The Department of Education
    will do what they do well. And we will work together to ensure
    each dollar goes further.
        The second area in which we work together is basic research
    and large empirical-based studies on the effect of technology
    on learning in the classroom. There is no longer a question
    about whether we should have technology in the classroom. I
    mean it is there. It is coming. There is going to be more of
    it. The real question is, how do you ensure those investments
    are wisely made and the kids learn more by having the
    technology there than they would otherwise?
        We are working with the Department of Education in that
    area, as well. And that was stimulated by PCAST reports, saying
    how important this was, and the President's directive.
        Senator Mikulski. Well, Senator Bond has very gently
    reminded me my time is up.
        And so I thank you and look forward to working with you.

                            plant genome initiative

        Senator Bond [presiding]. Thank you, Senator Mikulski.
        I was most interested in the exchange, but I hear we are
    going to have another vote at 10:55 a.m. So before we lose more
    time, I am not going to pass up the opportunity to talk about
    the plant genome initiative.
        Dr. Lane, we provided you with $40 million last year for
    the plant genome initiative. Dr. Zare has mentioned it. And I
    gather that Dr. Clutter is here. And I cannot pass up this
    opportunity to ask you all for an assessment of how the program
    is progressing, how it is going to be managed, the plans for
    1999, and what involvement you see in the other agencies that
    made up last year's OSTP interagency working group.
        Dr. Lane. Mr. Chairman, the NSF spending plan for the Plant
    Genome Research Program follows the recommendations of the
    interagency working group on plant research. That group has
    been working very hard. They did a tremendous job. The NSF is
    very pleased to be participating.
        The funds will be invested using merit review. That is with
    peer evaluation. That is how we do our work at NSF. So specific
    projects will be funded based on the proposals we receive, and
    the scientific merit as determined by the reviewers.
        We currently have 67 proposals in hand. They are under
    review. We expect to announce awards by September of this year.
    Of course, that is for fiscal year 1998.
        Senator Bond. It takes that long to get all the proposals
    reviewed?
        Dr. Lane. I am sorry, Senator?
        Senator Bond. The review process is that long?
        Dr. Lane. It takes about 9 months total in order to ensure
    that you get the information out and give the community time
    enough to understand what the program is about, write their
    proposals, send them in, have the proposals reviewed, make the
    decision, and get the money out the door.
        It is quite a major process. We are trying to cut that time
    back in the way we do business by using electronic processing.
    But that is pretty much the situation right now.
        Specifically, with the $40 million in fiscal year 1998, we
    will support accelerated sequencings of Arabidopsis, but also
    the development of the research infrastructure, new informatics
    tools, shared databases, genome mapping, virtual centers,
    multi-investigator, multi-institutional research. And, of
    course, we will broaden our activities to other plants--
    economically important plants.
        In fiscal year 1999, we will have a new competition for the
    funds that we have requested, $40 million in 1999, plus the
    amount of money we have already been spending on genome
    research--about $20 million was our base prior to the
    additional $40 million that was provided in 1998. So we are
    spending a total of about $60 million a year in plant genome
    research.

                         focus on plant genome research

        Senator Bond. Now, are the grants you are envisioning for
    September going to be focusing on the mustard seed, on the
    Arabidopsis mustard seed?
        Dr. Lane. The Arabidopsis mustard seed--well, not entirely.
    But they will enable us to accelerate that.
        Senator Bond. Well, that one is good. Because we are going
    to have a few problems unless you branch out beyond that a
    little bit.
        Dr. Lane. I think we were directed by the committee to
    accelerate the mustard seed and extend our research activities
    to other economically important plants. And we are certainly
    going to do that.
        We do not know which genes and which plants will come out
    of the solicitation of proposals--but we are not going to spend
    all the money on Arabidopsis.
        The importance of finishing the Arabidopsis, though I think
    we all understand is that there is a gene set there that is
    going to be very valuable in understanding rice, corn, wheat,
    and other grains. But the additional funds that were provided
    in fiscal year 1998, have enabled us to expand the program, to
    move more quickly on some of these other cereal grains. And
    that certainly is our intention. That is certainly what we are
    going to do.
        We are also working with USDA, the Department of Energy and
    NIH, because there are many commonalities between the human
    genome effort and the plant genome effort. We are well along on
    human genome, and we are very proud and very pleased to be
    moving aggressively on plant genome.

                 interaction of plant and human genome research

        Senator Bond. I gather that the knowledge gained in the
    plant genome exploration would profit by the experience and the
    information that you have developed for distributing knowledge
    through the human genome process? This is where Washington
    University has, I think, played a significant role.
        Dr. Lane. Absolutely. It goes both ways. And Dr. Zare might
    want to comment. We get information both ways.
        Senator Bond. Dr. Zare, and maybe, if you would not mind, I
    would be delighted to hear what Dr. Clutter has to say, as
    well.
        Dr. Zare. Why don't we ask Dr. Clutter, please, to speak to
    this.
        Senator Bond. Thank you, Dr. Clutter, for your leadership
    and your strong informed support of this effort.
        Dr. Clutter. Thank you very much, Senator Bond.
        I think that this program is giving the technology needed
    for agriculture of the 21st century a shot in the arm. The
    proposals that we have in-house represent the best science in
    this area that I have seen. It is also attracting many
    scientists who have not been part of the crop genome
    initiatives, but who are leading-edge scientists, to work on
    these problems. So I am very pleased with what we see.
        The proposals are in review right now. And we will not know
    the awardees until sometime this summer. But we will also need
    to do some site visits. So that is why it takes a little bit
    longer. There are more than 400 scientists involved in these
    collaboratories, as we call them, virtual centers. So the job
    of reviewing these proposals is a little bit more difficult
    than an ordinary individual investigator proposal.
        Senator Bond. I can assure you, if you are making site
    visits, that we can arrange to have the welcome mat out for
    you. If you let people know in the areas you are going to
    visit, we will make sure that they are properly responsive. I
    am sure they will be.
        Dr. Clutter. Thank you very much.
        Senator Bond. Can you give us an idea of the kinds of
    proposals being submitted? I mean, are these broad-based
    scientific inquiries? For example, from the 60-some-odd
    applications that you have, how do the proposals break down?
    What percentage are in specific crops or other aspects of the
    project?
        Dr. Clutter. I have not read these proposals myself. But I
    do know that probably every economically significant crop you
    can think of is mentioned in one or more of these proposals. I
    think you will be very pleased with the outcome.

              effect of plant genome initiative on the environment

        Senator Bond. One of the things that is of great interest
    to me is we have focused a lot on the economic benefits of the
    plant genome initiative, but I believe that there is a
    potential for other benefits, which may be extremely important.
    I know at the University of Missouri they have recently tested
    a hybrid corn which, when fed to swine, decreased phosphorous
    in manure by 37 percent. And given the environmental problems
    that we have had with livestock waste, it seems to me that
    there are potentials in plant-based technologies to deal with
    this problem.
        Can you give us some ideas, any of you, on the possible
    benefits for the environment from this work? Do you think the
    project might lead us to tools that would improve the
    digestibility of phosphorous in animal feed or improve nitrogen
    use efficiency?
        Dr. Zare. Well, in the long run, it is going to transform
    truly the foods we eat. We will be able to design more
    nutritious food for ourselves by what we are doing, and be able
    to grow better crops that are more resistant to various
    environmental factors, and that are much more friendly toward
    the environment, in terms of growing them. That is very much
    how I see the future.
        Dr. Lane. And the phosphorous example I think is a very
    good example. I found that a very exciting result. And the
    potential benefit is just so clear, that by successfully
    altering the feed, you do not then have to remove the
    phosphorous from the environment. It could save money, and
    perhaps in other ways would be better for the animals. I think
    it is a tremendous example. And it is real, as opposed to my
    suggestion of chocolate corn that the chairman did not think
    was such a great idea earlier.
        Maybe Mary could add a substantive comment. [Laughter.]
        Senator Bond. Dr. Clutter?
        Dr. Clutter. Well, of course, we have already seen from the
    Arabidopsis project, that genes are being isolated and
    identified and characterized, which really will make growing
    crops more environmentally friendly. So they will be resistant
    to various stresses. However, while we expect multiple
    benefits, we do not know exactly what is going to come out of
    this.
        Senator Bond. That is the whole purpose, yes.
        Dr. Clutter. That is the whole purpose.
        I think that we are going to see many benefits.
        Senator Bond. All right, great.
        Dr. Lane. The other thing that will happen, Mr. Chairman,
    is the feedback effect I was alluding to. Because you have this
    very exciting scientific area of the plant genome that needs
    KDI kind of research to be done, it is going to stimulate
    research activities in computer science and engineering, and
    that is going to broadly impact it.
        Senator Bond. So you envision a computer hookup with all of
    the research going on?
        Dr. Lane. There is no question.

                    coordination of plant genome initiative

        Senator Bond. As some of you may recall, one of the things
    that I asked about previously was to what extent there was
    coordination. Because we know that there are some chemical
    companies, in cooperation with seed companies, who were
    beginning to do some work totally in the private sector. You
    then had the Arabidopsis project. Are you comfortable--and
    maybe Dr. Jones would want to weigh in--that there is a
    coordination of efforts, so that we are not going to be
    reinventing the wheel, but we will be able to take advantage of
    the developing and coordinating the knowledge in this area?
        Dr. Jones. Mr. Chairman, I think the coordination is one of
    the key efforts that this initiative has to focus on. And I
    think the interagency process that has started will continue to
    have to play a role. Because this is not limited to the key
    agencies that were mentioned, but also the other agencies that
    are out there dealing with sophisticated issues on informatics.
        And I think we have to look across the agencies, not just
    for the plant genome initiative, but also for information
    technology initiatives, and make sure that those are connected.
    Coordination is as important a product as the new plants, if
    you will, because the coordination will take the informatics
    technology to the next generation and to the next level of
    being able to connect and give us more information.
        I think this coming together of information technology and
    biological science is going to be something that is very
    important in terms of informing both systems--both the
    information technology and the biology.

           expanding opportunities for participation in nsf research

        Senator Bond. I have quite a few more questions, but the
    time is running out. I am really interested in pursuing, and I
    will for the record pursue, the questions about how we assure
    that there are opportunities to expand the Federal investment
    in science research and investigation beyond the top 50
    schools. And I know, Dr. Zare, you represent one. And I am sure
    I know others who are in that top group.
        But Senator Burns and I and others are looking for--is
    there anything, briefly, that you would say that we need to do
    to make more schools more competitive? Are there any kind of
    reforms that could help assure that we elicit the best research
    and investigation from schools not traditionally in the top 50?
        Dr. Zare. Again, I would urge the support of the KDI
    program and the efforts toward developing an ecosystem, whereby
    we have regional centers of strength and partners in this, so
    that many more people can participate in the integration of
    research and education.
        Dr. Lane. I second that, and would appreciate the
    committee's support of our efforts with EPSCoR to broaden the
    impact of that program and to try to get a more integrated
    approach to the research going on in all of our States around
    the country. EPSCoR is a very important program. But what we
    are trying to do is ensure that the researchers in the EPSCoR
    States are competitive in the standard programs.
        And we are doing that by working across the whole
    Foundation, with shared funding between the EPSCoR program and
    the directorates, to try to ensure people do not fall through
    the cracks. And so we appreciate your support of those efforts.
        Dr. Zare. If I might add one more statement on this. The
    National Science Board made a study recently and issued a
    report, which I would be glad to enter into the record, about
    the stresses on graduate education in universities and how we
    have a need--one of our recommendations--for more partnerships.
        Senator Bond. I would appreciate seeing that. Good.

                         Additional committee questions

        Well, again, I will submit lots of questions for the
    record. I think several others will. We would welcome your
    further answers.
        [The following questions were not asked at the hearing, but
    were submitted to the Office for response subsequent to the
    hearing:]

                      Questions Submitted by Senator Bond

         national science board's call for setting research priorities
        Question. A recent paper from the National Science Board on
    government funding for scientific research calls for more comprehensive
    coordination of federally funded research. Dr. Zare, as you know, we
    have the White House Science Advisor's office and OMB--two entities
    that are supposed to address the coordination of federal R&D among and
    between agencies. Should the ``take home message'' of your report be
    that the OSTP-OMB process is not working? What specific improvements in
    the process are you calling for?
        Answer. The Board's Working Paper recognizes that a degree of
    coordination of Federal research spending exists across disciplines and
    that during the last decade the Executive branch has taken steps to
    improve coordination of research across agencies in key areas. The
    Office of Management and Budget in consultation with the Office of
    Science and Technology Policy provides annual budget guidance to all
    agencies participating in support of priority research areas in
    preparing the Federal budget for submission to Congress. Too, agency
    budget submissions must be developed in the context of the Government
    Performance and Results Act, which requires that agency supported
    research activities have measurable outcomes toward achieving agency
    missions. We note in particular that the committees of the National
    Science and Technology Council (NSTC) provide coordination in areas of
    special national interest, such as global change, the development of
    less polluting transportation, energy, specific health areas, childhood
    development, and the future of the U.S. program in the Antarctic. These
    efforts benefit from special Administration studies, including reports
    of the President's Committee of Advisors on Science and Technology
    (PCAST) and the NSTC.
        But, beyond those special areas, coordination tends to depend on
    individual agency-to-agency agreements, informal cooperation across
    agencies at the program level, and the memories of Congressional
    committees. The Board has concluded that there remains a need to
    examine and coordinate the science and engineering research budget as a
    whole. The Board asserts that currently important decisions about the
    allocation of limited resources sometimes happen by default, without
    explicit weighing of alternatives and that the process can and should
    be improved. The Board states that ``[t]here should be an overall
    strategy for research, with areas of increased and areas of decreased
    emphasis. The budget as a whole should be adequate both to serve
    national priorities and to foster a world-class scientific and
    technical enterprise. To this end, Congress and the Administration need
    to establish a process that examines the complete Federal research
    budget before the total Federal budget is disaggregated'' for
    consideration in Congressional committees. ``Departments and agencies
    should make decisions based on clearly articulated criteria that are
    congruent with the overall strategy.''
        The absence of a comprehensive strategy for support of science at
    the Federal level may inadvertently result in gaps in support to
    important scientific areas, with the potential for discouraging
    students or scientists from entering or remaining in unsupported fields
    of research; contain undesirable duplication; or fail to address
    adequately national priorities for research. The Board concludes that
    the appropriate next step is to initiate a study of guidelines for
    priority setting across fields of science that go beyond those proposed
    in the COSEPUP report, ``Science, Technology and the Federal
    Government/National Goals for a New Era.'' The purpose of this task
    would be not to set priorities, but rather to undertake a study of how
    they might best be set. The study should involve the opinions of a
    diverse group including, among others, active researchers with breadth
    of vision.
                        international competitors in r&d
        Question. (Dr. Lane, Dr. Zare) A recent NSF report that came out in
    January (entitled ``The Science and Technology Resources of Japan'')
    states that Japan leads the U.S. in the percent of its Gross Domestic
    Product (G.P.) invested by government and industry in non-defense
    research and development (R&D). It also says that Japan outpaces the
    U.S. in the percent of its G.P. invested by government in civilian R&D.
    The report describes Japan's growing awareness that it needs more
    advanced industries based on fundamental science. This awareness
    culminated in a 1995 Science and Technology Basic Law, and the decision
    to double the Japanese government R&D budget by the year 2000 or
    shortly thereafter. Is that still their objective considering their own
    economic woes and does your recent report on Japan's prowess with
    respect to science and technology give you cause for concern?
        How does Japan's method of investment in R&D differ from U.S.
    practice and what lessons can we take away from Japan's approach?
        Answer. The Japanese Government is continuing to increase R&D
    funding despite its large national deficit and prolonged economic
    recession. In its 1995 Basic Plan for S&T, the Government called for a
    5-year (1996-2000) investment of 17 trillion yen. Such investment would
    require an average annual growth rate in R&D funding of around 10
    percent, and would result in almost doubling the Government's 1990
    budget of $11 billion (constant 1992 dollars). Japan may reach their
    investment goal by the year 2000 or shortly thereafter.
        Besides increased government R&D funding, Japan's Basic Plan for
    S&T called for structural changes in S&T. Japan is continuing to
    implement many structural changes in R&D investments to increase the
    national capacity for breakthrough research: expansion of basic science
    and competitive research at universities and national laboratories,
    expansion of graduate education and postdoctoral research positions,
    and more flexibility in funding and hiring of S&T personnel.
        The response to the economic recession is fostering government
    investment in R&D, but will likely slow industrial R&D investments. The
    recent Japanese government's economic stimulus package provides a large
    supplemental budget for R&D in 1998. This additional money will likely
    go into S&T infrastructure (upgrading university facilities and
    equipment) and exchanges (hosting researchers, scholars and foreign
    students). However, industry funding and performance of R&D in
    industrial laboratories may contract during Japan's recession. While
    Japanese S&T personnel continued to expand in the first half of the
    1990's despite an economic slowdown, the continuing recession may
    constrain industrial employment of new university Ph.D.'s.
        Japan is moving away from its former model of adaptive research and
    quality engineering of Western technology. What served Japan well from
    the 1950's to the 1980's might not serve in future industries that are
    very science dependent. For the past 15 years, Japan has been moving
    towards an R&D system that more closely resembles that of the United
    States.
        What might be instructive for the United States, however, is
    Japan's regional approach to development assistance and S&T education.
    Through direct foreign investment, technology transfer and the
    education of significant numbers of foreign students from neighboring
    countries in engineering, health, and agriculture, Japan is one of the
    Asian region's growth engines. The education and training is provided
    both within developing countries and within Japanese universities. S&T
    education is provided within Japan by funding scholarships for students
    from poorer surrounding countries to study S&E fields. The Japanese
    Office of Development Assistance (ODA) continues its strong outreach
    program for more integration with China and South Korea, and for
    technical assistance to developing countries in the Asian region. This
    three pronged approach (direct foreign investment, technical
    assistance, and science and engineering education) has likely
    contributed to Japan's competitiveness in the Asian region, and to
    Japan's role in fostering regional economic development.
        The United States could learn from Japan's approach and investigate
    how efforts such as S&T development assistance and S&E educational
    outreach could further the economic development of the Americas.
                  carnegie foundation report on undergraduates
        Question. New Study Says Higher Ed Institutions Short Change
    Undergraduates: Dr. Lane, within the last two weeks, the Carnegie
    Foundation released a new report that added to the criticism of our
    major universities. As I understand it, the report said that
    undergraduate students get the short end of the stick in terms of
    instruction at the major institutions of higher education. What do you
    think of that conclusion and what is NSF doing to influence colleges
    and universities to elevate the importance of teaching and instruction
    to the same level of prestige that research enjoys in the mind of
    university administrators.
        Answer. The undergraduate education experience--at large, research-
    oriented or comprehensive universities or at four-year, liberal arts
    institutions and two-year institutions--is critical to the intellectual
    and career development of students. The report by the Boyer Commission
    on Educating Undergraduates in the Research University, created under
    the auspices of the Carnegie Foundation for the Advancement of
    Teaching, discusses the undergraduate education experience at a total
    of 125 ``Research I'' and ``Research II'' universities in the United
    States where approximately 15 percent of the nation's undergraduate
    students are enrolled. The Report makes numerous recommendations for
    change in undergraduate education, especially at those institutions.
        The report also includes a number of ``Signs of Change''--
    vignettes--that describe existing outstanding programs at these same
    institutions that have been implemented explicitly to enhance the
    education of undergraduates. These programs illustrate some of the ways
    to meet the recommendations in the Carnegie Report, and many of these
    programs have received support from the NSF.
        Having made similar observations to many of those highlighted in
    the Carnegie Report, NSF had begun taking action prior to the issuance
    of the report. New merit review criteria which went into effect in
    October 1997 for all proposals submitted to the NSF, require reviewers,
    for all programs across NSF, to consider how effectively investigators
    link their research and education responsibilities. The informal
    response from the research and education community has been quite
    positive, and the new criteria expand our abilities to fund exemplary
    projects that can improve undergraduate classroom education.
        NSF sponsors a variety of efforts that address many of the
    suggestions in the Report. Our programmatic focus includes students
    enrolled at research universities and those enrolled in comprehensive
    universities, baccalaureate (four-year) institutions, and the community
    colleges (two-year institutions). A number of NSF programs are designed
    to support traditional, basic research with a required component being
    the inclusion of opportunities explicitly designed for the education of
    undergraduate students. Such programs include the Engineering Research
    Centers, Science and Technology Centers, Materials Research Science and
    Engineering Centers, Research Experiences for Undergraduates, and
    Research in Undergraduate Institutions. In addition, NSF's Faculty
    Early Career Development program is aimed at young faculty who
    effectively integrate research and education and NSF's Recognition
    Awards for the Integration of Research and Education acknowledge
    exemplary institutional efforts at combining research activities with
    high-quality education efforts.
        Other programs of the NSF focus on curricular reform at the
    undergraduate level and make use of the research expertise of faculty
    from research institutions to inform the effort. Some of these programs
    also include opportunities for research experiences for undergraduate
    students as an integral part of the projects. These programs include
    Course, Curriculum, and Laboratory Improvement, Alliances for Minority
    Participation, NSF Collaboratives for Excellence in Teacher
    Preparation, Combined Research-Curriculum Development, and the
    Engineering Education Coalitions.
                   next generation internet and internet fund
        Question. Dr. Lane, last week the Congress passed, and the
    President signed into law, a provision that should provide the
    Foundation with a total of about $60 million in fiscal year 1998 to
    support research and other activities related to the Next Generation
    Internet and other related networking activities. Tell us little about
    how you will go about using these resources.
        Answer. There are three goals in the NGI: (1) Conduct research in
    next generation networking technologies; (2) Establish and operate
    networking testbeds hundreds to thousands of times faster than today's
    Internet and capable of providing advanced networking services; and (3)
    Develop revolutionary scientific and engineering applications requiring
    high performance networking. If and when the $60 million becomes
    available, following court actions now in progress, they will be
    utilized in a balanced fashion across all three NGI goals and related
    information technology activities.
                       nsf funding to a few universities
        Question. Dr. Lane, I raised in my opening statement a concern
    about how NSF funds are distributed to universities and colleges, as
    well as to various areas of the country. I understand that a recent NSF
    survey of federal R&D expenditures based on data collected through
    fiscal year 1996 indicated that the top 50 recipients of university-
    based research received about 60 percent of all available federal
    research dollars (some $8.3 billion out of $13.8 billion).
        In addition, a number of these ``top 50'' schools received an
    additional $4.3 billion because they manage large federally funded
    research and development centers for various federal agencies. For
    example, MIT receives $271 million annually in academic R&D
    expenditures, plus an additional $334 million of its DOD-supported
    Lincoln Lab. Likewise, Stanford receives $282 million in academic R&D
    dollars, plus an additional $120 million through its DOE-supported
    Stanford Linear Accelerator Facility.
        While the Experimental Program to Stimulate Competitive Research
    (EPSCoR) is a attempt to simulate R&D competitiveness in universities
    in states which receive relatively little federal R&D funds, this
    program has relatively little funding with the NSF budget request
    totaling some $53 million for fiscal year 1999.
        Is there a way to make schools more competitive? Is the grant
    system flawed in some way and in need of reform. For example, are the
    peer review panels structured in a way which weighs the consideration
    of grants toward these so-called ``top 50'' schools?
        Answer. NSF has several programs in addition to the Experimental
    Program to Stimulate Competitive Research (EPSCoR) that are designed to
    stimulate systemic and sustainable improvements in universities'
    capabilities to compete successfully for Federal R&D funds. These
    programs play a key role in promoting greater diversification of the
    infrastructure for basic research in the United States. Other programs
    include:
      --Support for Historically Black Colleges and Universities (HBCU's);
      --Collaboratives to Integrate Research and Education (CIRE)-
            collaborations between NSF-supported research centers and
            facilities and minority serving institutions;
      --Centers of Research Excellence in Science and Technology (CREST)-
            enhancement of research and education activities at the most
            productive minority institutions; and
      --Research in Undergraduate Institutions (RUI)-research support for
            faculty in predominantly undergraduate institutions.
        Depending on appropriations, fiscal year 1999 funding for these
    five programs will total more than $100 million.
        NSF facilitates the transition of scientists and engineers into
    regular Foundation programs in several ways. The Foundation encourages
    researchers to participate in other NSF programs such as Small Business
    Innovation Research and Industry/University Cooperative Research
    Centers. In addition, NSF research program officers are briefed on
    research efforts from these programs and frequently serve on site visit
    teams. This helps to build relationships between researchers and
    program officers throughout the Foundation.
        NSF also encourages states and institutions to participate in other
    agencies' programs. For example, NSF works to maintain coordination and
    communication with other agencies' EPSCoR and EPSCoR-like programs
    through the EPCSoR Interagency Coordinating Committee (EICC).
        NSF strives to involve researchers from a broad range of
    institutions in the merit review process. For example, in the recent
    STC competition, researchers from twelve EPSCoR states served on the
    preproposal review panel. This experience helps researchers to
    understand the merit review process and the requirements of successful
    proposals.
        NSF's policy on the selection of peer reviewers addresses the
    importance of wide representation--including characteristics such as
    geography, type of institution, and underrepresented groups. A 1994
    study by the GAO found that, overall, the peer review process used by
    several federal agencies appeared to be working reasonably well, and
    that the intrinsic qualities of a proposal were important factors in
    reviewers' scoring. Regarding institutional factors, GAO found that
    reviewers were not more likely to come from elite institutions than
    were applicants, and there were few differences in region of origin.
        NSF believes the merit review system maintains high standards of
    excellence and accountability in the proposal decision process, and
    thus pays close attention to the workings of the system. For example,
    The National Science Board and NSF staff recently completed an
    examination of the merit review criteria which had been in use since
    1981. This examination, which involved the broad scientific community
    through the opportunity for public comment, led to the adoption of two
    redefined criteria in fiscal year 1998: the intellectual merit of the
    proposed activity, and the broader impact of the proposed activity. The
    second criterion is expected to address a range of issues, including
    how well the proposed activity broadens the participation of
    underrepresented groups (e.g. gender, ethnicity, geographic, etc.).
                               r&d funding trends
        Question. According to the Association for the Advancement of
    Science, since 1976, in constant dollars, funding for the health
    sciences has just about doubled, while at the same time funding for
    just about every other field of science--engineering, physical, social,
    environmental, etc.--has remained virtually level. Dr. Lane, Dr. Zare,
    and Dr. Jones, what do you think about these trends? Is this in the
    best interest of the nation?
        Answer. The Board agrees that the Federal government should
    continue to play a major role in supporting research in the health
    sciences as a national priority, as it has over the last half century.
    In addition the Board, like the NIH Director, Harold Varmus, and other
    members of the scientific and engineering community, is concerned that
    support for research be balanced across the portfolio. Effective
    allocation of Federal funds to sustain and enhance the Nation's science
    and technology enterprise requires a comprehensive assessment of which
    fields and which investment strategies hold the greatest promise for
    new knowledge to achieve national objectives. These objectives include,
    in addition to better health, greater equity and social justice, higher
    standards of living, a sustainable environment, a secure national
    defense, and growth in our understanding of nature. It is necessary to
    recognize that areas of scientific knowledge do not advance in
    isolation. New knowledge or cutting-edge instrumentation from one field
    of science frequently catalyzes breakthroughs in other areas of science
    and technology, including among others, health applications.
                     concerns of the national science board
        Question. In a few weeks, we will see the Board's latest report on
    science and engineering indicators. Dr. Zare, perhaps you can give the
    subcommittee a preview of what this new report will tell us with
    respect to the health and future of our Nation's research and education
    enterprise?
        Answer. An important feature of the Science and Engineering
    Indicators--1998 report is an increased emphasis on international
    comparisons and on indicators of Science and Technology globalization.
    We are living in an increasingly global economy. Science and
    engineering activities have always had a global dimension, but this is
    now intensifying.
        Science and Engineering Indicators.--1998 also contains a new
    chapter entitled, ``Economic and Social Significance of Information
    Technologies.'' There is an increasing need to understand better the
    contributions and impacts of science and technology. Measurement of the
    economic and social impact of science and technology is a special
    challenge--particularly for rapidly developing technologies, such as
    information technologies (IT). The Board believes that this new
    chapter, which addresses both positive and negative aspects of IT,
    makes a significant contribution to synthesizing and crystallizing what
    is currently known about selected aspects of this important topic.
        The report ``Overview'' highlights five cross-cutting themes that
    are important trends. These are:
        Increasing globalization of science, technology and the economy.--
    Other countries besides the United States are investing in financial
    and human resources for science and technology, recognizing that such
    investments are essential underpinnings for social and economic well
    being in the global economy. Individual scientists and engineers,
    industrial firms, and academic institutions are taking advantage of the
    increasingly international character of science and technology, as
    witnessed by enhanced international mobility of the science and
    technology workforce, international co-authorship of scientific
    publications, the development of international industrial alliances,
    and the global flow of technological know-how.
        Greater emphasis on science and engineering education and
    training.--Many countries, including the United States, recognize the
    importance of providing an excellent education to their population in a
    global, knowledge-based economy. At the professional level,
    universities in the United States and elsewhere face the challenge of
    introducing greater flexibility and breadth into their curricula in
    order to improve the employment prospects of their students at both the
    undergraduate and graduate levels. More broadly, the nation as a whole
    faces the challenge of assuring that its diverse workforce will possess
    sufficient technological literacy, and its citizenry sufficient
    knowledge and understanding of science and technology and their socio-
    economic impacts, to address the requirements of the new century.
        Structural and priority changes in the science and engineering
    enterprise.--The decreasing Federal share of financial support for the
    Nation's R&D effort, evident since the beginning of the decade,
    persists. The Federal role remains essential, however, in the support
    of basic research in the academic sector and in the integrally linked
    education of the nation's science and engineering workforce. Even as
    the role of industry in supporting R&D has become more prominent, the
    structure of research in industry itself is changing, as is evident
    from the increasing prominence of R&D in the service industries.
        Industrial R&D support remains most heavily concentrated on applied
    research and development, as opposed to basic research.--That private
    industry recognizes the importance of U.S. colleges and universities to
    the national enterprise is evident from the growing linkages between
    the industrial and academic research sectors, a trend also explored in
    our occasional paper, Industry Trends in Research Support and Links to
    Public Research (NSB-98-99), accompanying Indicators.
        Increasing impact of science and technology on our daily lives.--
    The impact of science and technology on our daily lives is profound,
    however difficult to track or quantify. The changes brought about in
    the workplace, schools and homes by information technologies may be the
    most obvious case in point. As one measure of this rising impact,
    Indicators reports the results of a survey of the public's
    understanding and attitudes toward science and technology.
                      setting priorities for major themes
        Question. Dr. Lane, can you describe to me how NSF determined that
    Knowledge and Distributed Intelligence (KDI) and Life and Earth's
    Environment (LEE) were the agency's top research theme areas (as
    opposed to crosscutting themes in materials, biotechnology,
    environmental engineering, or math and science education)? Can you tell
    us a little more about what makes these two themes distinct from
    traditional disciplinary support NSF has historically emphasized?
        Answer. In the early Spring 1996, the Director, Deputy Director and
    NSF senior managers met for two days. The purpose of these intense
    sessions was to identify and establish the research priorities for the
    fiscal year 1998 budget request, as well as future budget requests. The
    focus of the discussion was on which areas of science and engineering
    were truly on the verge of major discoveries. During these two days
    each Assistant Director took turns presenting the emerging
    opportunities within their disciplines that warranted greater emphasis
    in NSF's funding strategy. From these discussions emerged areas such as
    ``knowledge networks,'' ``human-centered computer systems,''
    ``intelligent manufacturing,'' complex biological and human systems,
    complex modeling, data mining and learning and cognition, which
    eventually came under the umbrella of KDI. LEE emerged from a larger
    discussion on the environment and the scientific quest for
    understanding the interaction of physical, biological and human
    activities. Both KDI and LEE build on recent research emphases, such as
    Learning and Intelligent Systems and LExEN, as well as research that
    NSF has been supporting for many years. We do not think of KDI and LEE
    as opposed to work in particular disciplines or specific cross-
    disciplinary areas, such as materials or biotechnology, but as a
    broader framework that might variously draw upon these more specific
    areas for relevant research and education contributions, or broadly
    raise capabilities within them for pursuit of research and education.
        What makes the KDI and LEE themes distinct is that is that they:
      --Link research and education that is intellectually important with
            issues that are societally important.
      --Provide frameworks and emphasis areas to which researchers and
            educators in many disciplines can respond with creative ideas
            leading to discovery.
      --Focus on research at the interfaces of extant disciplines where new
            knowledge is increasingly created.
      --Organize research and education interests in order to improve
            communication with the public.
        Question. The so-called KDI theme is proposed to increase by $78
    million. However, nowhere in the budget can I find a baseline estimate
    for this activity. Is this a $78 million increase on top of the
    approximately $50 million requested in last year's budget (p.4 of the
    fiscal year 1998 Justifications of Estimates) or is this a $78 million
    increase on top of some core programs that total $200-$400 million? It
    is hard to know what to think of your proposed increase without knowing
    its context. I am not asking you to turn the KDI theme into some line
    item in the budget, but it would very helpful to the committee if we
    had some way to assess what this increase means. Can you help us out
    here?
        Answer. The fiscal year 1998 KDI base of over $400 million supports
    a broad range of KDI-related activities, including the Digital
    Libraries Initiative, the Biological Databases Program, Partnerships
    for Enhancing Expertise in Taxonomy (PEET), a collaborative for upper
    atmospheric research, several centers for Collaborative Research in
    Learning Technologies (CRLT), and a large number of KDI-related
    research projects submitted to NSF disciplinary programs.
        The $50 million increase in fiscal year 1998 will fund three KDI
    focal areas: Knowledge Networking (KN), Learning and Intelligent
    Systems (LIS), and New Computational Challenges (NCC). The KDI proposal
    solicitation elicited nearly 700 multi-disciplinary proposals that are
    currently undergoing review. NSF expects to fund approximately 60-75 of
    these proposals.
        The $78 million increase proposed for fiscal year 1999 will support
    new investments in the KN, LIS, and NCC focal areas. In the Knowledge
    Networking area, digital libraries, high-speed networks, interactive
    data sets for real-time simulations, collaboratories, and information
    representations are topics of emphasis. Research on legal, ethical, and
    social implications of the information revolution also will be given
    high priority. For Learning and Intelligent Systems, NSF will support
    basic research on learning in natural and artificial systems, as well
    as research on learning technologies and the use of such technologies
    by teachers and students. In the New Computational Challenges focal
    area, priority will be placed on development of computational methods
    for collecting, transmitting, and analyzing extremely large data sets
    in real time; visualization of results; and simulating complex systems.
    The enhanced KDI investment will be administered through a second
    focused KDI proposal competition, other KDI-related initiatives such as
    Digital Libraries and Next Generation Internet, and support of KDI-
    related research projects submitted to disciplinary programs.
                     knowledge and distributed intelligence
        Question. Dr. Lane, again this year we see the NSF budget
    emphasizes the theme of knowledge and distributed intelligence. Last
    year we had some trouble in getting you to explain to us what this
    initiative is all about. So we asked you for some milestones as to what
    we could expect as this program moves forward. And frankly, what we got
    were not milestones but examples of projects being supported. So let's
    try this again, what do you see as the major objectives of the KDI
    initiative in fiscal year 1999 and how does it tie back to your core
    programs in research and education? Perhaps you can look ahead 10 years
    and speculate how the conduct of science--and even how society--might
    be different as a result of your emphasis on knowledge and distributed
    intelligence.
        Answer. Looking ahead 10 years, NSF expects the investment in KDI
    to have a substantial impact on how we learn, work, and create, in
    science and in society. KDI research will generate widely-applicable
    tools and technologies for increasing the efficiency, effectiveness,
    and creativity of scientific research (e.g., digital libraries and
    scientific databases, high-speed networks for rapid transmission of
    massive data sets, web-based `collaboratories' allowing distributed
    research teams to share instrumentation, data, and analysis methods,
    and advanced computational methods for simulating complex natural
    systems). In addition, the KDI initiative will stimulate formation of
    the multi-disciplinary research teams and techniques needed to address
    many of the frontier problems in science. By emphasizing the training
    of graduate and post-doctoral students in KDI-supported projects, KDI
    will help create a new generation of multi-disciplinary researchers
    with the knowledge and skills required to realize fully the potential
    of the new methods and technologies. The overall outcome should be
    increased scientific productivity, and reduced compartmentalization of
    science.
        Many of the tools and techniques developed through KDI research
    (e.g., data mining and visualization techniques, computational
    simulation methods, digital libraries, high-speed networks) will have
    broad application in education, business, and industry. Also, much of
    the research KDI is supporting, and will support in the future, speaks
    directly to societal needs, issues, and opportunities related to the
    information revolution. For example, among the topics currently
    emphasized in the KDI initiative are:
      --Enhancing the accessibility and utility of on-line information
            (e.g., data-mining techniques, access for persons with
            disabilities).
      --Ethical, social, political, legal and economic implications of the
            information revolution (e.g., privacy, confidentiality,
            reliability of data; disparities among racial, ethnic, and
            cultural groups in use of and benefit from information
            technologies).
      --Improving education through advances in educational technologies
            (e.g., intelligent tutors), and in understanding of learning
            processes.
        The objectives for KDI in fiscal year 1999 reflect these longer-
    term goals. Within NSF, the major objectives for fiscal year 1999 are
    as follows:
      --Conduct a new KDI proposal competition with a budget of
            approximately $60-70 million, funding approximately 70-80
            proposals in the focal areas of Knowledge Networking, Learning
            and Intelligent Systems, and New Computational Challenges.
      --Continue to support other KDI activities (e.g., Digital Libraries
            Initiative, research proposals submitted to disciplinary
            programs).
      --Explore the development of international KDI endeavors involving
            cooperation with NSF's counterpart agencies in other countries,
            to stimulate international collaborations in KDI research.
      --Evaluate NSF's KDI activities funded in fiscal year 1998 and 1999
            to assess the need for changes in scope, emphasis, or
            management of the initiative.
        Scientific research and training objectives for KDI in fiscal year
    1999 are difficult to specify precisely, because most of the research
    projects that will be supported by KDI in fiscal year 1999 have not yet
    been selected or even received. In general terms, the expected outcomes
    include the following:
      --Formation of multi-disciplinary research teams, and an increase in
            the number of such teams supported by NSF;
      --An increase in the number of graduate and post-doctoral students
            receiving multi-disciplinary training in KDI-related research;
            and
      --Significant advances in the research areas targeted by KDI in
            fiscal year 1998 and 1999, such as:
        --digital libraries;
        --high-speed networks;
        --tools and techniques for collecting, organizing, distilling,
                searching, and disseminating information;
        --prototype knowledge networks;
        --ethical, social, legal, political, and economic implications of
                the information revolution;
        --computational methods for addressing scientific problems
                involving multiple scales in space or time;
        --computational methods for scientific problems involving dynamic
                interplay between data and computation in real time;
        --learning and intelligence in natural and artificial systems; and
        --learning tools and educational technologies.
                       increasing award size and duration
        Question. Dr. Lane, one of the objectives you seem to have with
    this budget is to increase the average award size--and award duration.
    Other than giving researchers more money to cover their work for longer
    periods of time, what does the Nation and the research enterprise get
    out of this? Remind us what is the average NSF award size and how does
    it compare to the average NSF award five years ago--and how does it
    compare to the average NIH award?
        Answer. In addition to providing more funds for researchers and
    stabilizing their research support, there are other significant
    benefits to the researcher, the research community, and the government,
    associated with reducing the number of applications submitted by the
    researcher. Providing extended funding reduces the frequency and amount
    of time spent by the investigator in preparing and submitting proposals
    and negotiating awards. There is an attendent reduction in the burden
    placed on merit reviewers, as well as reduced workload for both the
    programmatic and administrative staffs of NSF. Increasing award size
    also reduces the instances of multiple proposal submissions which are
    frequently necessary in order for the researcher to maintain his/her
    research program. This benefits not only merit reviewers and NSF, but
    also other Federal agencies to which the researcher may turn for
    support. In particular, NSF intends to emphasize stable funding for new
    investigators, so they spend more effort establishing their research
    programs and professional credibility and are less burdened with
    obtaining their next grant.
        The NSF fiscal year 1997 annualized award size was a slightly below
    $83,000 (average) compared to the NIH basic research grant which
    averaged about $245,000. In fiscal year 1992, the NSF annualized
    average award size was approximately $74,000; a little over $83,000 in
    fiscal year 1997 dollars.
                             polar cap observatory
        Question. Dr. Lane, I see that again this year you are requesting
    support for the construction of a polar cap observatory that would be
    located at the magnetic north pole in Canada. If you are unable to get
    the Polar Observatory on line in time for the next solar max event, is
    this project still worth pursuing at this time? Why?
        Answer. We have requested authorization to provide up to $5 million
    in fiscal year 1998 to initiate the project, beginning with $2.5
    million for non-site specific R&D that includes antenna engineering and
    design, prototyping of the antenna element unit and validation. The
    antenna for the PCO incoherent scatter radar is to be constructed from
    about 4,000 individual antenna elements. In 1998, these antenna
    elements would be designed and a prototype antenna constructed in
    California consisting of about 40 elements. The prototype antenna would
    undergo a series of tests to ensure that the waveform and radiation
    pattern of transmitted signals are as predicted by the preliminary
    design.
        With these tasks accomplished in 1998, it will still be possible to
    complete construction of the PCO by the summer of 2001. If these tasks
    are not begun until the next fiscal year, it will mean a one-year slip
    in the schedule. Considering that the maximum of the solar cycle lasts
    only about four years, a one year delay will represent a significant
    loss in the amount of science that can be performed in the early life
    of the observatory. However, because the PCO is expected to operate for
    at least 30 years (similar to the other observatories in the chain),
    the observatory will operate through several solar cycles. Although it
    is not our last chance to operate the PCO during solar max, the growing
    susceptibility of technical systems to space weather makes it
    imperative that we begin these studies as early as possible.
        Even if construction of the PCO were delayed, it would nevertheless
    provide very important information over its anticipated 30-year
    lifetime. Although the possibility of coordinated observations with
    many other national and international projects during the solar maximum
    period will have been lost, the scientific impetus for constructing the
    Observatory will remain strong. Therefore, if it does not go forward in
    the present budget cycle, the NSF and NSB would consider submitting it
    in a future budget request.
              math and science education international comparisons
        Question. Dr. Lane, since 1965, NSF has been involved in
    international comparisons of student math and science performance. For
    30 years we've known that U.S. students are near or at the bottom of
    performance. The recent TIMSS finds that our 12th graders are still
    bringing up the rear. On Monday of this week, the Washington Post ran
    an opinion piece that advocated a ``back to basics'' approach to
    mathematics education. I appreciate that there is a fair amount of
    controversy regarding differing approaches about teaching mathematics
    at the K-12 levels. Nevertheless, the TIMSS study is a real eye-opener.
    What should we be doing and why have we made so little progress in 30
    years?
        Answer. Progress has been made over the last 30 years. Students are
    taking more advanced courses in science and mathematics, and student
    achievement has largely returned to or exceeded the levels set in the
    early 1970's. Clearly, the rate at which achievement has been
    increasing is something we want to accelerate.
        The news from the Third International Mathematics and Science Study
    (TIMSS) is both good and bad. Although U.S. fourth-graders scored as
    well as their counterparts in some of the highest scoring nations in
    the world, and eighth-graders scored about average, U.S. twelfth-
    graders ranked at the bottom.
        In general, TIMSS revealed that the U.S. curriculum at the 8th
    grade level and beyond is not consistent with those of other countries
    that performed well on the assessment. The curriculum is less focused
    and includes many more topics than is common inter-nationally. The
    topics--especially in mathematics--tend to remain in the curriculum for
    more grade levels, and there are indications that the material is
    pitched at a lower level. In sum, there is too much repetition of
    material, not enough coverage of core topics in science and
    mathematics, and expectations for student performance are set too low.
        NSF supports projects addressing all major facets of teaching and
    learning (i.e., curriculum, instructional materials, assessment,
    teacher professional development, preparation of future teachers,
    reform strategies to improve resource allocation and cultivate change
    in school districts). For example, NSF-funded investigators have
    recently concluded the design of several comprehensive sets of
    mathematics curricula. Elementary science curricula have been completed
    and work continues on middle and secondary school science. Newer
    instructional materials are coming on-line and will be more widely
    available in the near-term. NSF encourages the alignment of curriculum
    and assessment, as well as related professional in-service development
    for K-12 teachers. NSF-supported products affect the education
    continuum at different points, and their impact on student achievement
    rates will necessarily vary.
        We will have a clearer measure of what happens between elementary
    and middle school when the TIMSS study is repeated for the 8th grade in
    1999. The 1999 study will tell us whether the relatively high
    performance of U.S. 4th graders in 1995 is sustained (relative to other
    countries) through the 8th grade. If performance declines, the
    accompanying curriculum analysis should help inform us as to why. If
    performance of this cohort of students remains strong, then we have
    evidence that the 1995 high achievement levels of 4th graders reflected
    a revitalized U.S. curriculum at early grades that is now being carried
    forward into later grades.
                           k-8 mathematics initiative
        Question. NSF and the Education Department: NSF and the Department
    of Education have proposed a strategy for improving mathematics and
    science education. One specific focus is on improving mathematics
    education at the eighth grade level. Since the two agencies have very
    different missions and operating procedures, how will this joint effort
    work and what will be the involvement of state and local education
    agencies in this activity?
        Answer. The joint effort on improving mathematics achievement at
    the 8th grade level is moving on several distinct, but related, tracks.
    Rather than attempt to develop common operating procedures, the two
    agencies are bringing their existing strengths to this effort--
    developing better understandings of what each is doing and finding ways
    of cooperating where joint efforts could be effective. NSF brings a
    strong external peer review process, experience with developing models
    of excellence in professional development and instructional materials,
    and existing programs that are able quickly to move this initiative
    forward.
        Specifically, NSF plans to put increased emphasis on a number of
    existing programs as follows:
      --Increase the number of Local Systemic Change (LSC) teacher
            enhancement projects in middle school mathematics;
      --Increase emphasis on middle school mathematics in all systemic
            initiative sites; and
      --Strengthen programming for K-8 mathematics, especially at the
            middle school level, within teacher preparation projects.
        The U.S. Department of Education (DoED) provides substantial
    financial resources through the Eisenhower program, Title I, and other
    programs. A major role of DoED in this joint effort is to help state
    and local education agencies better understand the range of
    possibilities for using federal funds appropriated for education and
    ways they can make better uses of these resources for improving
    mathematics education.
        Additionally, NSF is working with DoED in planning for a
    competition for Capacity-Building Planning Grants to school districts
    for developing strategies for professional development that supports
    implementation of quality instructional materials and for effective use
    of federal resources to support related professional development.
        State and local education agencies must be heavily involved in
    reform efforts and are the ones who must take the initiative in
    improving their mathematics education. NSF and DoED can provide
    assistance and guidance in navigating existing federal programs,
    providing awareness and access to resources (e.g., high-quality
    materials, effective strategies), and some financial support for
    developing and implementing exemplary models.
                       educational technology initiative
        Question. Dr. Lane, in the budget request you have a total of $25
    million laid out for a Foundation-wide initiative--with the Department
    of Education--for research on education and training technologies. Can
    you give a better idea what this program is all about and how you and
    the Department of Education will be working together?
        Answer. The objective of the NSF/DoED Research on Education and
    Training Technologies initiative is to develop the knowledge base
    necessary to improve teaching and learning in reading, mathematics and
    science. It is the first phase of a planned interagency research
    strategy that derives from the President's Committee of Advisors on
    Science and Technology's (PCAST) Report to the President on the Use of
    Technology to Strengthen K-12 Education in the United States (March
    1997). In accord with the PCAST Report, the initiative will seek
    proposals to perform:
        (1) Basic research in various learning-related disciplines and
    fundamental work on educationally relevant technologies;
        (2) Early-stage research aimed at developing new forms of
    educational software, content, and technology-enabled pedagogy; and
        (3) Empirical studies to determine which approaches to the use of
    technology are most effective.
        The program announcement and choice of projects will be guided by
    the pursuit of research bearing on two broad objectives: All children
    will be able to learn the basics of reading and mathematics and will
    have mastered these by the end of grade 3, and all mathematics,
    science, and reading teachers will have the high-level content,
    cognitive and pedagogical knowledge and skills required to perform
    their jobs effectively. It is expected that project proposals will be
    received from individual investigators as well as multidisciplinary
    teams carrying out large-scale empirical studies of effectiveness
    (e.g., using schools connected to systemic initiative projects as
    testbeds).
        An NSF/DoED working group has been engaged for several months in
    defining the initiative, and two workshops are planned for early
    September 1998 to provide input for the interagency program
    announcement. The initiative will be administered jointly, and it is
    planned that proposals will be evaluated using NSF methods of merit
    review.
               undergraduate math and science education progress
        Question. The recent TIMMS study tells us that our Nation's 12th
    graders are not doing as well in math and science as our international
    competitors. Now for a number of years--spurred on by a National
    Science Board report in the late 1980's and this committee--NSF has
    invested on a number of fronts to improve math and science education at
    the undergraduate level. And late last month, the Carnegie Foundation
    came out with a report that was critical of the job our research
    universities are doing in undergraduate education. What is NSF's view
    on this matter?
        Answer. The undergraduate education experience--at large, research-
    oriented or comprehensive universities or at four-year, liberal arts
    institutions and two-year institutions--is critical to the intellectual
    and career development of students. The report by the Boyer Commission
    on Educating Undergraduates in the Research University, created under
    the auspices of the Carnegie Foundation for the Advancement of
    Teaching, discusses the undergraduate education experience at a total
    of 125 ``Research I'' and ``Research II'' universities in the United
    States where approximately 15 percent of the nation's undergraduate
    students are enrolled. The Report makes numerous recommendations for
    change in undergraduate education, especially at those institutions.
        The report also includes a number of ``Signs of Change''--
    vignettes--that describe existing outstanding programs at these same
    institutions that have been implemented explicitly to enhance the
    education of undergraduates. These programs illustrate some of the ways
    to meet the recommendations in the Carnegie Report, and many of these
    programs have received support from the NSF.
        Having made similar observations to many of those highlighted in
    the Carnegie Report, NSF had begun taking action prior to the issuance
    of the report. New merit review criteria, which went into effect in
    October 1997 for all proposals submitted to the NSF, require reviewers,
    for all programs across NSF, to consider how effectively investigators
    link their research and education responsibilities. The informal
    response from the research and education community has been quite
    positive, and the new criteria expand our abilities to fund exemplary
    projects that can improve undergraduate classroom education.
        NSF sponsors a variety of efforts that address many of the
    suggestions in the Report. Our programmatic focus includes students
    enrolled at research universities and those enrolled in comprehensive
    universities, baccalaureate (four-year) institutions, and the community
    colleges (two-year institutions). A number of NSF programs are designed
    to support traditional, basic research with a required component being
    the inclusion of opportunities explicitly designed for the education of
    undergraduate students. Such programs include the Engineering Research
    Centers, Science and Technology Centers, Materials Research Science and
    Engineering Centers, Research Experiences for Undergraduates, and
    Research in Undergraduate Institutions. In addition, NSF's Faculty
    Early Career Development program is aimed at young faculty who
    effectively integrate research and education and NSF's Recognition
    Awards for the Integration of Research and Education acknowledge
    exemplary institutional efforts at combining research activities with
    high-quality education efforts.
        Other programs of the NSF focus on curricular reform at the
    undergraduate level and make use of the research expertise of faculty
    from research institutions to inform the effort. Some of these programs
    also include opportunities for research experiences for undergraduate
    students as an integral part of the projects. These programs include
    Course, Curriculum, and Laboratory Improvement, Alliances for Minority
    Participation, NSF Collaboratives for Excellence in Teacher
    Preparation, Combined Research-Curriculum Development, and the
    Engineering Education Coalitions.
                                  plant genome
        Question. Dr. Lane, excluding the funding that has been set-aside
    for Arabidopsis and any NSF funds used for the international rice
    effort, how much of the remaining Plant Genome funding will be
    available for the most economically significant crops? How are you
    determining the most economically significant crops? For example, what
    are the total, annual receipts needed for an individual species to
    qualify for the program?
        Answer. NSF plans to spend up to $10M out of the $40M Plant Genome
    Research allocation specifically for accelerated sequencing of the
    Arabidopsis genome. Therefore, at least $30M is available to support
    research on non-Arabidopsis genomes.
        The goal of the NSF plant genome research program is to support
    research that will lead to understanding of the structure, organization
    and function of economically significant plants. In soliciting
    proposals for the Plant Genome Research Program, NSF has sought ideas
    from the scientific community that will contribute to the program goal.
    Under this system, it is incumbent upon the applicants to justify the
    use of specific plant species in their research projects and to
    convince reviewers how their studies will contribute to the program
    goal. Reviewers evaluating the proposals determine whether the proposed
    projects will indeed contribute to the program goal. One of the
    evaluation criteria for the plant genome research program is
    ``relevance or potential impact of the proposed project to the
    development of improved, economically significant plants.'' So, the
    scientists define ``economically significant plants'' collectively, as
    applicants and reviewers.
        Question. It is my understanding that efforts are underway for an
    international consortium on sequencing the rice genome. Recently, the
    Japanese government announced a $128 billion package of spending and
    tax cuts that includes significant cuts in R&D programs while focusing
    most of the research spending on bricks and mortar. I am concerned that
    the U.S. will be asked to pay for more than 15 or 20 percent of the
    overall effort. What assurances do we have that the Japanese will, in
    fact, bear the majority of the cost of sequencing the rice genome?
        Answer. The Japanese Ministry of Agriculture, Forestry and
    Fisheries (MAFF) has approved a 10-year project to sequence the rice
    genome beginning in fiscal year 1998. While there is no guarantee that
    MAFF will be able to keep this commitment for the next 10 years, the
    Japanese scientists are proceeding with the plan. MAFF has made a major
    investment in the rice genome project for the past 7 years, and as a
    consequence, Japan is a leader in rice genome research. It would be to
    their advantage to maintain that leadership.
        Efforts to establish internationally coordinated rice genome
    sequencing have been ongoing at the initiative of interested scientists
    from all over the world. Currently, scientists from Japan, U.S.,
    European Union, France, China, Taiwan, Singapore, and Korea have
    expressed interest in conducting a large-scale high throughput
    sequencing of the rice genome. A proposed plan published in February
    1998, by an ad hoc committee of international scientists, calls for
    completing about one-third of the total sequence by the year 2003, with
    Japan contributing 50 percent of that goal and the rest of the
    international consortium contributing the balance.
                        status of supercomputer program
        Question. Dr. Lane, last year at this time NSF had just made its
    decisions with respect to which university supercomputer centers would
    be supported in your new Partnerships for Advanced Computing
    Infrastructure program. Can you give us an update as to how the
    transition process is going? As I recall, you were going to have to
    move users from centers in New York and Pennsylvania to the centers in
    Illinois and San Diego. How has that gone and what are we doing to get
    the new computing centers up to full power?
        Answer. The users of the Centers program have been almost
    completely migrated to the new program. When they have requested it,
    all of their data and applications have been moved to a Partnerships
    for Advanced Computational Infrastructure (PACI) site.
        For fiscal year 1998, the total number of cycles available will be
    about the same as in fiscal year 1997, thus assuring no net loss of
    cycles during the transition period. We should note, however, that
    because of the transition, there will be no growth in capacity for the
    year.
        An IBM system of more modern design and equivalent in power to the
    one at Cornell has been installed and is functional at San Diego. Loss
    of access to the systems at the Pittsburgh Supercomputing Center has
    temporarily reduced the computing resources available, especially for
    users of the Cray T3E. Many users have had their allocations reduced
    below their requests or have had to move their computing to platforms
    other than the T3E. Now that the transition period is completed,
    acquisition of new systems with fiscal year 1999 funds will enable
    traditional annual increases in capacity.
                         major research instrumentation
        Question. Dr. Lane, a few years back, we had a separate academic
    research infrastructure account--part of it went for modernizing labs
    and other research facilities and the other part of it went for fairly
    large scale research supports the laboratory modernization program, but
    I believe you still have a $50 million large scale instrumentation
    effort. Is that right?
        It is my impression that the $50 million is spread out among the
    research directorates, yet the budget request provides no details on
    the distribution of the instrumentation resources. It would help us if
    we could get a table for the record showing how the $50 million in
    instrumentation support has been initially distributed among the
    directorates and something on the rationale for that distribution.
        Answer. NSF currently is supporting a $50 million large-scale
    instrumentation effort. The Major Research Instrumentation Program
    allocates funds in the range of $100,000 to $2,000,000 for
    instrumentation that is not readily available from normal NSF programs.
    This $50M cross-directorate instrumentation program seeks the best
    investments for instrumentation acquisition and instrument development.
    Below is a table of the actual distribution of fiscal year 1998 MRI
    funds and the estimated distribution of fiscal year 1999 MRI funds. The
    estimated distribution for fiscal year 1999 funds is based on the
    three-year (fiscal year 1996, 1997, and 1998) average of funds actually
    obligated by each Directorate.

                            DISTRIBUTION OF MRI FUNDS
                            [In millions of dollars]
    ------------------------------------------------------------------------
                                                             Fiscal year
                                                       ---------------------
                                                                      1999
                                                           1998     Estimate
    ------------------------------------------------------------------------
    BIO...............................................       9.28      10.25
    CISE..............................................       6.92       7.99
    ENG...............................................      10.87       8.93
    GEO...............................................       7.78       8.28
    MPS...............................................      12.21      12.28
    OPP...............................................       0.28       0.64
    SBE...............................................       2.67       1.64
    ------------------------------------------------------------------------

        The final fiscal year 1999 distribution of these funds will be
    based on the merit of the research and education proposed for the
    instrumentation requested.
     environmental research and the national institute for the environment
        Question. Dr. Lane, recall that this committee asked NSF to report
    in April on what it would take to establish a National Institute for
    the Environment (NIE) within the Foundation. The Subcommittee received
    that report on April 22 and it is pretty clear the Foundation believes
    that enhanced support for environmental research makes good sense, but
    you would go about it in a way different from the NIE proposal. Please
    give us a thumbnail sketch of the Foundation and the Board's view on
    this matter.
        Answer. The views of the National Science Board on the NIE are
    summarized in a resolution adopted by the Board in February 1998. The
    resolution, ``The Proposed National Institute for the Environment''
    (NSB-98-65), which provides policy guidance to the Foundation, is
    attached.
        There are three main points, outlined below, articulated in the
    report prepared by NSF on this issue.
        (1) NSF is committed to environmental research and education and is
    eager to expand its role in a manner consistent with overall national
    goals and with its mission and strategic plan, particularly in those
    areas where NSF can play a catalytic role. NSF currently manages a
    complex, merit-reviewed portfolio of basic environmental research and
    education in broad areas of science and engineering. In addition, we
    are enhancing, consistent with organic developments within science and
    engineering disciplines, efforts to integrate environmental research
    across the Foundation. By further augmentation of its already
    significant role as a sponsor of fundamental, broad-based research and
    education activity related to the environment, NSF can serve as a key
    component of an enhanced NSTC activity discussed below.
        (2) The range and complexity of environmental research, as well as
    the diverse needs of those who depend on the results of such research,
    require a heightened response involving many Federal agencies. Thus,
    the Report has recommended a revision of the existing interagency
    strategy into a new National Science and Technology Strategy for the
    Environment that involves all relevant agencies; is based on
    competitive, merit-reviewed activities; and seeks to define and to link
    the information needs of policy-makers as closely as possible with
    relevant environmental research opportunities. The structure for
    developing and coordinating this Strategy should be led by the White
    House, particularly the Office of Science and Technology Policy (OSTP)
    and the relevant committees of the National Science and Technology
    Council (NSTC), with the advice of the President's Committee of
    Advisors on Science and Technology (PCAST). This coordinating structure
    should be strengthened in order to carry out the goals of the
    ``National Strategy.''
        (3) The National Science and Technology Strategy for the
    Environment should influence agency planning and budgeting. NSTC,
    working through the Executive Branch budget process, should establish
    priorities and consider the appropriate level of funds to support the
    strategy. This could result in a strengthened effort to address the
    challenges suggested by the proposers of the institute concept and by
    other interested entities. The NSTC and CENR should continue to serve
    as a forum for coordinating assessments related to environmental policy
    objectives. Such assessment activities and any necessary
    ``stakeholder'' coordination activities could be conducted by the NSTC
    itself, supported by the CENR, along with the appropriate external
    entities.
        Establishing a stand-alone entity or agency would not be an
    effective means of achieving the proposed intellectual goals of an
    environmental institute for the reasons articulated in the Report. NSF
    believes that the approach outlined in the Report will link
    environmental assessment, research, education, and information
    dissemination efforts, suggested as functions for such an entity, more
    effectively to the missions of the various agencies and to the needs
    and interests of the public and its policy-makers.
                             large hadron collider
        Question. This budget proposes a new start for NSF requesting $22
    million for an initial contribution to the Large Hadron Collider. And
    according to the budget request, by 2003, NSF expects to provide a
    total of $81 million towards the construction of detectors to be
    installed in the LHC project. It is my understanding that the
    Department of Energy is planning on providing a total of $450 million
    for this project--located at the CERN laboratory in Switzerland. Given
    the heavy involvement of the Department of Energy, what is the
    significance and role of the Foundation in this project?
        Answer. The LHC has a very high discovery potential for new
    physics. The LHC project represents cutting-edge science leading the
    frontier in high energy physics for the next two decades or more. The
    roles of NSF and the Department of Energy (DOE) are both significant
    because each brings critical, yet distinct, intellectual expertise to
    the project. The NSF support for this project will allow the full
    participation of many NSF-funded university groups. These groups
    provide much of the intellectual leadership in this project and will
    contribute substantially to the technical expertise and infrastructure
    needed for its successful completion. The involvement of these
    universities will also allow their students to gain experience working
    at the research frontier, and will allow the outreach activities
    connected to the LHC to benefit as wide a community as possible.
        It is important to note that because of the high cost associated
    with projects like the LHC, international partnerships are now
    considered almost essential. The LHC has established a joint management
    structure whereby the decision-making process is equal, regardless of
    the funding provided.
                        millimeter array radio telescope
        Question. Dr. Lane, this budget is requesting an additional $9
    million for the second installment in the design and development phase
    of the millimeter array radio telescope. As I understand it, you need a
    total of $26 million to complete the design and development phase. Then
    to actually build the telescope--which would consist of a substantial
    number of individual 8-meter radio telescopes all linked together
    electronically--it will cost something like an additional $200 million.
    Where are you in putting together an international partnership to help
    defray the total cost of the telescope. And what level of international
    participation are you attempting to obtain? Provide for the record you
    current set of milestones for this project.
        Answer. NSF has encouraged the National Radio Astronomy Observatory
    (NRAO), the organization that developed the Millimeter Array (MMA)
    proposal, to explore possible partnerships with foreign organizations.
    The European Southern Observatory (ESO) has expressed strong interest
    in becoming a partner. ESO may reach a decision on this matter as early
    as the end of 1999. A collaboration with Japan, which seemed promising
    one or two years ago, currently seems less likely due to economic
    constraints there.
        NSF considers international and/or other-agency participation at
    the 25-50 percent level important for both the construction and
    operations phases of the MMA project. The National Science Board has
    indicated that it intends to evaluate cost sharing arrangements when it
    considers whether to authorize Phase II construction of the MMA.
        Current milestones for the MMA project are:
        Fiscal year 1998 milestones.--Design antenna; Select MMA site;
    Begin negotiations with possible international partners; Design and
    begin construction of prototype receivers; Design prototype correlator,
    computer/software system, LO and fiber optics systems; Select project
    architect/engineer; and Begin design of civil works.
        Fiscal year 1999 milestones.--Deliver first prototype receiver and
    computer/software system to test site; and Select Photonic or Gunn LO
    system.
        Fiscal year 2000 milestones.--Finalize agreements with
    international partners; Deliver antenna 1 to U.S. test site; Begin
    antenna 1 single dish testing; and Deliver all remaining receivers to
    test site.
                      zare's term on the nsb ending in may
        Question. Dr. Zare, since you joined the Board about six years ago,
    you have served with distinction. For the last two years you have
    guided the Board as its chairman and have sought to revitalize the
    Board as a major player in national science policy. Should this turn
    out to be your last appearance before this subcommittee as a member or
    chairman of the board, do you have any final observations you might
    care to share with us today?
        Answer. Chairman Bond, Thank you for giving me the special
    opportunity to share with you some thoughts as I step down as Chairman
    and leave the National Science Board after six years of service. With
    your permission, I would like to enter for the record the farewell
    remarks I made to the National Science Board (attached). I also would
    like to offer three personal observations:
        First, the best science policy for our country is to continue
    strong bipartisan support. We need buy-in from as many different points
    of view as possible. By its very nature, scientific research is a long-
    term undertaking that requires sustained support for its payoff. Only
    with a bipartisan consensus can we expect this enterprise to flourish.
    To do otherwise is to invite a roller coaster ride that is a dangerous
    path to follow.
        Second, let me commend Congress for repeated support for growth in
    the Federal science and technology budget. For ourselves and for the
    generations of Americans to come, we must continue and substantially
    increase investment in science and technology. Such investment really
    has provided handsome returns in creating new jobs and new wealth. What
    is more difficult to measure but may well be more important is the
    following: The investment in scientific research directly affects the
    quality of life, the health, and the defense of the country. Moreover,
    it provides the capability of finding successful answers to unimagined
    new problems and threats drawing on the reservoir of knowledge and
    human resources developed through research.
        It is easy for some to say that this response is just what you
    expect from a working scientist, that the scientific community is never
    satisfied. I for one think that as a community we have demonstrated
    leadership in setting priorities within individual fields, and I am
    impatient to taste and savor the benefits that increased funding of
    identified priority areas of science and technology would bring to our
    society. We truly are on the threshold of wonderful new discoveries and
    advances, and we must find the will to commit resources to reach these
    goals.
        Finally, a smart science policy does not make all its new
    investments in just a few areas, no matter how promising or inviting
    these areas might seem to be. We must recognize that one of the most
    striking changes taking place in science and technology is the rapidly
    increasing interdependence on all types of knowledge and know-how.
    Breakthroughs in a given field frequently have profound consequences
    for distant and unexpected areas of knowledge. We must avoid optimizing
    near-term returns to the exclusion of long-term benefits that come from
    a balanced science policy of widespread but carefully chosen support.
    In this context, let me offer a caution: The popular debate on whether
    it is better to support practical versus curiosity-driven research can
    blind us to an important fact. Research, whatever it is labeled but so
    long as it is of high quality, invariably has broad benefits, both to
    advancing fundamental science and finding important applications.
    Moreover, let me emphasize that the consequences of research remain
    unpredictable. A wise science policy is not one that foresees the
    future but rather one that enables it to unfold.
                                     ______

                         Attachment NSB-98-83 (Revised)
                richard n. zare, chairman, nsb may 1996-may 1998
                report to the national science board may 7, 1998
        Winston Churchill said, ``Success consists of going from failure to
    failure without loss of enthusiasm.'' In that spirit let me describe to
    you what progress I think the National Science Board has made during
    the time I was its chairman. To me, the most significant change has
    been a reaching out by the Board to address issues bigger than the
    immediate concerns of the National Science Foundation. As you know, the
    Board has by statute a dual role, namely, to set policy for the
    National Science Foundation and to report to the President and to
    Congress on the state of health of the nation's science and engineering
    enterprise. It is in that second realm, I believe, that the Board has
    assumed a much larger presence.
                nsb oversight of the national science foundation
        I will not recite a litany of standard though important activities,
    such as approval of the NSF budget, work on long-range planning,
    approval of various large NSF awards and programs, supervision of the
    Inspector General, approval of the Vannevar Bush and Waterman Award
    winners, etc. Instead, let me highlight some specific items from NSB's
    special responsibility to oversee NSF. The Board has taken its
    responsibilities most seriously, approving several actions of
    consequence. It has:
      --Revised the criteria for merit review of all NSF proposals,
            reducing the number from four to two and sending a clear
            message that what counts, in brief, is a proposal's intrinsic
            excellence and impact;
      --Established that the default policy on renewal awards is that all
            expiring awards be recompeted unless it is judged in the best
            interest of U.S. science and engineering that they not be;
      --Approved a Science and Technology Centers Program and provided
            guidelines for its management that stress educational outreach
            and the creation of partnerships;
      --Approved NSF's participation in the Large Hadron Collider project,
            which involves multi-agency support of a large facility not
            located in the U.S.;
      --Approved a major revamping of the nation's supercomputer activities
            which has broadened from centers to partnerships enlarging the
            base of supercomputing and the reach of this program;
      --Issued policy guidance on NSF's role in the assignment of domain
            names;
      --Participated in a multi-agency discussion of what is scientific
            misconduct and how misconduct proceedings should be carried out
            in general;
      --Provided oversight, through an NSB/NSF staff working group, for the
            development of the NSF Strategic Plan and NSF Performance Plan
            under the Government Performance and Results Act; and
      --Approved a resolution on the proposed National Institute for the
            Environment that actively supports the Foundation's role in
            fundamental environmental research but does not support a
            separate, stand-alone organization for this purpose.
    Reform of NSB Operations
        We began, under the most able leadership of our Vice-Chair, Diana
    Natalicio, by significantly revising Board operations, particularly its
    calendar.
      --We agreed to reduce the number of Board meetings to five and to
            have one of these meetings each year in a location outside NSF
            and the Washington, DC area;
      --The Board made an important decision about its organization in
            addressing NSF responsibilities by agreeing to have non-
            overlapping memberships in its three standing committees: Audit
            & Oversight (chaired by Charles Hess), Education & Human
            Resources (chaired by Shirley Malcom), and Programs & Plans
            (chaired by John Hopcroft). These standing committees have been
            put on a comparable footing with various task forces reporting
            to each standing committee. It is my impression that this
            division of labor has served us quite well;
      --We delegated additional responsibility to the Executive Committee,
            specifically, the authority to approve the budget that NSF
            submits to the Office of Management and Budget each year;
      --We have moved to modernize the NSB meeting procedures, encouraging
            reliance on information technology to conduct our work; and
      --We have produced an election protocol for filling the positions of
            Chair, the Vice Chair, and four of the five positions on the
            Executive Committee.
    NSB National Policy Role
        I turn to activities ``external'' to NSF. To provide a quick
    summary, we:
      --Established a National Science Board Public Service Award, to be
            given annually to an individual and to a group who foster the
            public's understanding of science and technology;
      --Produced a Working Paper on Federal Support of Science Research
            that called for more understanding of the methodology of
            priority setting;
      --Held our first off-site policy meeting in Houston, Texas, on the
            campus of the University of Houston on the subject of the
            Federal role on graduate and postdoctoral education;
      --Produced a National Science Board Paper entitled ``The Federal Role
            in Graduate and Postdoctoral Education.'' This work came out of
            our meeting in Houston, Texas, and responded to the
            Presidential Review Directive to contribute to this assessment
            process. It also came out of the continuing NSB-GUIRR project
            on Stresses on Research and Education in Higher Education
            Institutions. This project has gone through two phases and has
            so far involved a total of 25 universities and colleges that
            are prominent in science and engineering research and education
            and that have participated in campus discussions and in one or
            both national meetings in Washington, DC;
      --Approved a resolution confirming NSB's intention to prepare
            analyses (``occasional papers'') for input to the process of
            developing the Federal budget for science and engineering
            research and education;
      --Prepared and approved for release the paper ``Industry Reliance on
            Publicly Funded Research,'' which should be available in the
            next few weeks;
      --Worked to revise and improve Science & Engineering Indicators,
            which will also be available in a few weeks; and
      --Published a collection of papers delivered at the NSB symposium on
            the University of the 21st Century, held during the March 1996
            NSB meeting at the University of California, Davis, chaired by
            Dr. Frank Rhodes, just before I became chair.
        A good measure of our desire to reach out can be found in the
    attached Appendix, which lists the invited visitors and speakers we
    have had at NSB meetings or functions during the past two years. I
    think that this collection of people is very revealing of our
    intentions.
        We know that it is easy for people to stumble and fall when they
    seek to follow a new path. In particular, we have become aware that it
    is awkward for the NSF Director, as a member of the Board, to vote on
    the clearance and approval of NSB reports on national research and
    education policy that may affect Federal agencies other than NSF. These
    considerations have led us to urge the Director to abstain as a matter
    of principle from such votes. In this regard, we are also developing a
    separate Board logo (not yet approved) to help distinguish ourselves
    from NSF in this new policy role. To me, these are clear signs that we
    are breaking new ground, but we have much more to do and to learn
    before we become really effective. It is my belief that the Board's
    appetite has been whetted for this new role and that there is now no
    turning back.
    Reflections and Comments
        Let me add a more personal note on what being Chair of the Board
    has meant to me. These past years have been my most rewarding
    experience of public service of any type. The more I gave, the more I
    received from others. During this period I authored seven editorials
    (two in Chemical and Engineering News, two in the Journal of Chemical
    Education, one in Science, one in The Scientist, and one in the New
    York Times Op Ed page). I appeared five times at Congressional hearings
    and I twice had the misfortune of traveling across the country to
    attend hearings that were cancelled at the last moment--something I
    call painful loss of hearing! I also made official visits to New
    Zealand (where I had the pleasure of dedicating a C-130 transport), to
    Antarctica, to Mexico, and to China.
        This ``burst of activity'' by the Board would not have occurred
    without strong support from others, especially the NSF Director, Neal
    Lane, who let it happen, and Dr. Marta Cehelsky, NSB Executive Officer,
    who provided the Board and me with huge assistance in spite of being
    quite understaffed to handle an activist Board trying to blaze new
    trails.
        What advice might I offer future members of the National Science
    Board? When I reflect on what needs to be done to sustain our progress,
    I recall a powerful statement whose source is unknown to me: ``To
    succeed in politics, it is often necessary to rise above your
    principles.'' When I first heard these words, I thought them strange.
    They are quite different from what Groucho Marx said: ``Those are my
    principles, and if you do not like them, * * * well, I have others.''
    The statement about the need to rise above principles, I have come to
    realize, contains special wisdom. I suggest that future Board members
    must be guided by their principles in carrying out all the tasks of the
    National Science Board, but once the Board has decided on a course of
    action, its members must learn to pull together in support of one
    another provided that our decision is not offensive to our most deeply
    held principles. Too often consensus is equated with near unanimity. We
    must learn how to reach consensus and then move on to do other
    business. The National Science Board is not a faculty senate meeting in
    which those who do not get their way remain free to object
    indefinitely, a behavior pattern not limited to those in universities.
        It has been a true pleasure and a high privilege for me to have had
    this opportunity to serve on the National Science Board for six years
    and as your Chair for the past two years. I will miss the good
    companionship it has provided me, and the opportunity for my own
    personal growth. In following along these new paths, the National
    Science Board can make an even more positive contribution to the
    nation.

                                               Richard N. Zare,
                                                   Chairman, 1996-1998.
                             addendum, may 8, 1998
        To complete the record for this term, after this report was
    written, during its May 6-8 meeting, the Board:
      --Approved a logo for the NSB; and
      --Met with Newt Gingrich, Speaker of the House of Representatives.
                                     ______

                                  Attachment 2

            government performance and results act--performance plan
        Question. Dr. Lane, earlier this month the committee received your
    performance plan as mandated under the Government Performance and
    Results Act. We noticed that you elected to use a more qualitative
    approach rather than the quantitative approach used by some other
    agencies. In other words, you took advantage of the flexibility
    provided in the act for a so-called ``alternative'' approach in setting
    goals and outcomes and then assessing your progress towards their
    attainment. Briefly describe your approach to performance assessment
    with respect to research and education and why you believe the
    alternative approach makes the most sense for your research and
    education programs.
        Answer. The National Science Foundation's fiscal year 1999 GPRA
    Performance Plan includes a combination of qualitative outcome-oriented
    goals and quantitative output goals. The quantitative goals are used to
    establish measures for the performance of NSF's investment process and
    management. The qualitative goals are used to assess the outcomes of
    NSF's investment in science and engineering research and education.
        The National Science Foundation uses a process of merit review with
    peer evaluation to identify the most promising proposals from
    researchers and educators. In addition, NSF has in place a mechanism
    for assessment of these processes. Each NSF program is evaluated by an
    external panel of experts (called a Committee of Visitors or COV) every
    three years. COV's evaluate the thoroughness, impartiality, and
    credibility of the merit review process. The reports from COV's are
    transmitted to Directorate-level Advisory Committees, to the cognizant
    NSF Assistant Director for response, and ultimately to the Director,
    Deputy Director, and Chief Financial Officer.
        As noted in NSF's fiscal year 1999 GPRA Performance Plan, ``NSF is
    committed to using panels of external experts to assess on a regular
    basis its effectiveness and directions.'' NSF will operate this
    assessment process through the directorate-level advisory committees.
    The COV process is being modified to include attention to results as a
    source of input to the advisory committees. This will provide
    consistent, comparable evaluation information that can be integrated at
    the Foundation level.
        NSF's process of merit review with peer evaluation focuses on the
    individual project level. The Foundation's staff of scientists,
    engineers, and educators consider the expert advice of peer evaluators
    from the research and education community and recommend support for the
    most promising research and education project proposals. Since both the
    substance and the timing of outcomes from these NSF-supported
    activities are unpredictable, performance standards for the results of
    NSF's investments in research and education cannot be adequately
    expressed in quantified, annual performance goals. NSF has expressed
    its performance goals for results as descriptive standards under the
    GPRA option for use of the alternative format. NSF's level of success
    in achieving these results-oriented goals will be determined through
    external assessment processes as described above. This approach allows
    for a responsible and comprehensive assessment of the continuous flow
    of results from NSF-supported activities.
                           year 2000 computer problem
        Question. Dr. Lane, describe where you are in getting a handle on
    the year 2000 computer problem. I understand in the House, the
    Government Reform Committee reviewed all agencies for their work on
    getting the Y2K problem under control. Where did NSF come out in that
    review?
        Answer. NSF is on schedule for achieving Year 2000 (Y2K) compliancy
    well before the turn of the century. OMB has consistently classified
    NSF as making satisfactory progress (the highest classification given)
    on its Y2K activities. During the last Y2K reporting period (May 15,
    1998), NSF received an A- from the House's Subcommittee on Government
    Management, Information and Technology, Committee on Government Reform
    and Oversight. Only four agencies received a grade of A.
                                     ______

                      Questions Submitted by Senator Burns

             experimental program to stimulate competitive research
        Question. EPSCoR (Experimental Program to Stimulate Competitive
    Research) has been important to Montana and some 18 other states which
    are largely rural. The heart of the program consists of infrastructure
    awards, EPSCoR grants and, more recently, co-funding. I am deeply
    concerned about the ability of the program to move forward without an
    increase in the base EPSCoR program. How can we insure that all three
    components--infrastructure awards, EPSCoR grants and co-funding
    advance?
        Answer. The fiscal year 1999 EPSCoR co-funding from research
    programs increases to approximately $15 million, $5 million over fiscal
    year 1998. In fiscal year 1999, EPSCoR will: (1) make approximately 19
    infrastructure development awards and (2) match the $15 million of
    available co-funding from the Foundation's regular research programs.
    EPSCoR's highest priority is to ``mainstream'' EPSCoR researchers and
    their institutions into the Foundation's regular grant programs. The
    co-funding effort thus represents the cornerstone of EPSCoR's
    ``mainstreaming'' strategy, since each dollar of EPSCoR support has the
    potential to leverage one additional dollar of research program support
    (i.e., the proposed $30 million total research grant support in fiscal
    year 1999). Under the fiscal year 1999 EPSCoR budget request of $38.41
    million, operation of the EPSCoR Grant program would be modified; e.g.,
    smaller, more-targeted awards would be made.
             epscor state representation in nsf advisory capacities
        Question. We have, for some time, been concerned about the lack of
    representatives from EPSCoR states on science boards and advisory
    committees and peer review panels. Are we making any progress on this?
        Answer. The EPSCoR Office reports annually to the Director on the
    level of participation of scientists and engineers from EPSCoR
    jurisdictions as NSF merit reviewers. In fiscal year 1996, the EPSCoR
    Office compiled and distributed to the Foundation's Directorates a list
    of over 1,900 potential reviewers from EPSCoR states. The intent was to
    provide the Directorates with a pool of available EPSCoR merit
    reviewers from which NSF program staff could select. In fiscal year
    1997, a total of 449 EPSCoR scientists and engineers, identified in the
    database, were selected by NSF programs as review panelists. This
    number compares to 333 in fiscal year 1996 and represents a 34.8
    percent increase in the use of those individuals identified by the
    EPSCoR states as being highly qualified to participate in the NSF merit
    review process. In addition, EPSCoR membership in the Foundation's
    ``General Advice Committees'' has also been examined. These committees,
    which provide general or specific advice on NSF programming, include:
    (1) The advisory committees for the seven directorates and the Office
    of Polar Programs; (2) the Committee on Equal Opportunities in Science
    and Engineering; (3) the Advisory Committee for Industrial Innovation
    Interface; (4) various public award committees (e.g., the Alan T.
    Waterman Award); and (5) ad hoc special topic committees (e.g.,
    Antarctic Blue Ribbon Panel). Excluding members of the Foundation
    staff, membership on the ``General Advice Committees'' totaled 285 in
    fiscal year 1997. Of this number, nine people were identified as being
    from EPSCoR states.
               status of v bns grant to montana state university
        Question. Montana State University has been awarded a vBNS high
    performance networking grant. When do you expect funding to be
    available?
        Answer. An initial installment of $175,000 was awarded in February
    1998. The remaining $175,000 will be awarded when the University
    notifies NSF that it has signed an agreement with a high performance
    network provider to use its system and has an anticipated connection
    date. The Principal Investigator plans to be connected in September
    1998, so the notification is expected in the near future.
            epscor state benefits from domain name registration fees
        Question. In the recent Supplemental Appropriations Bill, we
    included language which hopefully will meet the legal objections which
    had been raised in connection with the use of domain registration fees.
    What do you see as the outlook for these funds? How will EPSCoR states
    benefit from them?
        Answer. Section 8003 of the fiscal year 1998 Supplemental
    Appropriations and Rescissions Act (H.R. 3579) included language
    ratifying NSF's use of domain name registration fees that had been
    collected by our awardee, Network Solutions, and placed into a fund for
    the preservation and enhancement of the intellectual infrastructure of
    the Internet. Presently, NSF is in the process of seeking judicial
    release of these funds--which amount to approximately $58 million--for
    use as part of our Next Generation Internet (NGI) initiative and
    related information technology activities. While NSF's request to the
    Court is being contested, the Office of General Counsel anticipates a
    favorable district court ruling by late summer. These funds would then
    be available for the NGI initiative and related information technology
    activities, subject to possible district court review.
        The influx of these funds will carry the Foundation toward our NGI
    and broader information technology goals which include conducting
    experimental research in new networking technologies, creating
    experimental network testbeds at research institutions nationwide and
    developing new revolutionary research applications. Moreover, in order
    to address inequities that may be caused by the remote location of
    research institutions in many EPSCoR states, NSF has arranged to review
    successful high performance connections proposals from research
    institutions in EPSCoR states and to award up to an additional
    $200,000, beyond the $350,000 maximum, where extraordinary costs are
    required to connect to the NSF NGI backbone network.
                       epscor state connections to v bns
        Question. How many institutions in EPSCoR states have now been
    awarded vBNS connections grants and at what level of connectivity? How
    many are actually connected?
        Answer. Eight institutions in EPSCoR states have been awarded high
    performance connections grants. As of June 15, 1998, one awardee has
    been connected (University of Alabama at Birmingham).
                       advanced networking infrastructure
        Question. How does the Internet 2's Abilene project relate to the
    NSF's VBNS?
        Answer. The Vice President, on April 14, 1998, unveiled the
    University Consortium for Advanced Internet Development (UCAID) project
    named ``Abilene.'' This UCAID project, to be undertaken in partnership
    with Qwest, Nortel, and Cisco, would build a second Internet2 backbone
    network to serve the research community along with the existing NSF-
    supported vBNS backbone network. It is anticipated that universities
    may receive NSF support to connect to and use either vBNS or Abilene.
    The Abilene network is complementary to the vBNS and will assist NSF in
    performing its mission to support the U.S. research and education
    community. Because of the extraordinary demand for bandwidth and
    advanced networking services, no single network would be able to fill
    the needs of the research and engineering community by itself. Having
    multiple experimental networks will also facilitate very important and
    interesting research that remains to be done to enable end-to-end
    services such as quality of service and security across multiple
    networks. This activity illustrates the increasing breadth of the
    networking partnership with the private sector that will help assure
    the preeminence of U.S. industry in this important new technology, and
    will help provide capabilities needed by the nation's academic
    community to continue to retain its preeminence in cutting-edge
    research.
                      geographic distribution of gigapops
        Question. What responsibility does NSF have for assuring reasonable
    geographic distribution of gigapops? What can you do to help insure
    that rural areas have reasonable access to gigapops?
        Answer. The current NSF high performance connections program
    provides support directly to universities. Universities, both NSF-
    funded and others, may band together to create regional gigapops if
    they decide that it is in their interests to do so. High performance
    connections awards funded by NSF may be used by the universities to
    support gigapops as well as other efforts. Since the geographical
    distribution of universities receiving high performance connections
    awards is quite broad (we anticipate that at least one location in each
    state will receive an award), gigapops should arise where and when the
    awardees and others decide that they are appropriate.
         epscor state participation in advanced computing applications
        Question. EPSCoR was, I understand mentioned in both the successful
    NCSA and the NPACI advanced computing applications. How are EPSCoR
    states included in these programs?
        Answer. In fiscal year 1997, the EPSCoR Office sponsored a
    technical workshop for EPSCoR researchers at the National Computational
    Science Alliance (NCSA) on the campus of the University of Illinois,
    Urbana-Champaign to acquaint them with opportunities available through
    the Foundation's Partnerships in Advanced Computational Infrastructure
    (PACI). As a result of these efforts, 32 EPSCoR institutions in 14
    states have become affiliated with the NSCA initiative through their
    status as EPSCoR program participants. An orientation and planning
    meeting of EPSCoR researchers and federal R&D personnel was also held
    in October 1997 at the Earth Resources Observation System Data Center
    (Department of the Interior, Sioux Falls, South Dakota) to develop
    partnerships among NSCA, federal R&D agencies and Midwest EPSCoR
    institutions. An additional technical workshop was conducted in June
    1998 at the Georgia Institute of Technology. The purpose of the
    workshop was to form R&D collaborations among the NCSA and EPSCoR
    researchers.
        Two EPSCoR institutions (University of Kansas and Montana State
    University) are currently members of the National Partnership in
    Advanced Computational Infrastructure (NPACI). To increase EPSCoR
    participation in NPACI, EPSCoR is sponsoring an information workshop in
    October 1998 at the San Diego Supercomputing Center on the campus of
    the University of California, San Diego. The workshop will acquaint
    university presidents and members of EPSCoR state higher education
    governing boards with the opportunities that NPACI membership affords.
    Special emphasis will be placed on acquiring NPACI membership for
    institutions in the western EPSCoR states (Idaho, Kansas, Montana,
    Nevada, Oklahoma, Wyoming).
                                  plant genome
        Question. How is NSF addressing the Congressional language which
    indicates that plant genome funding should be focused on ``economically
    significant'' crops? How will you proceed on this in fiscal year 1999?
        Answer. The focus of the Plant Genome Research Program is
    determining and understanding the genetic structure, organization, and
    function of economically significant plants. Many of these
    characteristics are common across species lines in plants. What is
    unique for a specific genome can often best be learned through
    comparative genomics, which requires studying genomes of diverse plant
    species including relatives of economically significant plants. NSF has
    sought ideas about the choice of experimental material from the
    applicants, who must convince the reviewers that their projects will
    produce results leading to new discoveries about the genomes of
    economically significant plants.
        In fiscal year 1999, NSF plans to continue to support the best
    science that will lead us closer to a complete understanding of the
    genomes of economically significant plants.
                          life in extreme environments
        Question. What are your plans for Life in Extreme Environments
    (LExEn) in fiscal year 1999? We have several areas in Montana that
    might be considered to have ``extreme environments''. Do these come
    within the parameters of the program?
        Answer. In fiscal year 1999, the LExEn program will continue to
    emphasize collaborative and interdisciplinary efforts to build a
    scientific community that can study how organisms have adapted to
    environments at the extremes of life, both in the present and in past
    geological sites. ``Extreme'' conditions are understood to include very
    high or very low temperatures, salt concentrations, acidity, pressure,
    or concentrations of toxic chemicals. Montana has sites with extremes
    of temperature and pressure. Examples would be at great depths under
    ground level, at nearby hot springs where scientists from Montana carry
    out their research, and permanent snowfields found in the alpine zone
    of the Rocky Mountains. LExEn-supported scientists can have their
    laboratories located anywhere in the United States, and the gathering
    of specimens that they study can occur anywhere in the world, including
    thermal vents on the floors of the oceans or Antarctica. A LExEn award
    was made to Montana State University last year for studies of microbial
    populations in Antarctica. (Edward E. Adams and John C. Priscu are co-
    principal investigators on the award.)
        epscor state participation in small business innovative research
        Question. Some of the EPSCoR money goes into NSF's SBIR program.
    How are EPSCoR states faring with NSF SBIR's? Can you document any
    improvement over the past five years? Do you know how EPSCoR states are
    doing in other departments and agencies?
        Answer. EPSCoR spends its Small Business Innovative Research (SBIR)
    funds for projects that are consistent with EPSCoR's objective of
    utilizing the science and technology resources that reside within a
    state's higher education institutions on behalf of its economic
    development. In fiscal year 1998, EPSCoR invested approximately $1.2
    million in SBIR grants. In addition, EPSCoR Cooperative Agreement
    awards support SBIR-related activities that help to develop
    partnerships between local entrepreneurs and university researchers.
    During the period fiscal year 1994-98, NSF SBIR awards to businesses in
    EPSCoR states increased. The 19 EPSCoR states received eight SBIR
    awards in fiscal year 1994 and nine awards in fiscal year 1995. In both
    fiscal year 1997 and fiscal year 1998, the number of awards doubled to
    18. In addition, nine Phase II SBIR awards were made in fiscal year
    1996 and fiscal year 1997. The fiscal year 1998 NSF Phase II awards are
    currently being processed.
        Anecdotal information from NSF's EPSCoR state Project Directors
    regarding SBIR activities indicates that progress also is occurring in
    other agencies. However, the lack of a government-wide SBIR data base
    precludes a quantitative analysis of the performance of EPSCoR states
    in the SBIR programs.
                                 polar research
        Question. Under your Polar Research Programs, how much do you plan
    to spend on Arctic research and how much on research conducted in the
    Antarctic? How much on logistics to support each polar program?
        Answer. NSF provides over 20 percent of the total Federal support
    for Arctic research and logistics and approximately 95 percent of U.S.
    funding for Antarctic research and logistics.
        The fiscal year 1999 budget request for the U.S. Arctic Research
    Program within Polar Research Programs is $41.16 million. This request
    includes $9.5 million for Arctic logistics. An additional estimated $39
    million--including $21 million for the Polar Cap Observatory--is
    estimated for Arctic research and education by other directorates
    within NSF.
        The fiscal year 1999 budget request includes $32.8 million for the
    U.S. Antarctic Research Grants Program, $108.4 for Antarctic Operations
    and Science Support, and $62.6 million for U.S. Antarctic Logistical
    Support Activities provided by DOD.
        Question. I recently visited the International Arctic Research
    Center (IARC) located in Fairbanks. Does NSF support this concept of
    international cooperation for research into the Arctic?
        Answer. NSF supports a broad range of international cooperation. In
    research related to global change, for example, the Foundation
    participates in many coordinated international activities. As the lead
    federal agency for global change research, NSF has been cooperating
    with Japan, especially its Science and Technology Agency, to develop
    concepts for exploring global change research and prediction under the
    aegis of the U.S.--Japan S&T agreement--including through the
    International Arctic Research Center in Alaska and the International
    Pacific Research Center in Hawaii. Other agencies, such as NASA, NOAA,
    and DOE, are participating in this interaction. It is expected that
    such centers would ultimately involve broader international
    participation as well. As with all its activities, NSF relies on merit-
    reviewed proposals to support the research undertaken at such centers.
        Question. With most of the world's population living in the
    northern hemisphere, does it make sense to dedicate more resources to
    exploring and understanding the impacts of human activities there?
        Answer. The Arctic plays a central role in regional and global
    environmental issues, especially those related to climate and resource
    development. It also is of considerable importance from economic and
    national policy perspectives, since the Alaskan Arctic and adjacent
    areas contain significant petroleum, natural gas, and marine resources.
    The need for additional scientific information is matched by new
    opportunities for research. The fiscal year 1999 budget request for the
    U.S. Arctic Research Program represents an increase of 26 percent from
    fiscal year 1998, including studies of human dimensions of the Arctic
    system focused on the interaction of global environmental changes,
    vegetation and marine productivity, and human activity.
                                     ______

                     Questions Submitted by Senator Stevens

                        total cost of south pole station
        Question. Total Cost of South Pole Station Increases by $35.9M: Dr.
    Lane, let's turn to the request for South Pole Station. On page 71 of
    the Augustine Panel report, we find their recommendation to modernize
    the South Pole Station. If you follow the panel's arithmetic they seem
    to recommend a total modernization effort that comes in at $145
    million. To pay for the project, they recommend that $20 million can be
    found in the temporary cut back in research during the years the
    station is being rebuilt. They also suggest that an additional $30
    million could be found in savings to be achieved by the transition from
    the Navy to the Air National Guard and the civilian contractor for
    logistics support. The panel then goes on to call for a net
    appropriation of $95 million over several years for the station's
    modernization activity.
        Last year we appropriated a total of $70 million to substantially
    start the modernization effort. Now if NSF was following the Augustine
    Panel's funding recommendations for the station--and by that I mean
    savings front logistics and research deferral, we would have expected
    to see in your budget for fiscal year 1999, a request of about $25
    million to finish off the south pole project.
        Well, in your fiscal year 1999 budget there is in fact a request of
    $22 million for South Pole Station--but you also say that beyond the
    fiscal year 1999 request, an additional $35.9 million will be need in
    fiscal year 2000 and fiscal year 2001 to complete the station.
        So what we are thinking here is either: (1) the cost of the station
    is up--in part--because NSF is seeking to avoid the deferral of
    research support as recommended by the Augustine panel, (2) NSF is not
    expecting to realize the savings in logistics estimated by the
    Augustine panel; or (3) we have just seen the $145 million station
    increase by nearly $36 million in one year.
        Can you help us understand this situation?
        Answer. The Augustine panel recommended expenditure of $145 million
    for Antarctic facilities, including $125 million for South Pole
    Station. Incorporating small adjustments to the Augustine Panel numbers
    due to the use of updated inflation factors the estimated cost of South
    Pole Station Modernization is $127.9 million.
        The Panel also recommended that $30 million anticipated from
    operational savings due to the transition from the Navy be used for
    Antarctic infrastructure renewal. NSF does expect to see savings, but
    not in the time frame envisioned by the Panel. The $30 million in
    savings estimated by the Augustine Panel was based on NSF's estimate of
    savings over the five year period fiscal year 1998-fiscal year 2002
    ($44 million) offset by the cost of modifying three NSF-owned LC-130
    aircraft for use by the Air National Guard (the Augustine Panel had
    used $14 million as the offset).
        NSF's Office of Inspector General (OIG) has issued two recent
    analyses of estimated transition costs and savings. The estimated
    savings for fiscal year 1998-fiscal year 2002, based on net savings due
    to the transition of functions and implementation of various OIG
    recommendations, is about $31 million. This would be offset by $36
    million, the current estimate for the cost of modifying the three NSF-
    owned aircraft.
        Overall, according to the OIG analyses, NSF could expect to see an
    annual savings of about $3 million in fiscal year 1999, rising over
    time to approximately $9 million. It is anticipated that such savings
    will be used to address infrastructure upgrades at McMurdo and Palmer
    Stations, as recommended by the Augustine Panel.
        Question. What kind of construction management strategy do you
    expect to employ as you move forward on the modernization effort and
    how will you ensure the project remains on schedule and within budget--
    particularly given the difficult environmental conditions you are going
    to have to confront?
        Answer. NSF will contract for procurement and construction
    management for all phases of the project, including design reviews of
    all drawings and specifications; conformance of the designs and
    procurements with established standardization criteria; assistance in
    establishing functional interfaces; transition from the existing to the
    new facilities; and systems integration. Naval Facilities Engineering
    Command, Pacific Division--with long-term experience in Antarctic
    construction projects--will select, monitor and manage architectural
    and engineering firms for design, post construction services, and
    construction inspection for the project.
        Any significant changes to project requirements and conceptual
    design will have to be approved by the project manager, project
    engineer, construction manager, and a Project Oversight Committee with
    members representing facilities, technical, scientific, budgetary, and
    contractual areas, to ensure cost and schedule control.
        The project cost estimate is composed of 1,200 activities. Each
    activity (material procurement, labor or logistics) has a projected
    cost that is tracked against actual expenditures. The project cost
    estimate used by the Augustine Panel did not include any cost
    contingency provision, although the Panel noted that this represents a
    departure from commercial practices. Any over-runs will be balanced
    with under-runs or scope reductions to keep the total costs within the
    overall project budget.
                               aircraft upgrades
        Question. Dr. Lane, in your fiscal year 1998 current plan, you
    proposed spending $4 million to begin the reconfiguration of your LC-
    130 aircraft to meet Air Force safety standards. The budget we have
    before us requests an additional $20 million for this effort. And I
    suspect that we may even see the need to spend even more in fiscal year
    2000 on this effort. It seems that these additional costs are related
    to the transition from the Navy to the Air National Guard. This
    Committee was under the impression that the cost of transition was
    expected to be fairly modest--certainly nothing like the $24 million
    needed this year and next. Give us some sense as to what these upgrades
    will accomplish in terms of safety and service life extension of the
    aircraft.
        Answer. Ski-equipped LC-130 aircraft are the backbone of the polar
    air transport system for the U.S. Antarctic Program. The LC-130's also
    support NSF's research in the Arctic. By March 1999 the Air National
    Guard (ANG) will provide the sole LC-130 support to the polar regions.
        Three NSF-owned LC-130's will be transferred to the operational
    control of the ANG, for a total ANG fleet of ten LC-130's. The NSF-
    owned aircraft require substantial upgrades and modifications to meet
    Air Force safety and operability requirements and FAA standards. The
    modifications include engineering, avionics, airframe, safety,
    propulsion, electronics and communications, equipment for black box
    installation, storage, and project administration. The modifications
    will improve safety of operations by providing identical cockpits and
    operating systems on all ten aircraft operated by the ANG. The service
    life of the aircraft will be extended, since each aircraft will be
    flown fewer miles annually when it is integrated into an overall fleet
    of ten aircraft.
        The transition from the Navy to the Air National Guard and other
    civilian contractors is expected to yield significant savings over the
    long term, starting in fiscal year 2000. The aircraft modifications
    take approximately two full years to complete. If the anticipated
    savings in operations were used to fund the modifications, it would be
    fiscal year 2005 before all three aircraft would be available. This
    would seriously impact support of polar missions, including the current
    schedule for rebuilding South Pole Station.
                                arctic research
        Question. Dr. Lane, in the request, you identify some $80 million--
    Foundation-wide--to support Arctic research and education activities.
    Within that amount you suggest that you are proposing to double your
    support for Arctic logistics. That does not seem to be the case and I
    would like a complete accounting of all proposed funding for both
    research and logistics for the Arctic. Also, please compare and
    contrast your role in the Arctic with your role in the Antarctic.
        Answer. The Office of Polar Programs, the Directorate for
    Geosciences, and other directorates within the NSF have proposed to
    direct more than $80 million in fiscal year 1999 to address emerging
    opportunities and needs in the Arctic, as detailed below:

                               NSF ARCTIC FUNDING
                            [In millions of dollars]
    ------------------------------------------------------------------------
                                                       Fiscal year
                                            --------------------------------
                                                                    Proposed
                                                1998       1999       1999
                                              Estimate   Request   increment
    ------------------------------------------------------------------------
    Research and Education.................       44.8       50.2        5.4
    Logistics..............................        4.5        9.5        5.0
    Facilities \1\.........................        5.0       21.0       16.0
                                            --------------------------------
          Total NSF........................       54.3       80.7       26.4
    ------------------------------------------------------------------------
    \1\ Includes Polar Cap Observatory.

        Arctic emphases Foundation-wide include expansion of logistics
    capabilities, research platforms and facilities; extension of education
    and outreach activities, especially those exploring new technology
    venues and distance learning; increased scientific cooperation at
    international levels; and further development of research programs on
    the human dimensions of global change.
        Arctic Logistics support will increase $5.0 million to $9.50
    million in fiscal year 1999--more than double the fiscal year 1998
    level. These funds will support research in Polar Programs and joint
    programs across NSF that require coordinated logistics support. In
    addressing the recommendations of the U.S. Arctic Research Commission
    in Logistics Recommendations for an Improved U.S. Arctic Research
    Capability (July 1997), funding will be provided in the following
    priority areas:
      --safety upgrades for field parties (GPS, communications, shelters);
      --improved scientific instrumentation for Navy Arctic submarine
            cruises and workshops for planning future cruises;
      --tests of science systems and instrumentation during sea trials of
            the new research icebreaker USCGC Healy;
      --upgrades to the Toolik Lake Long Term Ecological Research (LTER)
            site and to the Barrow Environmental Observatory in Alaska;
      --extension of winter-over camp at Summit, Greenland to a year-round
            camp; and
      --feasibility studies of autonomous vehicles and instruments for
            Arctic observations.
        In comparing and contrasting NSF's role in the Arctic with its role
    in the Antarctic, several points can be made. Because both Antarctica
    and the Arctic are dominated by extreme cold and characterized by days
    to months of continuous daylight alternating with periods of complete
    darkness, they are apt to be thought of in terms of their similarities.
    However, there are also major differences which affect NSF's role.
        Federal funding for research in Antarctica and the Arctic is
    managed differently. Three federal agencies provide funding for
    Antarctic research, with NSF providing approximately 95 percent of the
    funds. The National Science Foundation has been assigned the
    responsibility for budgeting and managing the entire U.S. Antarctic
    Program. Twelve federal agencies currently support Arctic research and
    associated activities, with the National Science Foundation and the
    National Aeronautics and Space Administration providing the largest
    shares. NSF is responsible for providing interagency leadership for
    research planning as directed by the Arctic Research Policy Act of
    1984.
        With a permanent population in excess of 2 million, the Arctic has
    settlements, villages, towns, and cities with an existing workforce and
    structure to provide food, material handling, shops, and warehouses.
    Support for scientists working in the Arctic, including utilities and
    communications, is arranged largely through commercial organizations.
        In contrast to the situation in the Arctic, there is no indigenous
    population in Antarctica. U.S. stations are established and maintained
    by the National Science Foundation to maintain a national presence on a
    continent with overlapping territorial claims and to support science
    conducted there. All life support as well as infrastructure and
    equipment maintenance--aircraft, runways, communications, passenger
    movement, and baggage handling--are provided by NSF.
                                     ______

                    Questions Submitted by Senator Mikulski

                               antarctic program
        Question. What activities does NSF carry out in the Antarctic that
    make the South Pole Station necessary?
        Answer. Since 1970, the National Science Foundation has been
    charged with the responsibility for managing and budgeting for the U.S.
    Antarctic Program. This responsibility, which has been articulated
    through a series of National Security Decision and Executive Memoranda
    and confirmed most recently in a report by the National Science and
    Technology Council, requires that the U.S. maintain an active and
    influential presence in Antarctica, including the year-round occupation
    of the South Pole. The conduct of science is the principal expression
    of U.S. presence in Antarctica.
        Occupation of the geographic South Pole is of particular
    geopolitical significance due to its location at the convergence of the
    territorial claims of six of the Antarctic Treaty nations. As a result
    of the singular geophysical conditions, the South Pole Station provides
    a unique observatory for several fields of science. Due to its location
    on the rotational axis of Earth, the South Pole is valuable for study
    of seismic and atmospheric waves. Its remoteness from population
    centers makes South Pole ideal for observing long-term effects of human
    activities on the atmosphere. Its altitude of nearly three kilometers
    combined with the cold dry atmosphere make it ideal for infrared and
    submillimeter astronomy.
        For the classes of observations that benefit from being at the axis
    of rotation, there is no reasonable alternative. For many astrophysical
    objectives, the best alternative would be space or lunar-based
    instruments, which would be considerably more expensive. Research
    funded at South Pole is that which can best, and in some cases only, be
    done there.
        South Pole Station is a hub for research on the high Antarctic
    plateau, as noted by the report of the Committee on Fundamental Science
    of the National Science and Technology Council (United States Antarctic
    Program, April, 1996.) Sites accessed via the station include some
    Antarctic Geophysical Observatories (AGO's), Antarctic Weather Stations
    (AWS's), and glaciology and geology projects requiring access to the
    continental interior. Without the station at South Pole, the report
    noted:
        ``The loss of AWS's would reduce acquisition of climate and weather
    data from this extremely data-sparse region and would break the
    continuity of the data sets, further increasing the uncertainty of
    global models that attempt to quantify and understand Antaractica's
    dominant force in global climate and climate variability * * *. The
    loss of the AGO's would inhibit U.S. mapping of the cusp region of the
    ionosphere, which complements the space physics observations of NASA,
    NOAA, and DOD * * * NOAA's long-term record of ozone and other
    greenhouse gas measurements would end. Loss of UV monitoring would be
    significant because the South Pole is at the center of the ozone hole.
    Loss of the seismic station would create a void in the global coverage
    (the South Pole sensor is recognized for probing remotely the Earth's
    interior and for monitoring earthquakes and nuclear weapons testing).
    Finally, the investment in AMANDA, the prototype of a new astronomy
    using the ice sheet to detect neutrinos, would be lost. Closure of
    South Pole would leave Russia as the only country with a station,
    Vostok, in the Antarctic interior.''
        Question. What is the South Pole Station Modernization project?
        Answer. The present U.S. research station at the South Pole, the
    most remote outpost on Earth, is aging. The U.S. Antarctic Program
    External Panel concluded in its report of April 1997 that the South
    Pole Station needs to be replaced soon for economic, safety and
    operational reasons. The Panel's recommendation of an ``Optimized
    Station'' was the basis for Congressional discussions, leading to the
    fiscal year 1998 appropriation to initiate the South Pole Station
    Modernization (SPSM) project.
        The concept of South Pole Station Modernization has evolved from
    engineering and architectural studies of all aspects of the station,
    including projected science requirements, logistics, construction
    limitations, and operation and maintenance of the completed facility.
    Studies have been conducted from 1989 through the present, during which
    time more than 40 reports were prepared, conclusions of which were
    incorporated in plans for modernization of the station. Throughout this
    process the following goals, consistent with U.S. Antarctic policy
    goals, were considered:
      --Maintain a U.S. presence in accordance with national policy;
      --Provide a safe working and living environment;
      --Provide a platform for science; and
      --Achieve a 25-year station life.
        The resulting South Pole Station Modernization project is an
    elevated station complex with two connected buildings, supporting 110
    people (46 science personnel and 64 support personnel) in the summer
    and 50 people (31 science personnel and 19 support personnel) in the
    winter. The current budget profile for SPSM is below:

                            [In millions of dollars]
    ------------------------------------------------------------------------
                                                Fiscal year
                                     --------------------------------  Total
                                       1998    1999    2000    2001
    ------------------------------------------------------------------------
    South Pole Station Modernization    70.0    22.0    22.4    13.5   127.9
    ------------------------------------------------------------------------

        The costs include materials, labor, logistics for transportation of
    all material and personnel to the South Pole, construction support,
    inspection, and equipment, as well as demolition and disposal. The
    location at the South Pole requires significant lead time for
    construction projects because of the long procurement cycle, the
    shipping constraints (one vessel per year to deliver materials for all
    South Pole and McMurdo Station needs), and the shortened summer period
    for construction at the South Pole (100 days per year). It is
    anticipated that the station will be completed in fiscal year 2005.
        Question. Where are you in implementing the recommendations
    highlighted in the Augustine Report?
        Answer. NSF is responding to all the recommendations that required
    action. For example:
      --funding received in fiscal year 1997 is being used to eliminate the
            most critical safety and health problems at the South Pole
            Station, and these upgrades are currently on schedule;
      --detailed plans for the recommended optimized station were developed
            and NSF has begun the South Pole Station Modernization project
            with the appropriation received in fiscal year 1998;
      --operational savings are being tracked and it is anticipated that
            such savings will be used to address infrastructure upgrades at
            McMurdo and Palmer Stations;
      --the fiscal year 1999 Budget Request reflects the Panel
            recommendation that science funding be reallocated to
            infrastructure needs;
      --an integrated long-range plan based on realistic out-year budget
            expectations and the prioritization of research and facilities
            needs in both the Antarctic and the Arctic is being developed;
            and
      --guidelines and procedures are being developed to incorporate
            science support costs into the merit review.
        Question. The budget justification mentions possibly adding a $10
    million cost contingency provision to the estimated project cost. Is
    this project on schedule and on budget?
        Answer. The cost estimate of the Augustine Panel and the
    corresponding Budget Request for South Pole Station Modernization does
    not include any cost contingency. Commercial construction projects
    usually do include such a contingency. The contingency covers
    variations in cost that may arise between the design of a project and
    the actual award of a construction contract. The discussion in the
    budget justification is intended to provide information on cost
    contingency if commercial practices were applied to the South Pole
    Station Modernization project. The cost contingency would be about $10
    million at this stage of the project.
        The South Pole Station Modernization Project, currently in its
    first year, is on schedule and on budget. Any cost over-runs will be
    balanced with under-runs or scope reductions to keep the total costs
    within the overall project budget.
                           informal science education
        Question. Isn't the need to increase our efforts in Informal
    Science Education one of the key messages you have been delivering to
    the science community in recent years as the NSF director?
        Answer. Informal science education plays a critical role in
    informing our citizens about science, technology, and mathematics. It
    is instrumental in exciting our youth about science and motivating them
    to pursue science and mathematics in their schooling and, possibly, in
    their careers. I have, indeed, encouraged the science community to
    become more involved in informing our citizens through activities in
    our K-12 schools, contributing expertise to informal science education
    projects, and, more generally, reaching out by making themselves
    available for presentations or discussions in public forums.
        Question. How do you reconcile flat funding a program that seems to
    be supporting the very activities you are encouraging the science
    community to carry out on a daily basis?
        Answer. When one looks at the total education picture and
    prioritizes needs, support for our schools and our teachers ranks high.
    The flat funding request for the Informal Science Education program
    does not diminish in any way the importance of this endeavor, but
    rather is a reflection of overall priorities.
        Within the planned funding for Informal Science Education, our goal
    is to reach as many people as possible. This is most effectively
    accomplished through media programs (``Bill Nye,'' ``Reading Rainbow,''
    ``3-2-1 Contact,'' IMAX films), youth groups (Girl Scouts, 4-H Clubs)
    and Museums and Science Centers. We estimate that we reach over 100
    millions citizens annually.
        Our current emphasis is to involve parents and caregivers,
    particularly as part of the K-12 systemic initiatives; foster linkages
    with ongoing research through grant supplements and to continue to
    strengthen ties between formal and informal science education.
        We are partnering with the Department of Education in public
    understanding activities and the mathematics initiative to reach a
    broader audience.
        Question. Have the programs not been effective at meeting their
    mission? How do you measure that effectiveness?
        Answer. A comprehensive, third-party evaluation of the Informal
    Science Education (ISE) program was recently concluded for NSF. Based
    on site visits, random sample surveys, and interviews with focus groups
    who were participants in ISE activities, the evaluation concluded that
    the program has:
      --increased the number of youth who are excited by science,
            mathematics, and technology, and who pursue such activities in
            and out of school;
      --promoted greater linkages between formal and informal education;
      --stimulated parents and other adults to be informed about science,
            mathematics, and technology education;
      --encouraged parents to support their children's science and
            mathematics in the home and in school;
      --improved the science literacy of children and adults; and
      --had a broad and long-term impact on the informal science education
            field.
        Projects supported by the Informal Science Education program,
    increasingly, are developing and implementing new summative evaluation
    strategies that will assess the impact the projects are having on the
    children and adults they reach.
        Also, a Committee of Visitors recently came to NSF and provided a
    review of operations under the Informal Science Education program. The
    preliminary report of the Committee gives high ratings to the program
    and cites many of its positive achievements.
        Question. What is NSF doing to integrate research and education so
    that our college graduates are better prepared to compete in today and
    tomorrow's job market?
        Answer. NSF is increasingly proactive in encouraging integration of
    research and education as a means of strengthening the science,
    mathematics, and engineering (SME) preparation of U.S. college
    graduates. Integral to NSF's strategy was the October 1997 revision of
    merit review criteria that signals potential Principal Investigators
    (PI's) and reviewers of the importance of linking research and
    educational responsibilities. A growing number of NSF programs and
    activities explicitly encourage faculty to integrate research and
    education, e.g., an education plan is required for proposals submitted
    to the Faculty Early Career Development (CAREER) program that supports
    promising young faculty. The Integrative Graduate Education and
    Research Training (IGERT) program provides financial support while
    affording graduate students numerous career opportunities through their
    involvement in cutting-edge interdisciplinary research in academic,
    industrial, federal laboratory, and international settings.
        The Foundation's systemic reform of undergraduate mathematics,
    chemistry, and engineering curricula aim to strengthen the preparation
    of SME majors and non-majors alike, and to improve preparation for a
    workplace increasingly dependent on science and technology. Reform
    efforts under the Collaboratives for Excellence in Teacher Preparation
    (CETP) program are breaking down barriers between SME disciplinary
    departments and schools of education at universities producing K-12
    science and mathematics teachers. In addition, NSF continues to
    encourage involvement of undergraduates in research at NSF's Science
    and Technology Centers, the Engineering Research Centers, and the
    Materials Research Science and Engineering Centers--adding teamwork and
    real-world problem solving skills to student educational experiences.
    These centers enable faculty and students to make connections with
    industry, as does the Grant Opportunities for Academic Liaison with
    Industry program. The Research in Undergraduate Institutions and
    Research Experiences for Undergraduates programs also bring research
    experiences directly into the education of undergraduates.
        Question. What NSF programs seem to work effectively, and what
    lessons have been learned from programs that weren't as effective in
    preparing students to compete?
        Answer. The Foundation's strategic goals call for high quality,
    advanced training of scientists, mathematicians, and engineers as an
    investment in the nation's productivity for the 21st century. This
    requires innovative strategies for improving undergraduate and graduate
    education. We have learned from past activities that truly meaningful
    undergraduate and graduate science, mathematics, engineering and
    technology (SMET) education require classroom instruction combined with
    the real-world challenges posed by a research environment.
        Third-party external evaluations of undergraduate curriculum and
    laboratory programs indicate successful achievement of improvements in
    faculty practices and student learning outcomes. ``Evaluation of the
    Division of Undergraduate Education's Course & Curriculum Development
    Program,'' (The Network, Inc., 1997) found increased student
    understanding of scientific approaches to problems and their increased
    competence in applying concepts, principles or theories; in using
    methods or equipment; and in working in teams. ``A Report on an
    Evaluation of the National Science Foundation's Instrumentation and
    Laboratory Improvement Program,'' (NSF 98-33) evidenced the program's
    impact on improved courses and research opportunities for students.
    Both evaluations made recommendations related to the reform of
    undergraduate education through adaptation and implementation of proven
    curricula, laboratory instructional models, and related faculty
    enhancement. These recommendations led to the programmatic enhancements
    incorporated into the successor, Course, Curriculum, and Laboratory
    Improvement (CCLI) program. CCLI focuses on the adaptation and
    implementation of proven curricula and laboratory instructional models,
    related faculty development, as well as innovative instructional
    strategies that use research as a vehicle for strengthening learning.
        The Advanced Technological Education (ATE) program is designed to
    improve education (at both the secondary and two-year college levels)
    of the Nation's future high-technology technician workforce to enhance
    global competitiveness. In addition, NSF has developed programs that
    recognize and foster dissemination of effective strategies for
    integrating research and education.
        At the graduate level, the NSF Integrative Graduate Education and
    Research Training (IGERT) program seeks to develop activities that
    produce a diverse group of new scientists and engineers who are well-
    prepared for a broad spectrum of career opportunities. IGERT emphasizes
    multi-disciplinary research themes within a framework for the
    integration of research and educational activities. Importantly, IGERT
    requires that institutions offer interdisciplinary training experiences
    relevant to both academic and non-academic settings (e.g., industry,
    national laboratories). In addition, NSF is aiding the dissemination of
    creative models of undergraduate education by acknowledging exemplary
    efforts for combining research with high-quality education activities
    through the Awards for the Integration of Research and Education at
    Baccalaureate Institutions (AIRE) and Recognition Awards for the
    Integration of Research and Education (RAIRE).
                   u.s leadership in research and technology
        Question. Can the NSF justify a 10 percent increase for fiscal year
    1998 to fiscal year 1999?
        Answer. NSF's investment portfolio is intended to set the stage for
    a 21st Century research and education enterprise that is focused on
    national priorities. As noted in the President's Budget, several
    studies show that scientific discovery and technological innovation
    have been responsible for at least half of the nation's productivity
    growth in the last 50 years, generating millions of high-skill, high-
    wage jobs and substantially improving the quality of life. (Budget of
    the United States Government, fiscal year 1999, p. 93.) Conservative
    estimates of the social rate of return from academic research exceed 20
    percent, based on overall effects on society (Mansfield, E. 1995.
    University Research and Industrial Innovation: An Empirical Study of
    Linkages. AAAS). The Federal government provided about two-thirds of
    the academic research cited. A more recent, ground-breaking study
    funded by NSF (Narin F. et al., 1997. The increasing linkage between
    U.S. technology and public science. Research Policy 26 pp 317-330) also
    found a rapidly growing linkage between industrial innovation and
    scientific research.
        NSF contributes to building a strong foundation for progress in the
    21st century through its support of research and education projects
    that meet the highest standards of excellence in competitive merit-
    based selection processes. Through appropriate allocation of resources
    and design of programs and competitions, NSF ensures that national
    priorities are addressed.
        NSF continues to receive many more proposals that it deems worthy
    of funding than it has resources to support. The success ratio of
    competitively reviewed proposals is about one in three. While NSF
    awarded 10,000 new awards last year, an additional 7,500 proposals,
    requesting about $900 million, were evaluated as very good or
    excellent, but were not funded.
        In addition, in order to fund as many worthy projects as possible,
    NSF often provides lower levels of funding for successful proposals
    than it would if increased funding were available. NSF would like to
    increase the award size and duration of its average award. The average
    award duration has been steadily declining for the past five years.
        Moreover, NSF intends to continue the momentum and development of
    its three theme areas, Knowledge and Distributed Intelligence, Life and
    Earth's Environment, and Educating for the Future.
        Question. Has this increase been targeted toward certain
    directorates and programs?
        Answer. NSF requested increases for fiscal year 1999 have been
    targeted in connection with its three major themes, Knowledge and
    Distributed Intelligence (KDI), Life and Earth's Environment (LEE) and
    Educating for the Future (EFF). These themes are broadly integrated
    throughout the Foundation's directorates and programs. They represent
    areas of focused investment which combine exciting opportunities in
    research and education with immense potential for benefits to society.
        Question. How can you convince the committee that the dollars would
    be spent wisely and efficiently?
        Answer. NSF's investment portfolio is intended to set the stage for
    a 21st Century research and education enterprise that is focused on
    national priorities. Since its inception, NSF has been committed to
    making merit-based investments in research and education that meet the
    highest standards of excellence. We believe the establishment of NSF's
    Government Performance and Results Act (GPRA) strategic plan, and the
    incorporation of its attendant performance plan and report, will help
    ensure that NSF is continuing to invest wisely and will enable us to
    identify improvements in our decision-making. In addition, NSF
    continues to play a leading role in government-wide initiatives to
    clarify and simplify research administration, with particular emphasis
    on Electronic Research Administration (ERA), while simultaneously
    maintaining proper accountability of federal funds.
        Question. What is the estimated return on federal investment in
    R&D?
        Answer. As noted in the President's Budget, several studies show
    that scientific discovery and technological innovation have been
    responsible for at least half of the nation's productivity growth in
    the last 50 years, generating millions of high-skill, high-wage jobs
    and substantially improving the quality of life. (Budget of the United
    States Government, fiscal year 1999, p. 93.)
        Conservative estimates of the social rate of return from academic
    research exceed 20 percent, based on overall effects on society
    (Mansfield, E. 1995. University Research and Industrial Innovation: An
    Empirical Study of Linkages. AAAS). The Federal government provided
    about two-thirds of the academic research cited. A more recent, ground-
    breaking study funded by NSF (Narin F. et al., 1997. The increasing
    linkage between U.S. technology and public science. Research Policy 26
    pp 317-330) also found a rapidly growing linkage between industrial
    innovation and scientific research. The study examined patents in key
    areas of industrial technology, including biomedicine, chemistry, and
    electrical components. It found that nearly three-fourths of the
    research papers cited by U.S. industry patents are what the study
    termed ``public science''--papers authored at universities, government
    laboratories, and other non-profit centers. Furthermore, the research
    underlying the cited papers was found to be heavily supported by NSF
    and other federal agencies. Federal investment in R&D continues to
    provide a critical seedbed for economic growth and for overall growth
    in job opportunities.
        Question. If the tobacco settlement is not forthcoming, what types
    of reductions in program support are you prepared to make and where?
        Answer. The priorities in the Foundation's fiscal year 1999 budget
    request were developed through a planning process that identified new
    opportunities as well as ongoing core activities from which the new
    opportunities emerge. If NSF does not receive the increase requested,
    the relative priorities in the budget would remain, with emphasis on
    the interdisciplinary areas encompassed in the themes of Knowledge and
    Distributed Intelligence, Life and Earth's Environment, and Educating
    for the Future. However, it would not be possible to increase the
    average grant size or the duration of grants, which would make the
    system more efficient or to move as aggressively as we feel appropriate
    in these important thematic areas.
                             strategic initiatives
        Question. Can you describe how this year's budget will help advance
    science and engineering across all fields of disciplines?
        Answer. All of NSF's programs are aimed at achieving the
    Foundation's outcome goals. These goals as stated in NSF's GPRA
    Strategic Plan, are:
      --Discoveries at and across the frontier of science and engineering;
      --Connections between discoveries and their use in service to
            society;
      --A diverse, globally-oriented workforce of scientists and engineers;
      --Improved achievements in mathematics and science skills needed by
            all Americans; and
      --Timely and relevant information on the national and international
            science and engineering enterprise.
        Activities in the themes of Knowledge and Distributed Intelligence
    (KDI) Life and Earth's Environment (LEE) and Educating for the Future
    (EFF), like all of NSF's efforts, are aimed directly at these goals.
        In the early Spring 1996, the Director, Deputy Director and NSF
    senior managers met for two days. The purpose of these intense sessions
    was to identify and establish the research priorities for the fiscal
    year 1998 budget request, as well as future budget requests. The focus
    of the discussion was on which areas of science and engineering were
    truly on the verge of major discoveries. During these two days each
    Assistant Director took turns presenting the emerging opportunities
    within their disciplines that warranted greater emphasis in NSF's
    funding strategy. From these discussions emerged areas such as
    ``knowledge networks.'' ``human-centered computer systems,''
    ``intelligent manufacturing,'' complex biological and human systems,
    complex modeling, data mining and learning and cognition, which
    eventually came under the umbrella of KDI. LEE emerged from a larger
    discussion on the environment and the scientific quest for
    understanding the interaction of physical, biological and human
    activities. EFF reflects NSF's strong emphasis on integration of
    research and education and our systemic approach to K-12 mathematics
    and science education.
        The themes reflect the Foundation's mission to support basic
    science and engineering research, and to promote science and
    engineering education at all levels. The activities supported under
    these themes are integrated into programs across the Foundation and
    provide a solid framework for the Foundation's investment strategy.
    Many of today's most promising discoveries are made at the intersection
    of different disciplines, as is reflected in these themes. We expect
    these cross disciplinary efforts to provide a foundation for enhanced
    collaboration and new approaches to the conduct of research and
    education that will benefit all NSF programs.
        In addition, the Foundation intends to make significant investments
    in other Foundation-wide efforts that we believe are important elements
    in the support of research and education. These efforts include such
    activities as Arctic Research and Education, Major Research
    Instrumentation and Plant Genome Research.
        Question. How will setting up this year's budget in themes help you
    capitalize on opportunities in research and education and what are the
    benefits to society?
        Answer. Because activities organized under these three themes,
    Knowledge and Distributed Intelligence (KDI), Life and Earth's
    Environment (LEE) and Educating for the Future (EFF), are thoroughly
    integrated into programs across the Foundation, we expect the enhanced
    efforts within these themes will strengthen all of NSF programs, and
    provide a foundation for enhanced collaboration and new approaches to
    the conduct of research and education.
        NSF expects that investments made within the themes will have long-
    term significant benefits for society. Basic research is the driver of
    progress in many industries--for example, communications, electronics,
    and materials manufacturing--and over the longer term, contributes in a
    variety of ways to economic competitiveness and quality of life.
        NSF expects its investment in KDI to have a substantial impact on
    how we learn, work, and create. For instance, many of the tools and
    techniques developed through research supported under the theme of KDI
    should have broad application in education, business, and industry.
    Examples include tools that enable users to search huge depositories of
    data for critical pieces of information; techniques for transforming a
    stream of data into a visual format; methods for simulating behaviors
    of complex systems from minimal amounts of data; and libraries in
    digital form and networks that enable all people to access them
    wherever they may be. All have obvious relevance beyond the realm of
    basic research. Indeed, many KDI projects involve collaborations
    between basic researchers and industrial or educational partners.
        Much of the research supported under KDI also speaks directly to
    near-term societal needs, issues, and opportunities related to the
    information revolution. For example, among the topics currently
    emphasized in the KDI initiative are:
      --Enhancing the accessibility and utility of on-line information
            (e.g., data-mining techniques, access for persons with
            disabilities);
      --Ethical, social, political, legal and economic implications of the
            information revolution (e.g., privacy, confidentiality,
            reliability of data; disparities among racial, ethnic, and
            cultural groups in use of and benefit from information
            technologies); and
      --Improving education through advances in educational technologies
            (e.g., intelligent tutors), and in understanding of learning
            processes.
        Activities under the theme of LEE are also expected to provide
    benefits:
      --Research In Engineered Systems may provide benefits in the areas of
            hazard mitigation, biological remediation of degraded
            ecosystems, impact-reducing closed-cycle manufacturing, and the
            development of advanced technology for detection and
            monitoring.
      --Life In Extreme Environments (LExEn) research may reveal
            fundamentally new biochemical systems and associated genetic
            forms that may open new doors for bioengineering and industrial
            chemistry;
      --Global change research deepens our understanding of the planet's
            climate, oceans, and polar region, and assists in predicting
            long term climate and environmental change; and
      --The environmental observatories include simultaneous cross
            disciplinary measurement of environmental processes, helping to
            identify and mitigate problems like the Hantavirus outbreak in
            New Mexico and Pfiesteria-caused fish kills In the Chesapeake
            Bay watershed.
        Over a longer time frame, increased understanding of ecosystems and
    human impact on the environment may result in sustainable natural and
    engineered systems, stabilization of at-risk species, and a significant
    reduction in the loss of biological diversity. Education efforts within
    LEE will contribute to increased public awareness of scientific issues
    associated with the environment.
        The theme of EFF includes a range of programs supporting innovative
    approaches to educating our citizens to live and work in a technology
    driven society. EFF focuses on developing new knowledge and strategies
    to strengthen the teaching and learning of science, engineering,
    mathematics, and technology at all grade levels, from kindergarten
    through early career development. The expected benefits of EFF include:
      --Increased application of learning technologies to K-12 education,
            making high quality education more available to all
            communities;
      --Strategies and models for reform of K-16 education, with special
            emphasis on K-8 mathematics. These strategies are expected to
            promote enhanced student performance in science, engineering,
            mathematics and technology at all levels; and
      --Enhanced worker productivity through the development of improved
            problem-solving skills and a smoother transition from school to
            the workplace.
                               advanced computing
        Question. The four national supercomputer centers under NSF have
    undergone a ``re-competition'' phase that has reduced the number of
    these centers. Has this change made for a more efficient use of NSF
    funding?
        Answer. The Partnerships for Advanced Computational Infrastructure
    (PACI) program, which replaced the NSF Supercomputer Centers program in
    fiscal year 1998, has two partnerships--the National Computational
    Science Alliance (NCSA) and the National Partnership for Advanced
    Computational Infrastructure (NPACI). Each has multiple sites which
    provide resources to the national academic science and engineering
    community. In NCSA, computing resources at the leading edge site at the
    University of Illinois, Urbana, and partners Ohio State, Argonne
    National Laboratory and Maui High Performance Computing Center, are
    allocated to the user community. At NPACI, the leading edge site at
    University of California, San Diego, and partners Caltech, University
    of Texas (Austin), University of Michigan and Berkeley provide
    resources.
        PACI represents a more efficient use of NSF funds, because the
    large computers are now concentrated in two locations instead of four.
    The resulting savings in operational costs of more than $10 million per
    year are being invested in software infrastructure critical to make
    effective use of parallel architectures.
        Question. What types of research activities are now underway at
    these supercomputer center sites?
        Answer. Research underway at the Partnerships for Advanced
    Computational Infrastructure (PACI) partnerships is supported by NSF
    and other agencies. There is considerable work on the computer science
    areas of parallel tools, data mining and visualization, as well as on
    applications in the areas of physics, chemistry, geophysics, biology,
    and engineering. Research problems range from astrophysics and
    molecular conformation to environmental modeling.
        Question. Would you give us some sense as to how and why the new
    supercomputer initiative differs from the previous NSF advanced
    scientific computing program?
        Answer. The Supercomputer Centers program consisted of four centers
    while the new PACI program is a distributed partnership involving about
    100 institutions with the two leading edge sites. While provision of
    computing resources to the science and engineering research community
    is still a primary function, the charter of PACI goes beyond the
    Supercomputer Centers program and specifically emphasizes the need for
    application of advanced computer science research to improve the
    efficiency of utilization of modern parallel computer architectures.
    Thus, many of the partner institutions have groups of computer
    scientists applying the results of their research to large scale
    computation.
        PACI also involves two other new components, application
    technology, and education, outreach and training (EOT). The members of
    the application teams were chosen for their expertise in utilizing
    parallel architectures and are tasked with making their techniques
    available to a larger community. The EOT program, which is a joint
    effort of the two partnerships, responds to the need for additional
    human resources in computational science and engineering.
                            academic infrastructure
        Question. Is $50 million for instrumentation sufficient? Does NSF
    plan to continue supporting this effort in fiscal year 2000?
        Answer. Proposal pressure for major research instrumentation awards
    has been fairly stable over the life of the program, with approximately
    400 to 500 proposals each year. MRI funding rates average about 20
    percent. In addition to the MRI program, NSF supports instrumentation
    through more than 15 different instrumentation programs Foundation-
    wide, as well as through research awards. In fiscal year 1997, funding
    for MRI and other instrumentation programs totaled more than $200
    million.
        NSF expects to continue to support the Major Research
    Instrumentation Program in fiscal year 2000.
                     government performance and results act
        Question. How do you go about assessing research progress in a
    realistic or meaningful way if your main objective is to support
    discoveries at and across the frontiers of science?
        Answer. The objective to support discoveries at and across the
    frontiers of science is one of a set of outcome goals that NSF has
    established to guide its investment decisions and assessment processes.
    As described in NSF's fiscal year 1999 GPRA Strategic and Performance
    Plans, NSF will rely on external panels of experts to apply their
    experience and judgment in assessing the progress of NSF-supported
    research and education activities. These assessments will use a
    qualitative approach in determining the progress in all areas of
    research investments and will allow for a long time horizon for
    research results to be reported and captured for assessment. These
    assessments in turn will help NSF's staff of scientists, engineers, and
    educators to strengthen the agency's investment portfolio.
        In addressing research results, NSF took advantage of the GPRA
    provision for an alternate, qualitative format for performance goals.
    In spite of the rather unusual character of the resulting GPRA
    strategic and performance plans, they have been ranked highly by
    responsible Congressional staff, ranking third and seventh,
    respectively, among the twenty-four agencies ranked.
        Question. What efforts are underway now that the performance plans
    have been issued by all agencies, to assess coordination of annual
    efforts in such crosscutting issues as global change, computer
    networking and education and training technologies?
        How are you addressing crosscutting factors such as budget cuts by
    other funding organizations?
        Answer. The four areas listed are all under consideration by
    interagency working groups (IWG's) established under the auspices of
    the National Science and Technology Council. These IWG's establish the
    objectives of such cross-cutting interagency programs and consider the
    appropriate role for participating agencies. They are now turning their
    attention to issues more directly linked to performance as well. They
    will need to consider how to modify performance goals in cases where
    one or more agency is not able to make planned contributions. For other
    areas, NSF is in constant dialogue at the staff level with various
    agencies that have crosscutting issues. NSF relies heavily on its merit
    review system to continue to support the most advantageous research
    opportunities for the country. NSF is aware of budget cuts at other
    agencies and considers how these cuts will affect Foundation programs.
                   nsf-nasa coordination/planning for origins
        Question. Have the NSF and NASA efforts in Astronomy been
    coordinated to prevent duplicative efforts? How has this coordination
    taken place and who is or was involved.
        Answer. Federal support for astronomical research is provided
    primarily by NSF and NASA. NSF supports ground-based research, while
    NASA supports space-based investigations. NSF and NASA have jointly
    supported a number of research activities, particularly in the area of
    planetary astronomy, and staff from the two agencies meet as needed to
    ensure coordination of research support to avoid unnecessary
    duplication. During the past few years, the two agencies have jointly
    supported activities on Comet Shoemaker-Levy, Comet Hyakutake, Comet
    Hale-Bopp, the ``Origins'' initiative, and currently, in comparative
    investigations of planetary atmospheres. In the case of the cometary
    and planetary atmospheres initiatives, NSF and NASA carried out joint
    solicitations for proposals as well as joint reviews to ensure the
    coordination of ground-based and space-based research.
        With respect to ``Origins,'' there has been active contact and
    cooperation between the two agencies. Because NASA's ``Origins''
    program pre-dated NSF's activities in this area, NASA generally takes
    the lead in ensuring coordination for origins research. NSF and NASA
    have jointly supported a number of ``Origins'' activities, and staff
    from the two agencies meet as needed to ensure coordination of research
    support to avoid unnecessary duplication. NSF staff take the initiative
    to ensure coordination when new NSF initiatives have the potential to
    overlap with activities supported by NASA.
        NSF requires that investigators who submit proposals indicate
    whether the proposal has been submitted to another agency. If this is
    so, NSF Program Directors contact their sister-agency counterparts to
    ensure that there is no duplication of effort. Further, NSF Program
    Directors are often asked to serve on NASA advisory and review groups,
    and a complementary situation exists for NASA Program Directors. This
    serves as another means to ensure that Program Directors remain current
    about activities at both agencies. Finally, NSF staff periodically
    attend administrative meetings at NASA (and vice-versa) in order to
    ensure coordination of efforts without duplication.
        Question. Does NSF's outyear planning estimates for the Math and
    Physical Sciences (MPS) Directorate assume any funding in optical
    astronomy for the Origins Initiative over and above the base funding
    for astronomy? If so, please explain? If not, please advise the
    Committee on why this has been given a relatively lower priority
    relative to other NSF programs, particularly with MPS.
        Answer. Outyear planning within the MPS Directorate does assume
    funding in optical astronomy for the ``Origins'' Initiative over and
    above the base funding provided for astronomy. Indeed, such planning
    has been highlighted in the MPS budget submission for fiscal year 1999
    and extends well beyond the area of optical astronomy. Within
    astronomy, support for the operations of the Gemini Observatories and
    for NSF's interdisciplinary studies of ``Life in Extreme Environments''
    will contribute to the advance of origins research. Further, a primary
    goal of ``Origins'' is the detection of planets around other stars, and
    MPS is particularly interested in fostering and supporting the
    development of new techniques in high resolution optics, as they are
    fundamental to the detection of other planetary systems. For example,
    within the Advanced Technologies and Instrumentation program, funding
    above the base level will be provided for adaptive optics and for
    optical/infrared interferometry at university and national optical
    observatories.
                      programs for underrepresented groups
        Question. What is the status of the minority education programs
    funded last year off the ground?
        Answer. A special initiative for Historically Black Colleges and
    Universities (HBCU's) was begun in fiscal year 1998. This activity
    places particular emphasis on innovative strategies (e.g., strengthened
    research infrastructure and research-based education) with potential
    for significantly increasing baccalaureate and doctoral degree
    production in science, engineering, and mathematics by underrepresented
    minorities. The initiative is funded at $6 million. Three awards are
    anticipated in fiscal year 1998 at a level of up to $2 million each for
    a duration of three years. The program guidelines were distributed on
    April 2, 1998, with a deadline of June 15, 1998 for receipt of
    proposals (14 proposals have been received). The evaluation process for
    the most meritorious HBCU proposals is now occurring.
        Another minority education activity that was initiated in fiscal
    year 1998 is the Minority Graduate Education (MGE) program. The MGE
    program seeks to significantly increase the number of African American,
    Hispanic, and Native American students receiving doctoral degrees in
    the sciences, mathematics, and engineering (SME). The lack of role
    models and mentors in the professoriate constitutes a significant
    barrier to producing minority SME graduates, and NSF is particularly
    interested in increasing the number of minorities who will enter the
    professoriate in these disciplines. For fiscal year 1998, the program
    is funded at $5 million, and it is expected that up to eight MGE awards
    will be made at $500,000 annually, with duration of up to five years.
    Proposals must be submitted by July 15, 1998. In addition, up to ten
    supplements will be made to Alliances for Minority Participation (AMP)
    projects for development and/or enhancement of activities that will
    support achievement of MGE program goals.
        Question. What is driving your decision to flat-fund your minority
    research programs?
        Answer. Minority institutions participate in programs across NSF,
    not just in ``minority research programs.'' NSF continually seeks out
    opportunities to increase their involvement. For example, one major NSF
    activity focusing on minority research programs is the Centers of
    Research Excellence in Science and Technology (CREST). In fiscal year
    1998, CREST continues activities in 12 Centers, with a competition for
    those completing their awards. While the CREST projects are making
    significant achievement in this arena, it is the intent of the NSF to
    provide more research support to minority-serving institutions from the
    formation of collaborations between CREST and the NSF-supported Science
    and Technology Centers (STC's), Engineering Research Centers (ERC's)
    and Materials Research Science and Engineering Centers (MRSEC's).
    Although the funding level of CREST is flat, the process of providing
    additional collaborative research dollars to these projects from other
    research programs at NSF has been achieved. In fiscal year 1998, NSF
    initiated a new, cross-directorate effort, Collaboratives to Integrate
    Research and Education (CIRE), to establish long-term research and
    education relationships between minority-serving institutions and NSF-
    supported facilities and centers. In addition, the Historically Black
    College and University (HBCU) initiative begun in fiscal year 1998
    focuses on research infrastructure at HBCU's as well as faculty and
    student research experiences.
        Question. Describe what plans and benchmarks NSF has in place to
    increase the number of women and minorities in the science and
    engineering field?
        Answer. All NSF programs respond to the need for increasing
    participation of underrepresented groups (i.e., women and minorities)
    in science and engineering. Major programming efforts specifically
    targeted on women include: the Program for Women and Girls (PWG);
    Professional Opportunities for Women in Research and Education (POWRE)
    program; and graduate fellowships for women in engineering and the
    computer sciences. The overarching approach to these program activities
    involves setting quantitative goals and objectives, and providing
    comprehensive strategies across all educational levels--precollege,
    undergraduate, graduate, and post-graduate. Staff for the PWG program
    are currently working to establish quantitative benchmarks for women
    and girls. While PWG affects more than 17,000 girls annually, there has
    not been enough time to do a longitudinal study on how many of these
    participants choose science and engineering careers, and how many go on
    to college in these disciplines. However, PWG is now undergoing an
    evaluation by an external contractor, and we should have answers to
    several benchmark issues from that study.
        For minorities, the Alliances for Minority Participation (AMP)
    program is the major program activity for increasing baccalaureate
    graduation rates among minorities and, hence, to increase the size of
    the pool of interested and academically qualified minority students
    eligible for graduate study in science, mathematics, engineering, and
    technology (SMET). AMP projects are now producing annually over 18,000
    minority students who earn baccalaureate degrees in SMET fields. By the
    year 2000, the program expects an increase in SMET degree production to
    over 21,000 graduates. At the turn of the century, it is anticipated
    that educational improvements supported by AMP will enhance SMET course
    opportunities for nearly 200,000 students per year. At the graduate
    level, the new Minority Graduate Education (MGE) program, instituted in
    fiscal year 1998, seeks to significantly increase the number of African
    American, Hispanic, and Native American students receiving doctoral
    degrees in the sciences, mathematics, and engineering. A longitudinal
    study, as well as indicator development related to the Government
    Performance and Results Act (GRPA), is being designed as part of the
    MGE evaluation effort.
        NSF also supports efforts to improve the research infrastructure of
    post-secondary institutions through the Centers of Research Excellence
    in Science and Technology (CREST) program and the new Historically
    Black Colleges and Universities (HBCU) initiative. Programs such as
    CREST and HBCU can increase the likelihood that minority students will
    successfully complete undergraduate and graduate education, and pursue
    careers in SMET fields. As part of NSF's activities under GPRA, the
    agency will measure the impact on recruitment, retention and graduation
    rates.
        Question. Could NSF expand the partnerships to develop resource
    linkages designed to promote and develop opportunities for women and
    minorities in the science and engineering fields? (i.e., partnerships
    with other federal agencies, state and local governments,
    universities).
        Answer. The NSF views partnering as an integral component for
    successful projects in a number of programs for underrepresented
    groups. Partnerships among project collaborators are a serious
    component to all awards for underrepresented groups in science,
    mathematics, engineering and technology (SMET) fields. Principal
    Investigators are required, for example, in programs such as the
    Alliances for Minority Participation (AMP) and the Comprehensive
    Partnerships for Mathematics and Science Achievement (CPMSA) to reach
    out and establish linkages with universities, local and/or state
    governmental agencies, community groups, etc. in order to leverage
    resources for a successful intervention strategy.
        For minorities, NSF has an on-going partnership with the National
    Institutes of Health (NIH). This partnership was established through a
    Memorandum of Understanding (MOU) between the two agencies. NSF and NIH
    combine resources to support an effort at forging collaborations
    between school districts with significant minority enrollments and
    colleges and universities in order to do research on teaching and
    learning. Under the auspices of the NSF-NIH MOU, there are 12 Centers
    of Excellence in Research, Teaching, and Learning (CERTL) projects that
    are connected to the CPMSA effort. Plans are underway to determine what
    other program activities would complement this particular effort. In
    addition to NIH, other partnering federal agencies include the National
    Aeronautics and Space Administration (NASA), and the Department of
    Education.
                            k-12 student achievement
        Question. What causes U.S. students to score lower than their
    foreign peers on science tests?
        Answer. The 1995 Third International Mathematics and Science Study
    (TIMSS) reported student test scores in both mathematics and science
    for grades 3-4 and 7-8. At grade 12, scores were reported for general
    students and physics students. At the lower grades, science scores of
    U.S. students were among the highest in the world. In middle school
    grades, science scores were about average for the 41 participating
    countries. At the high school level, however, science scores were among
    the lowest in the world of the 16 countries that completed the study at
    that grade. There is some evidence as to the reasons for the drop-off
    in performance from the study of curriculum materials conducted by
    William Schmidt of Michigan State University in conjunction with the
    TIMSS testing. Although U.S. students begin their schooling with higher
    levels of knowledge in science, their weak performance at the high
    school level relative to their foreign peers might be due to an
    unfocused middle school science curriculum and less high school science
    study. A diffuse science and mathematics curriculum beyond the
    elementary level reduces their relative advantage as they proceed
    through the system. We will have a clearer measure of what happens
    between elementary and middle school when the TIMSS study is repeated
    for the 8th grade in 1999.
        Question. We thought that NSF programs over the last ten years
    would help our students learn better about math and science. What is
    wrong with NSF's and other agencies' science education programs if they
    don't help our students learn better and perform at higher standards?
        Answer. We believe that NSF programs and those of other Federal
    agencies, working together with state and local educational
    organizations, are having a positive effect. U.S. students are
    performing at higher standards today than they were 10 years ago. The
    change is slow but is occurring at faster rates in some parts of the
    country than others. Test scores for the National Assessment of
    Educational Progress (NAEP) in the past 10 years have shown general
    increases for much of the population in science and mathematics. Recent
    state-by-state test scores in mathematics have shown especially
    significant increases in states such as Texas, Connecticut, North
    Carolina, Michigan, Indiana, and Hawaii. Bringing together the
    ingredients for improved achievement by our students is a lengthy
    process. As a start, we need agreement on high standards for what
    students should know and be able to do; instructional materials that
    reflect those standards; and teachers who have the subject mastery and
    pedagogical skills to teach effectively. We also need supportive school
    systems and assessment processes that incorporate standards.
        NSF programs help put these necessary elements of improved
    achievement in place. For example, in the early 1990's we supported
    development of instructional materials in mathematics and science, with
    a focus on the early grades. Those materials, after extensive field
    testing that established their potential to improve performance, have
    now reached many schools and students. Middle school and secondary
    materials are in process, and gradually finding their way into schools.
    NSF has coupled this with teacher enhancement and attention to system-
    wide issues that affect performance.
        Both the TIMSS results and third-party evaluation of NSF programs
    show the greatest improvements in student achievement at the early
    grades. The accumulated deficits of prior schooling, make it more
    difficult to make significant gains at the secondary level. We believe
    that the planned TIMSS testing of 8th grade students in 1999 will give
    us better information on whether the gains made in the primary years
    can be sustained through the middle schools.
        Question. What programs are in place in NSF to address the need for
    improvement as shown by the results of TIMSS.
        Answer. For the most part, the Third International Mathematics and
    Science Study (TIMSS) confirms results of tests from the 1960's and
    1980's--U.S. students are not among the top performers in mathematics
    and science achievement. Tests that track student achievement over time
    indicate, however, that U.S. student performance has improved. For
    example, the National Assessment of Education Progress (NAEP), a test
    constructed for the U.S. Department of Education (DoED), has shown
    improvements in mathematics performance over the last two decades.
    These changes, however, are not large enough to improve radically our
    ranking vis a vis other countries.
        An NSF-supported analysis of science and mathematics curricula,
    which was designed to help explain TIMSS results, found that U.S.
    textbooks cover many more topics and fail to have the coherence and
    depth of coverage that characterize texts used by high performing
    nations. U.S. performance also suffers, in part, from low expectations
    for the vast majority of our students and from the general belief that
    science and mathematics are only for the gifted. Relevant scientific,
    mathematics, and related education communities developed the national
    mathematics and science standards under the auspices of the National
    Council for Teachers of Mathematics (NCTM) and the National Academy of
    Sciences (NAS), respectively. These standards should help in both
    regards, providing guidelines to states and localities on what children
    should know and be able to do at various grade levels.
        Over the past eight years, NSF has placed significant emphasis on
    developing inquiry-based, K-12 science and mathematics instructional
    materials that are aligned with standards and that hold promise for
    significantly improving classroom instruction. The published materials
    are now available for widespread use at all grade levels. Student
    achievement data from field test sites and from those NSF systemic
    reform projects that are implementing these materials demonstrate the
    potential of these materials for improving performance of all students.
    This potential can only be realized, however, if the materials are
    accompanied by strengthened content and pedagogical training of
    teachers (both pre- and in-service). Moreover, because student
    assessments signal what is a valued learning experience, high stakes
    tests must be aligned with the standards embodied in such materials.
    Education programs, grades K-12, promote development and implementation
    of systemwide education reform and standards-based instructional
    materials and related performance-based assessments, as well as
    effective models of systemwide education reform, professional
    development, and innovative applications of instructional technologies.
        Question. Do you feel the need to restructure any of your existing
    efforts, especially at the precollege level?
        Answer. K-12 education poses an enormous challenge to the nation.
    While primary responsibility rests with states and localities, the
    entire Federal investment-representing roughly seven percent of total
    K-12 funding-can have a significant effect on the enterprise. The
    Foundation has viewed its role in K-12 science and mathematics
    education as one of providing vision; leadership; resources (e.g.,
    curricula, instructional materials); effective strategies for systemic
    reform, teacher professional development, applications of learning
    technologies; and research on teaching and learning. The joint
    challenges posed to the Nation by the TIMSS results, and to Federal
    agencies by the Government Performance and Results Act (GPRA) and
    fiscal realities, have indeed caused us to look at our comprehensive
    set of program activities. We are currently in the process of assessing
    program priorities in light of new challenges and emerging
    opportunities.

                             conclusion of hearings

        Senator Bond. I apologize, but because of the voting
    schedule, we are going to have to recess the hearing. But our
    thanks to all of you. We look forward to working with you. And
    we wish you the best.
        And thank you for your service, Dr. Zare. Thanks for what
    you have done in your previous job. Best wishes.
        And, to you, Dr. Lane, Dr. Jones, and Dr. Clutter, thank
    you very much.
        The hearing is recessed.
        [Whereupon, at 11:05 a.m., Thursday, May 7, the hearings
    were concluded, and the subcommittee was recessed, to reconvene
    subject to the call of the Chair.]

     DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
            INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1999

                                  ----------

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.

                           NONDEPARTMENTAL WITNESSES

        [Clerk's note.--The following testimonies were received by
    the Subcommittee on VA, HUD, and Independent Agencies for
    inclusion in the record. The submitted materials relate to the
    fiscal year 1999 budget request.

                        ENVIRONMENTAL PROTECTION AGENCY

      Prepared Statement of Bruce Delaney, Mayor, City of Gainesville, FL

            the sweetwater branch/paynes prairie stormwater project
        Mr. Chairman: On behalf of the City of Gainesville, Florida I
    appreciate the opportunity to present this written testimony to you
    today. The City of Gainesville is seeking federal funds in the fiscal
    year 1999 VA-HUD Appropriations bill, in order to assist our efforts to
    protect the Florida aquifer from stormwater runoff. In particular, we
    are hopeful that the Subcommittee will provide the City with $2 million
    as an EPA Special Assistance Grant.
        In Gainesville, the Sweetwater Branch basin contains approximately
    1,710 acres and is located in the southeast central portion of the
    City. The outfall from this basin discharges into Paynes Prairie, a
    state owned preserve and park system, which eventually flows into the
    Alachua Sink, a natural sink hole that drains directly into the Florida
    aquifer. This aquifer provides the majority of drinking water to
    Florida's residents and has a direct impact on Florida Everglades.
        The Sweetwater Branch drainage basin contains urban, commercial,
    industrial, and residential area stormwater runoff. Because the branch
    runs through some of the oldest portions of Gainesville, most
    stormwater runoff is directly discharged into the Branch with very
    little flooding or pollution removal treatment. The runoff has the
    potential to affect threatened and endangered wildlife such as the Bald
    Eagle, the Woodstork, the Florida Sandhill Crane, and the Southeastern
    American Kestrel. In addition, many domestic water wells are used to
    obtain water from surficial and intermediate aquifers in the area. In
    summary, the situation has created a concern among environmentalists,
    business leaders, and concerned citizens throughout the region that
    Paynes Prairie and the Florida aquifer are being compromised.
        With this in mind, the City of Gainesville, Alachua County, St.
    Johns River Water Management District, Florida Department of
    Environmental Protection and local citizens are all seeking a
    comprehensive ecosystem management solution to the problem of
    stormwater runoff from downtown entering Sweetwater Branch, Paynes
    Prairie, and the Alachua Sink. The project devised by these groups
    would reduce or eliminate the sediment, debris, nutrients and general
    pollutants currently being discharged. Current projections are that the
    project would consist of the following three components: the purchase
    of undeveloped property in the vicinity of State Road 331 and
    Sweetwater Branch; the construction of maintainable sediment and debris
    removal systems; and the construction of maintainable nutrient removal
    systems.
        An in-depth engineering analysis of the creek system, property
    topography, associated wetlands, and other pertinent factors is needed
    to determine the optimum and appropriate scope of property purchase and
    facilities construction. The City is prepared to pay some of the cost
    for this analysis, but we are simply unable to bear the entire burden.
    As a result, we request that the Subcommittee appropriate $2 million as
    an EPA Special Assistance Grant to assist our efforts. Once the project
    construction is complete, Gainesville Stormwater Management Utility, a
    public utility, would provide the required annual maintenance for the
    facility and no federal maintenance funds would be needed.
        This is a critical and much needed project for the City of
    Gainesville, as well as the entire State of Florida, and we
    respectfully ask the Subcommittee for its consideration of the
    Sweetwater Branch/Paynes Prairie Stormwater Project.
                                     ______

               Prepared Statement of the City of Miami Beach, FL

        Mr. Chairman and Members of the Subcommittee: The City of Miami
    Beach would first like to thank the subcommittee for all its diligent
    efforts throughout the past to assist local governments in need. Now,
    as you begin the long and tedious process of crafting the fiscal year
    1998 VA, HUD, and Independent Agencies Appropriation Bill, the City of
    Miami Beach would like to request the subcommittee's assistance with
    regards to an important initiative: The Miami Beach Waterway
    Revitalization Project.
        The City of Miami Beach exists as a cluster of barrier islands,
    with the Atlantic Ocean on one side and the Biscayne Bay Marine Estuary
    on the other. This six mile long chain of islands is subdivided by 39
    miles of canals and waterways. Just after the turn of the century,
    these natural waterways were ``improved'' by dredging and the
    construction of seawalls to improve navigation and to stabilize the
    shorelines.
        Over the years, these once pristine waterways have fallen into
    decline. The waterway improvements so altered the shoreline ecosystem
    that the mangroves and other native plants have died-out or been
    overgrown by nuisance species. The steel and concrete seawalls have
    crumbled and collapsed.
        The loss of native plant communities and the failure of the
    seawalls has resulted in substantial erosion of the shorelines. The
    shoreline erosion has undercut roadways and public and private
    structures. The erosion also transported tens of thousands of tons of
    sand and topsoil into the waterways.
        Silt and sediment from the eroding shorelines have smothered
    benthic communities and clouded the water. In addition, the eroded
    shorelines allow rain water run-off to wash nutrients, agricultural
    chemicals and other pollutants into the waterways.
        These water quality and ecosystem impacts have driven away or
    killed-off the manatees, porpoises, bait fish and gamefish populations
    which used to be in abundance. The loss of the native wetland plant
    communities from along the shorelines has also substantially reduced
    the available habitat for many key bird, reptile and animal species,
    including many migratory birds which utilize our area as winter nesting
    grounds.
        Through the Miami Beach Waterway Revitalization Project, the City
    of Miami Beach proposes to address the shoreline erosion problem in a
    truly innovative and environmentally beneficial manner. The City plans
    to replace the crumbling concrete and steel seawalls with an innovative
    ``living seawall''. This would entail the demolition of the damaged
    seawalls and the construction of a new wall comprised of carefully
    intermeshed boulders of different sizes. The slope and elevation of the
    new boulder walls will be designed to closely mimic the natural tidal
    creek shorelines which pre-existed the seawalls. The eroded shoreline
    areas behind the new boulder walls will be refilled with rich topsoil
    and the entire shoreline will be replanted with native plant species.
        Over time, the native plantings will anchor the shoreline and
    prevent erosion. These shoreline areas will also become a buffer zone
    protecting the waterways from rainwater run-off and wind blown litter
    and sediment. The enhanced shorelines will also provide significant new
    wetland habitat for local and migratory wildlife. As the flow of silt,
    sediment and polluted run-off are curtailed, and as the shoreline
    communities recover, water quality within the waterways will be
    restored and affected marine life will recover.
        Finally, the City of Miami Beach will complete the project with the
    development of an Urban Preserve Program to educate residents and
    visitors about the importance of marine wetlands, the need for
    continued enhancement, restoration and protection of these areas and to
    promote the sustainable beneficial use of our marine resources.
        The City of Miami Beach requests $2.5 million from the subcommittee
    to begin this important initiative.
                                     ______

      Prepared Statement of Terrence J. O'Brien, President, Metropolitan
                  Water Reclamation District of Great Chicago

        I am Terrence J. O'Brien, President of the Metropolitan Water
    Reclamation District of Greater Chicago, and on behalf of the Water
    Reclamation District, I want to thank the Subcommittee for this
    opportunity to present our priority for fiscal year 1999, and express
    our appreciation for your support of our requests over the years. The
    Metropolitan Water Reclamation District (MWRD) is the sponsor for the
    federally approved combined sewer overflow (CSO) project, the Tunnel
    and Reservoir Plan (TARP), in Chicago, Illinois. Specifically, we are
    asking that $10 million be included to continue construction of this
    project in the Subcommittee's VA, HUD and Independent Agencies
    Appropriations Bill for fiscal year 1999. The following outlines the
    project and the need for the requested funding.
                                  introduction
        The Metropolitan Water Reclamation District was established in 1889
    and has the responsibility for sewage treatment, and is also the lead
    agency in providing sponsorship for flood control and stormwater
    management in Cook County, Illinois. In fact, the District was
    established in response to an epidemic which killed 90,000 people in
    1885. By 1900, the District had reversed the flows of the Chicago and
    Calumet Rivers to carry combined sewage away from Lake Michigan, the
    area's main water supply. The District has been involved with major
    engineering feats since its inception.
        In an effort to meet the water quality goals of the Clean Water
    Act, to prevent backflows into Lake Michigan, and to provide an outlet
    for flood waters, the Metropolitan Water Reclamation District of
    Greater Chicago designed the innovative Tunnel and Reservoir Plan. The
    TARP tunnels, which were judged by the EPA on two occasions as the most
    cost-effective plan available to meet the enforceable provisions of the
    Clean Water Act, are a combined sewer overflow elimination system. The
    TARP reservoirs, also under construction, will provide flood control
    relief to hundreds of thousands of residents and businesses in the
    Chicagoland area.
                           tunnel and reservoir plan
        TARP is an intricate system of drop shafts, tunnels and pumping
    stations which will capture combined sewer overflows from a service
    area of 375 square miles. Chicago will remove three times the amount of
    Combined Sewer Overflow (CSO) pollution as Boston's projected removal--
    for approximately the same cost. The remaining Calumet tunnel system
    will provide 3.1 million pounds of biological oxygen demand (BOD)
    removal versus Boston's one million pounds of BOD removal per year. In
    fact, Chicago's CSO pollution problems are worse than the combination
    of Boston, New York, and San Francisco's pollution problems. The
    Chicago Metropolitan Area's annual BOD loading is 43 million pounds per
    year. This contrasts with the combination of Boston, New York and San
    Francisco's combined annual BOD loading of 35 million pounds.
        A good portion of the remainder of the TARP system is to be built
    in the southeast side of Chicago and the southern suburbs (Calumet
    system), a low-income, highly neglected and highly polluted area. This
    community suffers from tremendous land, air and water pollution--
    literally a dumping ground for multi-media pollution ranging from
    chemical waste to serious water pollution.
        Due to the enormous risk to the community, the Water Reclamation
    District, as the local sponsor, cannot afford to leave the citizens
    vulnerable. Therefore, it is imperative that this work must continue.
    Because the construction industry is already doing work in the area,
    the climate is favorable for proceeding with this work at this time,
    producing a significant cost savings. What we are seeking, then, is
    funding to advance federal work.
        We have a proven and cost-effective program. In fact, we have
    estimated that TARP's cost is about a quarter of the cost of separating
    the area's existing combined sewer systems into separate sewage and
    stormwater systems. Upon reanalysis, the EPA has consistently found the
    TARP program to be the most cost-effective solution that will reduce
    the impacts by the greatest degree to meet the enforceable requirements
    of the Act, with the least amount of dollars. The project, while
    relating most specifically to the 52 tributary municipalities in
    northeastern Illinois, is also beneficial to our downstream communities
    such as Joliet and Peoria. These benefits occur because of the capture
    of wastewater in the tunnels during storm periods and by treatment of
    the discharge before being released into the waterways.
        TARP was designed to give the Chicago metropolitan area the optimal
    environmental protection that could possibly be provided. More
    importantly, no other project was found to be as cost effective. In
    addition, the beneficial use of the project is being enhanced by the
    addition of the flood control reservoirs now being designed and
    constructed by the Corps of Engineers, which will be connected to the
    tunnels for additional capture and storage of combined sewage during
    flood events. We believe TARP stands as a tribute to our nation's Clean
    Water goals and one that is being accomplished within the most
    economical constraints.
                                requested action
        The $10 million we are seeking in fiscal year 1999 funding in the
    Subcommittee's bill will help keep the local sponsor whole for the
    advance construction it plans to accomplish on the Torrence Avenue Leg
    for the Calumet System of the congressionally-authorized TARP project.
    While the TARP project was originally authorized at 75 percent federal
    funding, the District as local sponsor has been contributing at least
    50 percent of the total project cost. We greatly appreciate the
    Subcommittee's endorsement of our request over the years to advance the
    construction of this work. This fiscal year 1999 work will go a long
    way to address serious water quality, stormwater and safety problems.
    It will have a tremendously beneficial impact on a community which
    suffers from water pollution and significant flooding problems. The
    facilities plan for the overall TARP project has been approved by the
    EPA and design has been completed. The EPA has identified this
    particular segment of work as the next critical section of the plan to
    be constructed based on significant water quality benefits.
        Once on-line, the Torrence Avenue Leg of the Calumet System will
    capture 2.0 billion gallons of CSO's per year and will protect 15.6
    square miles of the City of Chicago from raw sewage backup and
    flooding.
        We urgently request that this funding be included in the
    Subcommittee's bill for the construction of the Calumet System of the
    TARP project. We thank you in advance for your consideration of our
    request.
                                     ______

          Prepared Statement of the American Public Power Association

        The American Public Power Association (APPA) is the service
    organization representing the interests of the more than 2,000
    municipal and other state and locally owned utilities throughout the
    United States. Collectively, public power utilities deliver electric
    energy to one of every seven U.S. electric consumers (about 35 million
    people) serving some of the nation's largest cities. The majority of
    APPA's member systems are located in small and medium-sized communities
    in every state except Hawaii. We appreciate the opportunity to submit
    this statement concerning fiscal year 1999 appropriations for programs
    under this Subcommittee's jurisdiction.
    I. Climate Change Action Plan Voluntary Partnership Programs
        APPA supports the Administration's fiscal year 1999 budget request
    of $231 million for Climate Change Action Plan programs operated by the
    Environmental Protection Agency (EPA). These partnerships emphasize
    cost-effective measures to reduce, avoid or sequester greenhouse gas
    emissions in order to return them to 1990 levels. Through voluntary
    agreements, public power and other electric utilities have committed to
    reducing emissions by over 43 million metric tons of carbon equivalent
    in the year 2000. In addition to demonstrating that important
    environmental objectives can be achieved through voluntary efforts,
    these EPA programs contribute to a stronger U.S. position in
    international climate change negotiations. Of particular interest to
    APPA member systems are the Green Lights, Energy Star and Landfill
    Methane Outreach programs operated by EPA.
                              green lights program
        The Green Lights program encourages use of energy efficient
    lighting to reduce energy costs, increase productivity, promote
    customer retention and protect the environment. Program partners agree
    to survey lighting in their facilities and to upgrade it, if cost
    effective. Environmental benefits result from more efficient energy use
    and from reductions in emissions of carbon dioxide, sulfur dioxide and
    nitrogen dioxide, thus improving air quality. EPA provides program
    participants public recognition and technical support. Both large and
    small APPA member systems participate in this program including City
    Utilities of Springfield, MO; Concord Municipal Light Plant, MA; City
    of Georgetown, TX; Grant County Public Utility District, WA; Gray's
    Harbor County PUD, WA; Greenville Utilities Commission, NC; Indiana
    Municipal Power Authority, IN; Los Angeles Department of Water & Power,
    CA; Mason County PUD, WA; New York Power Authority, NY; Norwood
    Municipal Light Department, MA; Omaha Public Power District, NE;
    Orlando Utilities Commission, FL; Port Angeles City Light Department,
    WA; Puerto Rico Electric Power Authority, PR; Sacramento Municipal
    Utility District, CA; City of St. Charles Electric Utility, IL; Salt
    River Project, AZ; Virgin Islands Water & Power Authority, VI;
    Springfield Utility Board, OR, and Taunton Municipal Lighting Plant,
    MA.
                              energy star programs
        A number of EPA's Energy Star programs build on the successes of
    Green Lights. These important EPA programs are examples of successful
    public/nonpublic partnerships that promote the use of profitable,
    energy-efficient technologies as a way to increase profits and
    competitiveness while at the same time minimizing pollution. They
    include Energy Star Buildings, the Energy Star Transformer Program,
    Energy Star office equipment and the Residential Energy Star Program.
    APPA member systems participate in and support EPA's Energy Star
    efforts.
                       landfill methane outreach program
        The Landfill Methane Outreach Program provides environmental
    benefits by encouraging utilities to make use of landfill gas as an
    energy source. Several APPA member systems participate in this program,
    including Illinois Municipal Electric Agency, IL; Jacksonville Electric
    Authority, FL; Emerald People's Utility District, OR; Los Angeles
    Department of Water and Power, CA, and Orlando Utilities Commission,
    FL. Utilities voluntarily agree to take advantage of the best
    opportunities to use landfill gas in generating power. EPA recognizes
    and publicizes the utility's efforts and provides technical assistance.
    One of the success stories cited by EPA occurred with APPA member
    system Emerald People's Utility District in Eugene, OR. This public
    power utility worked collaboratively with the State of Oregon, Lane
    County officials and a private investment company to develop a 3.4 MW
    plant at the Short Mountain Landfill. EPUD's general manager says
    landfill energy recovery is like ``turning straw into gold,'' providing
    additional revenue to EPUD as well as a fee to the county.
    II. Council on Environmental Quality (CEQ)
        APPA supports the Administration's fiscal year 1999 budget request
    of $3,020,000 for the Council on Environmental Quality (CEQ). As units
    of local government APPA member utilities have a unique perspective on
    environmental regulation. Public power utilities and others from
    industry have experienced a general lack of consistency in federal
    environmental regulation. While additional layers of government should
    be avoided, a central overseer can perform a valuable function in
    preventing duplicative, unnecessary and inconsistent regulations. The
    council is responsible for ensuring that federal agencies perform their
    tasks in an efficient and coordinated manner. For these reasons, APPA
    supports the existence and continued operation of CEQ.
    III. Superfund
        APPA member systems also support the Administration's request of
    $1,442.7 million for Superfund cleanups. The Superfund Trust Fund as
    well as Superfund research programs are critical as we consider
    reauthorization of the Comprehensive Environmental Response,
    Compensation and Liability Act (CERCLA), the law authorizing Superfund.
    The increased emphasis on expedited settlements and administrative
    relief, the Brownfields Initiative and more effective use of
    alternative dispute resolution by EPA are worthy goals.
        Again, APPA member systems appreciate your consideration of our
    views on priority appropriations issues for fiscal year 1999.
                                     ______

    Prepared Statement of Joe L. Mauderly, Senior Scientist and Director of
           External Affairs, Lovelace Respiratory Research Institute

        It is requested that the U.S. Environmental Protection Agency (EPA)
    continue to support the National Environmental Respiratory Center for
    the purpose of providing information, conducting research, providing
    research resources, and facilitating communication concerning the
    respiratory health risks of combined exposures to multiple air
    pollutants and pollutant mixtures. Funds for the Center are requested
    in the fiscal year 1999 EPA appropriation.
            status of the national environmental respiratory center
        The National Environmental Respiratory Center was established
    through the fiscal year 1998 EPA appropriation. The mission of the
    Center is to catalyze, facilitate, and participate in a long-range
    national initiative to understand respiratory health risks from
    combinations of inhaled airborne environmental and occupational
    pollutants. The Center's goal is to help place the respiratory health
    risks from variable, mixed pollutant atmospheres in their appropriate
    context as a basis for regulatory and technological decision making.
    The Center is operated by the Lovelace Respiratory Research Institute
    in Albuquerque, New Mexico, and is located in the government-owned, now
    privatized, Inhalation Toxicology Research Institute facility, which is
    leased by Lovelace.
        The establishment of the Center is well underway at the midpoint of
    its first year. The infrastructure of the Center has been developed,
    and the information resources are under development. Agencies, health
    advocacy organizations, industry stakeholders and their trade
    associations are being briefed on the Center and their support is being
    enlisted to fulfill the Center's intent as an interagency, government-
    industry initiative. Selection of the initial series of specific
    research projects is underway, and research will be initiated in this
    fiscal year. The goals of the Center and its research resources are
    being communicated to the scientific community, and collaborative
    projects are under development. A budget and plan of work has been
    prepared for the second year, the funding for which is being requested
    in this testimony.
       the center is needed to resolve critical uncertainties about the
                 relationship between air pollutants and health
    The U.S. has a huge burden of respiratory disease
        Respiratory diseases kill one out of four Americans. Among cancers,
    the second leading cause of death, lung cancer is the single largest
    killer. Nearly 195 thousand new cases of respiratory tract cancer will
    be diagnosed this year, and 166 thousand Americans will die from these
    cancers. Lung cancer kills more than twice as many women as breast
    cancer, and more than twice as many men as prostate cancer. Pneumonia
    and heart-lung failure are the terminal conditions for many of our
    elderly. Excluding cancer, chronic respiratory diseases and pneumonia
    are the third leading cause of death in the U.S., killing over 188
    thousand Americans in 1995. Asthma, growing unaccountably in recent
    decades, now afflicts 15 million Americans, including 5 million
    children. The incidence of asthma increased 61 percent between 1982 and
    1994, and asthma deaths among children nearly doubled between 1980 and
    1993. Viral respiratory infections are the most common cause of
    hospitalization of infants and cause a tremendous loss of productivity
    in the adult workforce. Occupational lung disease is the number one
    work-related illness in the U.S. in terms of frequency, severity, and
    degree of ``preventability''. Worldwide, three times more people die
    from tuberculosis than from AIDS.
    The contributions of air pollution and occupational air contaminants
            are uncertain
        Pollutants inhaled in the environment, workplace, and home are
    known to aggravate asthma and contribute to respiratory illness, but
    the extent of their role in causing respiratory disease is not clear.
    It is known that it is possible for airborne irritants, toxins,
    allergens, carcinogens, and infectious agents to cause cancer,
    degenerative disease, and infections directly, or indirectly through
    reduction of normal defenses, but the portion of such diseases caused
    by, or strongly influenced by, pollution is uncertain.
        EPA and other agencies are faced with estimating the health effects
    of air contaminants on the basis of very limited information and in the
    presence of large uncertainty. It is difficult to associate health
    effects with specific pollutant sources. Most environmental air
    contaminants have multiple sources which produce species of
    overlapping, but slightly different physical-chemical types. There are
    few biological markers of exposure which can be used to link health
    effects to past exposures to pollutant classes, much less to specific
    pollutants and sources. This makes it very difficult to associate
    specific pollutant species with specific health effects, identify and
    prioritize the sources whose management would most efficiently reduce
    the effects, and compare potential health gains to the financial,
    technological, and lifestyle commitments required to achieve them.
    Estimating the effects of combined exposures to pollutant mixtures is
            an especially critical problem
        EPA faces the critical problem of having little scientific or
    regulatory ability to deal with pollutant mixtures. Nobody ever
    breathed only one pollutant at a time! Although all exposures to air
    pollutants involve inhalation of complex mixtures of materials, but
    there is very little research on the health effects of mixtures, or the
    significance of interactions among combined or sequential exposures to
    multiple pollutants. The present approach to implementing the National
    Ambient Air Quality Standards (NAAQS) addresses individual
    contaminants, or contaminant classes, in isolation. There is little
    framework for considering the effects of pollutant mixtures, and little
    ongoing research that will provide a basis for such a framework. We
    know that multiple pollutants can cause common effects, such as
    inflammation. We know that some pollutants can amplify the effects of
    others. We can presume that a mixture of pollutants, each within its
    acceptable concentration, could present an unacceptable aggregate
    health risk. We face the possibility, exemplified by current
    uncertainties about particulate matter, that a pollutant occurring in a
    mixture might wrongly be assigned sole responsibility for a health
    effect that, in fact, results from the mixture or an unrecognized
    copollutant that varies in concert with the accused species. This issue
    will become increasingly important as pollutant levels are pushed ever
    lower, and needs coordinated, interdisciplinary attention.
        As air pollutant levels are reduced, the problems of correctly
    linking health effects to the correct species and sources, and of
    making difficult cost-benefit policy judgments, will increase. The
    levels of many environmental air contaminants have decreased due to
    technological developments and regulatory pressures. For example,
    between 1985 and 1995, concentrations of airborne lead, sulfur dioxide,
    and carbon monoxide in the U.S. decreased 32 percent, 18 percent, and
    16 percent, respectively, and levels of airborne particulate matter
    decreased 22 percent between 1988 and 1995. Levels of ozone and several
    other pollutants have also decreased.
        As background levels are approached, decisions regarding: (a) the
    benefits of further reductions in man-made pollution; (b) the need to
    consider pollutants as a mixture rather than as individual species; and
    (c) the point at which small biological changes represent health
    effects warranting control, will be more difficult and will require
    additional focused, coordinated research.
    There is no other Center or interagency activity focused on the problem
            of combined exposures to air pollutants and providing the
            resources provided by the Center
        EPA and its advisory committees are increasingly recognizing the
    importance of understanding the effects of pollutant mixtures. The
    Agency is developing a ``One Atmosphere'' initiative to better
    understand pollutant mixtures, but this activity is small and does not
    yet focus on health effects. Indeed, EPA does not have the mandate or
    resources to resolve all of these interrelated issues alone; the
    resources of other agencies and non-federal sponsors are critical.
    Current efforts relevant to the mixtures issue are funded by multiple
    agencies, and by health advocacy organizations, industry, labor, and
    private foundations. There is no effective coordination of these
    activities, and no central mechanism for facilitating communication and
    research planning. Progress will require a wide range of laboratory
    researchers, atmospheric scientists, epidemiologists, and clinical
    researchers. Focusing and resolving the issues will require
    interactions among researchers, health care professionals, and policy
    makers in an iterative manner that fosters rapid information transfer
    and development of joint investigative strategies. An important
    function of the National Environmental Respiratory Center is to serve
    as a focal point for interdisciplinary communication, research needs
    identification, and research resource coordination.
        There is also no other national center for collecting and
    disseminating information on the health impacts of airborne
    environmental contaminants. Researchers, federal agencies, congress,
    industry, and the public have no other centralized source of
    information on ongoing research or recent findings.
        There is no other national interagency user facility with the
    specialized facilities, equipment, core support, and professional
    collaboration required for many types of investigations to study the
    complex airborne materials and health responses of concern. No activity
    other than the Center serves to facilitate the work of investigators in
    universities, federal laboratories, and industry by identifying and
    providing shared resources or standardized samples.
        No other national center is focused on serving cross-agency and
    government-industry needs in this filed. EPA and other agencies have
    intramural research centers or administrative structures that serve
    internal programmatic coordination needs, but these efforts rarely
    extend across agency lines. EPA and other agencies also fund extramural
    centers to study, or facilitate the study, of specific issues related
    to environmental respiratory health, but none are focused on the
    overriding problem of the health effects of pollutant mixtures.
    the national environmental respiratory center will address the combined
                  exposures problem through four key functions
    The Center will perform the following functions
        Conduct research.--The Center will conduct intramural and
    collaborative research relevant to understanding the respiratory health
    risks of combined exposures to airborne toxicants, and the exposure-
    response, mechanisms, susceptibility, and interspecies extrapolation
    issues important to advancing our understanding of respiratory disease
    and the control of health risks. The advice of a scientific advisory
    committee and other external scientific peer review will be used in
    guiding the Center's research program. This effort will be expanded by
    complementary research funded through collaborations with external
    scientists making use of the Center's specialized facilities.
        Provide information.--The Center will develop, maintain, and make
    broadly available information related to combined exposures issues.
    Researchers, agencies, congress, industry, students, and the public
    will access listings of published research, ongoing research, relevant
    scientific and regulatory issues, and research resources by phone, fax,
    e-mail, and the Internet. The Center will develop and keep current
    information specific to combined exposures issues that is not currently
    maintained in organized form by other organizations. It will also
    provide links to the many related data bases on air contaminants and
    health that are maintained by other organizations.
        Facilitate communication and planning.--The Center will coordinate
    workshops and conferences on the health effects of pollutant mixtures
    and combined exposures. Current knowledge will be benchmarked.
    Particular emphasis will be given to establishing a continuing
    communication loop between health scientists and atmospheric scientists
    to focus the efforts of both research communities on the exposures and
    effects thought to be the most important. Multiple government and non-
    government research sponsors and researchers from numerous
    organizations and disciplines will be brought together to identify
    critical research gaps and optimize the use of resources. This effort
    will complement other interagency and government-industry coordination
    activities.
        Provide research facilities.--The Center will develop and maintain
    certain specialized facilities needed for research on mixtures,
    reaction products, and combined exposures. It will make the facilities
    operated by Lovelace available for use by researchers in other
    organizations, collaborating and providing assistance as appropriate.
    It will also assist researchers in identifying and accessing
    specialized resources and collaborators in other organizations.
                  continued funding of the center is requested
        The Center is intended as a long-term communication, facilitation,
    and research effort. Funding for the first year was provided through
    the fiscal year 1998 EPA appropriation. It is anticipated that the
    Agency will ultimately incorporate funding for the Center into its
    budget request, as a component of its ``One Atmosphere'' initiative or
    other programs dealing with pollutant mixture issues. Until that
    occurs, funding through the Agency's appropriation will be necessary to
    continue the project. Funding is requested in the fiscal year 1999 EPA
    appropriation for the second year in the amount of $2 million
    (identical to the first year level).
                                     ______

         Prepared Statement of Kerry L. Sublette, Sarkeys Professor of
     Environmental Engineering, University of Tulsa, Director, Integrated
                Public/Private Energy & Environmental Consortium

        It is proposed that the U.S. Environmental Protection Agency
    continue to support a focused, university-based program, the Integrated
    Public/Private Energy & Environmental Consortium (IPEC), with the goal
    of increasing the competitiveness of the domestic petroleum industry
    through a reduction in the cost of compliance with U.S. environmental
    regulations. Continued Federal support of $4 million is specifically
    requested as part of the fiscal year 1999 appropriation for the
    Environmental Protection Agency through the Science and Technology
    account or other source the Subcommittee may determine to be
    appropriate.
        Mr. Chairman, on behalf of the Integrated Petroleum Environmental
    Consortium (IPEC), I would like to take this opportunity to thank you
    for providing $1.5 million in funding for IPEC in the fiscal year 1998
    appropriations bill for the Environmental Protection Agency (EPA).
    Under your leadership both houses of Congress and the final
    appropriations bill included initial funding for this Consortium.
    Specifically this funding was provided for the development of cost-
    effective environmental technology, improved business practices, and
    technology transfer for the domestic petroleum industry. With initial
    funding under the Science and Technology account of EPA, IPEC will
    implement a comprehensive mechanism (Center) to advance the
    consortium's research expertise in environmental technology. IPEC's
    operating practices and linkages to the independent sector will ensure
    that real problems in the domestic petroleum industry are addressed
    with real, workable solutions. The consortium includes the University
    of Tulsa, the University of Oklahoma, Oklahoma State University, and
    the University of Arkansas.
        We are pleased to report that, as envisioned and proposed by the
    consortium, State-level matching funds have been pledged to support
    IPEC, creating a true Federal-State partnership in this critical area.
    In fiscal year 1998, IPEC has secured a pledge of $375,000 in matching
    funds from the Chancellor of Higher Education of the State of Oklahoma.
        IPEC officers have met with the Director of the Environmental
    Engineering Research Division of the EPA National Center for
    Environmental Research and Quality Assurance. The Consortium is working
    with EPA to ensure that we meet the agency's requirements for funding
    as a research center and the successful funding of IPEC.
        IPEC is proceeding in its solicitation and review process so that
    we will be in a position to fund projects as soon as possible. The IPEC
    Industrial Advisory Board (IAB) has been formed and met for the first
    time on January 20, 1998. This twenty-member Board is composed of
    environmental professionals from the domestic petroleum industry and is
    dominated by representatives of independent producers. We are pleased
    to report that IPEC's Industrial Advisory Board has approved five
    programs for funding and more are expected in the coming months. These
    five projects are:
        (1) Intrinsic bioremediation of whole gasoline.--This project seeks
    to develop a scientific basis for a risked-based approach to management
    of sites contaminated with gasoline. The project will investigate the
    mechanism and rate of the natural attenuation of gasoline via
    biodegradation by microorganisms which occur naturally in soil (termed
    intrinsic bioremediation). If all of the regulated components of
    gasoline can be naturally biodegraded, then contaminated sites which
    pose no immediate threat to human health or environmental receptors can
    be given a low priority for active intervention freeing precious
    resources to be allocated to sites where the threat is more acute.
        (2) Microflora involved in phytoremediation of polyaromatic
    hydrocarbons.--Phytoremediation is the term applied to the use of
    plants and microorganisms that thrive in the plant's root zone to
    biodegrade soil pollutants such as polyaromatic hydrocarbons (PAH's).
    PAH's are a major class of recalcitrant pollutants and are a
    significant byproduct of petroleum processing and refining. PAH's are
    concentrated in food chains, are toxic, and some are recognized
    mutagens and carcinogens. This project will determine the feasibility
    of using plants to degrade these PAH's in contaminated soil by creating
    a ``living cap'' of plants and associated microorganisms over
    contaminated sites. The costs of such waste treatment are far below
    those required for conventional treatment such as excavation and
    incineration of contaminated soil.
        (3) Passive sampling devices (PSD's) for bioavailability screening
    of soils containing petrochemicals.--The concept of a risk-based
    corrective action applied to the management of contaminated soil or
    groundwater requires that a regulator assess human risk. Soil
    contaminants can be detected by chemical analysis, but this provides
    little information on the actual hazard presented to ecological and
    human receptors. In some cases, contaminant levels above current soil
    quality guideline levels exists, but not toxicity. In other cases,
    chemical levels are below soil quality guidelines, yet toxicity
    persists. This project seeks to develop a rapid, cost-effective
    screening tool or passive sampling device (PSD) to determine the actual
    toxicity of contaminants in soil and their bioremediation potential.
    Use of such a device to determine the actual risks to human health
    presented by a site and its amenability to bioremediation would allow
    regulators to better prioritize contaminated sites needing immediate
    remedial action.
        (4) Using plants to remediate petroleum-contaminated soil.--This
    project also proposes to use plants and associated microorganisms in
    the plants root zone to effect the remediation of soil contaminants.
    This project specifically seeks to conduct field studies to develop
    protocols suitable for phytoremediation of petroleum-contaminated
    secondary containment berms. These earthen berms are designed to
    contain fluids in the event of a major spill or leak in a tank. Many of
    these berms become contaminated with oil through leaks, spills, and
    normal transfer operations. This project envisions the continuous
    cultivation of suitable plants on these berms to keep oil contamination
    under control.
        (5) Probabilistic risk assessment of petroleum contamination using
    detailed physical models.--Like all human endeavors the exploration and
    production (E&P) of oil and gas has associated with it some risk of
    damage to human or environmental health. Response to this risk can be
    reactive or proactive. The latter is of course preferred since
    proactive management prevents environmental damage and injury and is
    less costly. This project will develop a proactive risk management
    program for E&P operations to minimize the potential for environmental
    damage. This risk-based approach makes resource allocation more
    effective based on the probability that a scenario will occur and the
    potential severity of the associated damage. Proactive risk management
    in the domestic petroleum industry has the potential for both
    significant cost savings and enhanced environmental protection.
        The use of the Industrial Advisory Board to measure the relevancy
    of research within the Consortium is truly unique and ensures that the
    Consortium is meeting the needs of the domestic petroleum industry.
    IPEC has secured significant matching funds from industry for these
    first five programs. The combined funding request for these five
    projects is $492,000; however, the investigators have secured another
    $502,000 in matching funds from industry for these projects from
    individual companies and industry organizations such as the Gas
    Research Institute, the American Petroleum Institute and the Petroleum
    Environmental Research Forum. IPEC is well on its way to becoming a
    true public/private partnership.
        As we have previously testified, the ability of small and medium
    sized producers to compete in a global market is complicated by two
    factors: the cost of regulatory compliance and the declining cost of
    crude oil. With your help IPEC is developing cost-effective solutions
    for the environmental problems that represent the greatest challenge to
    the competitiveness of the domestic petroleum industry. However, the
    fiscal year 1998 appropriation is only a beginning. For example, the
    IPEC Industrial Advisory Board has identified 26 critical research
    needs. With the current funding we can begin to address only a fraction
    of these needs. There is much work to be done and we are again
    requesting the support of the Subcommittee in the form of a $4 million
    appropriation for IPEC in fiscal year 1999.
            the continuing crisis in the domestic petroleum industry
        The crisis in the domestic petroleum industry that we described in
    testimony in the last session of Congress has only gotten worse as the
    price of crude oil continues to fall. The independent producers are
    producing from mature fields left behind by the majors. Although there
    is a significant resource base in the fields, this is the most
    difficult and the most costly oil to produce. The independent producer
    has only one source of revenue--the sale of oil and gas. There is no
    vertical depth to his business. With the price of oil this low the
    independent producer is extremely vulnerable to the costs of
    environmental compliance. This latest drop in oil prices will no doubt
    result in another wave of business closures, plugged and abandoned
    wells, and reduced new well completions. The problem is so acute that
    the Governor of Oklahoma recently formed an emergency task force to
    determine what the state can do to help Oklahoma producers survive the
    current decline in prices. A similar price crash in the 1980's
    triggered a prolonged statewide recession. Clearly this trend is not in
    the best interest of the U.S. in terms of energy self-sufficiency or
    national security. We are turning over control of our cost of
    production in terms of energy costs to foreign interests. If domestic
    exploration and production and refining are to continue to play a
    strategic role in meeting U.S. energy needs, the domestic petroleum
    producer will continue to require access to cost-effective technology
    for pollution prevention, waste treatment and remediation in
    exploration and production (E&P) and refining.
                   ipec's response to critical research needs
        IPEC will continue to work with the domestic petroleum industry to
    provide solutions to those environmental problems that represent the
    greatest challenge to the competitiveness of the industry. Specifically
    in fiscal year 1999 IPEC will continue to work with our Industrial
    Advisory Board to address the remaining critical research needs they
    have identified as well as address new needs that develop. These
    research needs include the following:
        (1) Bioremediation and other remediation technologies.--Reducing
    toxicity of hydrocarbon-contaminated soils; development of rapid, on-
    site remediation technologies; control of salt migration in the
    subsurface; developing methodologies for phytoremediation.
        (2) Risk assessment.--Development of cost-effective ecological risk
    assessment methods for petroleum impacted sites; development of cost-
    effective and relevant terrestrial (animal/plant) bioassays for use in
    ecological risk/impact assessment; development of field methods for
    ecological risk assessment; development of methods to evaluate actual
    and future environmental risk of petroleum impacted soils; determining
    the correlation between ecological risk assessment and human health
    risk assessment; determining the impact of intrinsic bioremediation on
    risk-based closures; development of risk-based guidelines for handling,
    disposal and storage of NORM-contaminated solids, pipe, and equipment.
        (3) Measurement technology.--Development of cost-effective methods
    (direct and indirect) for measuring the amount and extent of petroleum
    hydrocarbon sources in unsaturated and saturated soils; development of
    useful and easy to implement field and analytical methods and protocols
    for demonstrating intrinsic bioremediation; validating current models
    for predicting flash emissions of hydrocarbons in E&P operations.
        (4) Process technologies.--Control or treatment of flash gas
    emissions from stock tanks; use, treatment or disposal of oil tank
    bottoms; development of cost-effective methods for capture, recycling/
    destruction of volatile organic compound emissions from hydrocarbon
    processing and storage tanks; development of improved water treatment
    methods--particularly those methods; development of methods to for
    treatment of hydrogen sulfide in the reservoir.
        (5) Management and decision tools.--Development of methods to
    predict plume migration of salt water from pits; development of methods
    to calculate the full life cycle cost of material and waste handling in
    the petroleum industry; development of proper pit closure methods using
    a clay or compacted soil cap; development of improved methods for
    disposal of drilling wastes; development of methods to distinguish
    between historical oil field pollution and recent, current and/or
    ongoing pollution.
        In addition to working with our Industrial Advisory Board, IPEC
    will continue in fiscal year 1999 to build linkages with organizations
    which provide services to the domestic petroleum industry. As IPEC
    begins to fund technology development projects the Directors will work
    with the leadership of these organizations to develop a synergy between
    their efforts and those of IPEC. These organizations form the IPEC
    Affiliates Group and include the National Petroleum Technology Office
    (NPTO) of the U.S. Department of Energy, the Interstate Oil and Gas
    Compact Commission (IOGCC), the Petroleum Environmental Research Forum
    (PERF) the Oklahoma Energy Resources Board (OERB), the Oklahoma
    Independent Petroleum Association (OIPA), the Gas Research Institute
    (GRI), the Office of the Oklahoma Secretary of Energy, the Osage Agency
    of the Bureau of Indian Affairs and the Oil Producers of Arkansas
    (OPA). Recently, Governor Frank Keating of Oklahoma named the IPEC
    Director to the Environmental and Safety Committee of the IOGCC.
        Since 1994 IPEC has organized and conducted the International
    Petroleum Environmental Conference. Dr. Kerry Sublette, Director of
    IPEC, has served as chair of these conferences. This conference is
    quickly becoming the premier conference of its kind in the U.S. and
    represents the flagship of technology transfer for IPEC. The last
    conference (4th) was held in San Antonio, TX and featured 8 plenary
    lectures, 135 technical presentations, a special symposium on intrinsic
    bioremediation of petroleum hydrocarbons, 30 exhibits and a poster
    session. There were 401 attendees from academia, independent and major
    oil and gas companies, companies that service the domestic petroleum
    industry, state and federal regulators, and the legal community. The
    NPTO of the U.S. Department of Energy was a major sponsor of the
    conference. Other co-sponsors included the Oklahoma Energy Resources
    Board, the Oklahoma Independent Petroleum Association, the Gas Research
    Institute, the Texas Railroad Commission, The Texas Independent
    Producers & Royalty Owners Association, the Petroleum Technology
    Transfer Council, the Interstate Oil and Gas Compact Commission, the
    National Energy-Environment Law and Policy Institute, the Great Plains/
    Rocky Mountain Hazardous Substance Research Center and The Nature
    Conservancy. This conference is IPEC's technology transfer flagship.
    The next conference is planned for Oct. 1998 in Albuquerque, NM.
        As a final note we would like to report that the Consortium is
    changing its name from the Integrated Petroleum Environmental
    Consortium to the Integrated Public/Private Energy & Environmental
    Consortium (IPEC). The member institutions of IPEC believe that this
    new name more correctly reflects the full scope of research
    capabilities of the institutions and gives us the flexibility to
    respond to future environmental research needs under the IPEC name.
    However, our mission with respect to the domestic petroleum industry
    has not changed and we remain devoted to increasing the competitiveness
    of this critical industry through a reduction in the cost of compliance
    with U.S. environmental regulations.
                                funding of ipec
        IPEC is seeking appropriations of $4 million for fiscal year 1999
    and the succeeding fiscal years 2000, 2001, and 2002 through the
    Environmental Protection Agency. The consortium will be responsible for
    at least a 50 percent match of federal appropriations with private
    sector and state support over a four year period. The Consortium will
    be subject to annual review to ensure the effective production of data,
    regulatory assessments, and technology development meeting the stated
    goals of the Consortium.
                                     ______

     Prepared Statement of Michael P. Kenny, Executive Officer, California
     Air Resources Board; Barbara Patrick, Member, Board Supervisor, Kern
     County and Member, California Air Resources Board; Manuel Cunha, Jr.,
    President, NISEI Farmers League; Les Clark, Vice President, Independent
         Oil Producers' Association; and Catherine H. Reheis, Managing
               Coordinator, Western States Petroleum Association

        Mr. Chairman and Members of the Subcommittee: On behalf of the
    California Industry and Government Coalition on PM-10/PM-2.5, we are
    pleased to submit this statement for the record in support of our
    fiscal year 1999 funding request of $1.25 million in the EPA budget for
    the California San Joaquin Valley Regional PM-10/PM-2.5 Air Quality
    Study.
        The San Joaquin Valley of California and surrounding regions exceed
    both state and federal clean air standards for small particulate
    matter, designated PM-10/PM-2.5. The 1990 Federal Clean Air Act
    Amendments require these areas to attain federal PM-10/PM-2.5 standards
    by December 31, 2001. Attainment of these standards requires effective
    and equitable distribution of pollution controls that cannot be
    determined without a major study of this issue.
        According to EPA and the California Air Resources Board, existing
    research data show that air quality caused by the PM-10/PM-2.5 problem
    has the potential to threaten the health of more than 3 million people
    living in the region, reduce visibility, and impact negatively on the
    quality of life. Unless the causes, effects and problems associated
    with PM-10/PM-2.5 are better addressed and understood, many industries
    will suffer due to production and transportation problems, diminishing
    natural resources, and increasing costs of fighting a problem that begs
    for a soundly researched solution.
        PM-10/PM-2.5 problems stem from a variety of industry and other
    sources, and they are a significant problem in the areas that are
    characteristic of much of California. Typical PM-10/PM-2.5 sources are
    dust stirred up by vehicles on unpaved roads, and dirt loosened and
    carried by wind during cultivation of agricultural land. Soil erosion
    through wind and other agents also leads to aggravation of PM-10/PM-2.5
    air pollution problems.
        The importance of this study on PM-10/PM-2.5 is underscored by the
    need for more information on how the Federal Clean Air Act Amendments
    standards can be met effectively by the business community, as well as
    by agencies of federal, state and local government whose activities
    contribute to the problem, and who are subject to the requirements of
    Title V of the Clean Air Act. There is a void in our current
    understanding of the amount and impact each source of PM-10/PM-2.5
    actually contributes to the overall problem. Without a better
    understanding and more information--which this study would provide--
    industry and government will be unable to develop an effective
    attainment plan and control measures.
        Our Coalition is working diligently to be a part of the effort to
    solve this major problem, but to do so, we need federal assistance to
    support research and efforts to deal effectively with what is
    essentially an unfunded federal mandate.
        Numerous industries, in concert with the State of California and
    local governmental entities, are attempting to do our part, and we come
    to the appropriations process to request assistance in obtaining a fair
    federal share of financial support for this important research effort.
    In 1990, our Coalition joined forces to undertake a study essential to
    the development of an effective attainment plan and effective control
    measures for the San Joaquin Valley of California. This unique
    cooperative partnership involving federal, state and local government,
    as well as private industry, has raised more than $19 million to date
    to fund research and planning for a comprehensive PM-10/PM-2.5 air
    quality study. Our cooperative effort on this issue continues, and our
    hope is that private industry and federal, state and local governments
    will be able to raise an additional $8 million over the next two years
    to fund this important study.
        To date, this study project has benefited from federal funding
    provided through EPA's, DOT'S, DOD's, USDA's, and Interior's budgets--a
    total of $10.6 million in federal funding, including $6.35 million in
    EPA appropriations. State and industry funding has matched this amount
    virtually dollar for dollar.
        With the planning phase of the California Regional PM-10/PM-2.5 Air
    Quality Study nearly complete, a number of significant accomplishments
    have been achieved. These interim products have not only provided
    guidance for completion of the remainder of the Study and crucial
    information for near-term regulatory planning, they have also produced
    preliminary findings which are significant to the Environmental
    Protection Agency's (EPA) interests.
        The Study is significant to EPA interests for a number of reasons.
    The San Joaquin Valley experiences some of the most severe PM episodes
    in the nation. The Valley is currently classified as one of five
    serious PM-10 non-attainment areas, and is likely to exceed both the
    new annual and 24-hour national ambient air quality standards (NAAQS)
    for PM-2.5. Exceedances of the PM-10 and PM-2.5 standards span many
    seasons and are influenced by a broad cross-section of sources. The
    information being collected by the PM study is essential for
    development of sound and cost-effective control plans. A number of the
    Study work products however will also have applicability to other areas
    of the nation. Products such as evaluation of monitoring methods and
    improved air quality and meteorological modeling techniques will assist
    the EPA in addressing PM non-attainment problems in areas outside of
    California as well.
        To this end, the PM study is expending significant resources to
    provide an improved understanding of the nature and causes of PM
    exceedances within the San Joaquin Valley and surrounding regions. One
    of the major recent efforts was a preliminary field monitoring program
    that was conducted during the fall and winter of 1995-96. Extensive air
    quality, meteorological, and fog measurements were collected. This
    database is being analyzed to address a number of questions including:
    (1) the sources contributing to elevated PM-10 and PM-2.5
    concentrations, (2) the zone of influence of specific sources, (3) the
    spatial representativeness of a monitoring site, (4) the adequacy of
    current monitoring methods, and (5) wind flow patterns and transport
    routes between the Valley and surrounding areas. The database produced
    as a part of this study is unparalleled in the nation, and results from
    the study are already providing a substantive base of understanding
    about PM-2.5. Preliminary results indicate that PM-2.5 constitutes 70
    percent to 80 percent of the PM-10 mass during the wintertime.
    Secondary ammonium nitrate is often the largest fraction of PM-2.5
    mass, and concentrations of ammonium nitrate tend to be very uniform
    throughout the study region. Site to site variability in PM-2.5 mass is
    primarily due to local variations in carbon, superimposed on the
    regional background of ammonium nitrate.
        The results of these analyses are being used to design large scale
    field monitoring programs to be conducted in 1999 and 2000. These field
    programs will address both the annual and 24-hour PM-10 and PM-2.5
    standard. Surface and aloft monitoring of air quality, meteorology,
    fog, and visibility will be conducted at a cost of over $12 million.
    Final plans for these field studies are being developed, which will be
    carried out by numerous contractors over a broad area encompassing
    Central California, the Sierra Nevada Mountains, and the Mojave Desert.
    Substantial resources will also be devoted to developing improved
    emissions estimates. A database of the field study results will be
    completed in 2001, with air quality modeling and data analysis findings
    available in 2002. This timeline is ideally positioned to provide
    information for federal planning requirements as a part of the new PM-
    10/PM-2.5 NAAQS.
        The Environmental Protection Agency's prior funding and strong
    support for the Study have enabled projects to occur. Continued support
    by EPA is essential to implement the major field programs and
    subsequent modeling and data analysis and ensure that effective control
    can be developed to meet the PM-10 and PM-2.5 NAAQS.
        For fiscal year 1999 our Coalition is seeking $1.25 million in
    federal funding through the U.S. Environmental Protection Agency to
    support continuation of this vital study in California. We respectfully
    request that the Appropriations Subcommittee on VA, HUD and Independent
    Agencies provided this additional amount in the EPA appropriation for
    fiscal year 1999 and that report language be included directing the
    full amount for California.
        The San Joaquin Valley PM-10/PM-2.5 study will not only provide
    this vital information for a region identified as having particularly
    acute PM-10/PM-2.5 problems, it will also serve as a model for other
    regions of the country that are experiencing similar problems. The
    results of this study will provide improved methods and tools for air
    quality monitoring, emission estimations, and effective control
    strategies nationwide. Consequently, the beneficial results of this
    study will contribute to national policy concerns as well.
        The Coalition appreciates the Subcommittee's consideration of this
    request for a fiscal year 1999 appropriation of $1.25 million for EPA
    to support the San Joaquin Valley Region PM-10/PM-2.5 Air Quality
    Study.
                                     ______

    Prepared Statement of Robert B. Peacock, Chairman, Fond du Lac Band of
                             Lake Superior Chippewa

        Mr. Chairman, Members, the Fond du Lac Band of Lake Superior
    Chippewa would like to thank you for the opportunity to present this
    testimony on fiscal year 1999 appropriations for the VA, HUD, and
    Independent Agencies. We seek the Committee's support for our
    Environmental Program and our cooperative environmental research
    initiative, which are essential to protect the environmental quality
    and the natural resources on which our people depend, and are also
    vitally important to the other citizens in our region.
        The Fond du Lac Reservation is one of six Chippewa Bands in the
    State of Minnesota. The Reservation was established by the Treaty of
    1854 with the United States Government. Currently, there are about
    3,350 Fond du Lac Band Members. The Fond du Lac Reservation encompasses
    approximately 100,000 acres, and is located 20 miles west of Duluth,
    Minnesota and the western end of Lake Superior.
              fiscal year 1999 funding for indian housing program
        The continuation of support for the Indian Housing Program is very
    important to the Fond du Lac Band. These funds from HUD are essential
    to build affordable housing for our Band Members. We urgently request
    that the Indian Housing Program budget be increased to address the need
    for additional housing or at a minimum to maintain the current funding
    levels.
             fiscal year 1999 u.s. environmental protection agency
        We are requesting a total of $275,000 in fiscal year 1999 to
    continue the funding of the Sediment Contaminant Mitigation and
    Prevention for Mercury project through the U.S. Environmental
    Protection Agency.
        This project is a cooperative study between the University of
    Minnesota/Duluth, the University of Wisconsin/Superior, and the Fond du
    Lac Natural Resources Program, to test various methods of preventing
    mercury contamination in aquatic sediments from getting into the food
    chain. Mitigation treatments have been successfully tested on a small
    scale on contaminated sediments in a reservoir. The mitigation
    technology we have been testing can be developed into an effective and
    efficient means of remediating mercury problems. Cost effective
    mitigation technologies must be tested on a larger scale to develop
    practical methods to be used full scale on lakes, rivers, reservoirs,
    and watersheds. The most effective and economical method will be tried
    on a large scale. The mitigation techniques developed will be
    transferable to other locations in the Great Lakes Region as well as
    other locations with the same problem. Congress provided $100,000 for
    the first phase of this study in 1996. We would like to thank the
    Committee for its support of this important project. We are requesting
    $275,000 to continue this study in 1999. These additional funds are
    critical to complete the testing and development of this mitigation
    technology.
        The mercury contamination in our region's fish continues to be a
    serious public health problem. Mercury can cause neurological and
    developmental disorders, especially for children and developing
    fetuses. Many Native American families in this region commonly consume
    more fish than the average fish consumption of the general population.
    Most of the lakes and rivers in our region have fish consumption
    advisories based on mercury contamination in the fish. A recent study
    concluded that Native Americans ``tend to be higher consumers of fish,
    have elevated levels of mercury and PCB's, and may be at higher risk
    for health effects.'' The Fond du Lac Band is very concerned about this
    threat to their health and well being. Our Reservation has cooperated
    in several mercury studies of fish and the aquatic ecosystem. A study
    of mercury levels in fishermen and their families from our community
    has also been conducted in recent years. This study confirmed that
    those individuals consuming a greater amount of fish had an increased
    level of mercury in their blood. The mitigation technology being
    developed by our cooperative research project can provide a practical
    means to decrease mercury levels in fish and thereby to reduce this
    potential health threat.
        The biotic uptake of mercury resulting in fish contamination in our
    lakes and rivers, and in Lake Superior, has the potential to devastate
    the sport fishing industry and subsistence use of the fishery. All of
    the states bordering the Great Lakes have fish consumption advisories
    on many water bodies, based primarily on mercury contamination of
    gamefish. The disruption of the sport fishing and related recreational
    business could potentially cost them millions. An effective,
    environmentally benign, and efficient method to use ``environmental
    engineering'' to prevent mercury from contaminating the aquatic food
    chain must be found. The federal funding of this research will prevent
    the decline of this important recreational and subsistence fishery and
    will derive benefits worth many times the initial investment.
        Many of the contaminated sediment sites around the Great Lakes,
    including 34 of the 42 Areas of Concern (identified by the
    International Joint Commission) could benefit from development and
    application of an efficient mitigation methodology. This technology
    could provide a cost effective mitigation option to sites which cannot
    otherwise be remediated without very costly or environmentally
    disruptive dredging and landfilling.
        Mercury contamination will continue to be a major environmental,
    health, and economic problem in the Great Lakes Region for many years.
    The levels of mercury in the region's waters and sediments is several
    times the pre-industrial level because of the airborne deposition onto
    watersheds. This contamination will continue to be a problem for many
    years, even if airborne deposition levels decline significantly. The
    accumulation of mercury in the sediments results in high concentrations
    in fish because of the ``magnification'' through each trophic level in
    the aquatic food chain. Mercury is a heavy metal which does not
    decompose, and it remains biologically active for many years within the
    top 6 to 12 inches of lake and river sediments. Even if the reductions
    of mercury in products and waste streams results in significant
    reductions in airborne levels of mercury, it will be many decades
    before the toxic affect of mercury contamination will allow mercury
    levels in fish to be at safer levels. The efforts to decrease airborne
    mercury levels is definitely necessary, however, practical means to
    decrease mercury levels in fish must be developed to address this
    problem in the interim. This mitigation technology would be effective
    for remediating water bodies with high mercury levels in sediments and
    also lakes with valuable game fisheries.
        The focus on mercury contamination by the USEPA in its ``Mercury
    Report to Congress'' provides ample evidence of this serious
    environmental and public health problem. The recent initiative proposed
    by the President to clean our Nation's polluted waters will hopefully
    provide more resources to solve some of these problems. Although the
    USEPA has established the mercury problem as a high priority
    environmental and public health problem, we do not see sufficient
    research funds being available for mercury remediation research.
    Efforts to decrease the mercury from entering our air and water is
    obviously an important focus, however, the high levels of mercury on
    the watersheds and in sediments may require remediation to decrease
    mercury levels in our region's fish. The funds available to address the
    many serious environmental contamination problems in the Great Lakes
    region through the EPA Region V Great Lakes National Program Office
    (GLNPO) are inadequate. The funds should be increased substantially to
    provide the resources to conduct essential research, and to ensure
    Tribal involvement and participation. It is difficult for Tribes to
    compete with the priority of this agency to fund study proposals from
    the Great Lakes states. We believe that the current research being
    funded by GLNPO commonly focuses on seemingly never ending assessment
    studies, rather then innovative solutions to efficiently cleaning up
    contaminated sites and polluted waters. The EPA's Office of Research
    and Development unfortunately does not have a high priority on basic
    mercury research, even though the EPA recognizes this as a very serious
    long term environmental problem.
        fiscal year 1999 indian environmental general assistance program
        We strongly support the Administration's request for $42.6 million
    in funds within the EPA's budget for the Indian Environmental General
    Assistance Program. This program funds a wide range of multi-media
    programs throughout Indian country.
        In USEPA Region 5, the 32 Tribes have worked on a government-to-
    government basis with the Region 5 Administrator, to achieve Tribal
    environmental protection presence on each and every Reservation. The
    General Assistance Program has provided these Tribes the necessary
    resources to develop cooperative relationships with the Environmental
    Protection Agency, other federal agencies, as well as state and local
    agencies.
        This written testimony is respectfully presented to the Senate
    Appropriations Committee, Subcommittee on Appropriations for VA, HUD,
    and Independent Agencies by
        The Fond du Lac Band of Lake Superior Chippewa is requesting a
    total appropriation of $275,000 for fiscal year 1998 for both of the
    Sediment Contaminant Mitigation and Prevention for Mercury.
                                  introduction
        The Fond du Lac Band of Lake Superior Chippewa is one of six Bands
    in the Minnesota Chippewa Tribe. The Fond du Lac Reservation was
    established by a Treaty with the United States Government on September
    30, 1854 (Stat. 1109). The Fond du Lac Reservation encompasses
    approximately 100,000 acres, and is located 20 miles west of Duluth,
    Minnesota and the western end of Lake Superior.
        The continuation of support for the Indian Housing Program is very
    important to the Fond du Lac Band. These funds from HUD are essential
    to build affordable housing for our Band Members. We urgently request
    that the Indian Housing Program be increased to address the need for
    additional housing or at a minimum to maintain the current funding
    levels. At the very least our funding level should stay the same, so
    that we can provide some of the needed housing to our Band Members.
    This would be of great benefit to our people.
        The research project, Sediment Contaminant Mitigation and
    Prevention for Mercury will determine the best means to break the link
    in the aquatic ecosystem, by binding, covering, or removing the mercury
    and sediments from the sediments. Our cooperative research project
    between the Fond du Lac Natural Resource Program and the Univ. of
    Minn./Duluth research laboratory have the expertise in conducting the
    field work and laboratory analysis to carry out this research project.
    This project would require $275,000 for fiscal year 1999. It is
    imperative to discover a means to break the link in the aquatic food
    chain to prevent mercury from contaminating important game fish
    populations. The mitigation technology would be useful reduce the
    affect of these contaminants in highly contaminated sites, which are
    common throughout the Great Lakes, and on less contaminated sites with
    mercury from aerial deposition.
        We strongly support the Administration's request for $42.6 million
    within the EPA's budget for the Indian Environmental General Assistance
    Program. This program funds a wide range of multi-media programs
    throughout Indian country. In USEPA Region V, the 32 Tribes have worked
    on a government-to-government basis with the Region 5 Administrator, to
    achieve Tribal environmental protection presence on each and every
    Reservation. The General Assistance Program has provided these Tribes
    the necessary resources to develop cooperative relationships with the
    Environmental Protection Agency, other federal agencies, as well as
    state and local agencies.
        This written testimony is respectfully presented to the Senate
    Appropriations Committee, Subcommittee on Appropriations for VA, HUD,
    and Independent Agencies by Robert B. Peacock, Chairman of the Fond du
    Lac Band Lake Superior Chippewa.
           sediment contaminant mitigation and prevention for mercury
                            statement of the problem
        The continuing uptake of mercury into the aquatic food chain has
    contaminated the fish in our rivers and lakes. Fish Consumption
    Advisories issued by the Minnesota Health Department (MDH, 1997)
    establish meal limits based on this contaminant. Our assessment studies
    have quantified the extent of mercury contamination throughout the St.
    Louis River Watershed and have identified contaminated hot-spots in the
    six lower reservoirs. Significant mercury residues are observed in fish
    food chain organisms, especially in the Thomson Reservoir, (see Figures
    1-6, Glass et al., 1997). Recently, it has been discovered that mercury
    levels in walleye from lakes on the Fond du Lac Reservation are also
    high in mercury. The transfer of contaminants from sediments into the
    aquatic food chain is significant and can occur through a variety of
    mechanisms. The ways and means to decrease and eliminate sediment borne
    contaminants from entering the aquatic food chain must be found, or the
    fish will continue to be too toxic to consume. These circumstances have
    serious long term consequences for the recreational and subsistence
    fishery in this region and in the Western Arm of Lake Superior. The
    ability to reduce these levels would decrease the health risk of
    neurological and developmental health problems for consumers of these
    fish.
        Mercury contamination in sediments has been shown to be the primary
    source of mercury residue in fish from the lower St. Louis River, and
    is identified as an important toxic contaminant in the St. Louis River
    Area of Concern (Glass, et al. 1992., MPCA/WDNR, 1992). Mercury
    concentrations measured as a function of depth in sediment cores taken
    from the Thomson, Forbay, and Fond du Lac Reservoirs, in deep water
    depositional zones show large peak mercury concentrations where the
    maximum core depths represent a sediment accumulation since the early
    1900's.
        The highest sediment mercury concentrations generally occur in the
    deeper strata. However, two areas of the Thomson and Scanlon Reservoirs
    show high levels near the sediment surface, where the mercury can
    readily contaminate the lower trophic levels of the aquatic food chain.
    The concentration of mercury multiplies as it transfers up through the
    food chain. These two areas may contribute significant mercury amounts
    to fish and thereby human consumers. These findings prompted our
    research group to conduct a research program of mercury in sediments in
    the lower St. Louis River reservoirs with the purpose of identifying
    mercury source and toxicity mechanisms and mitigation mechanisms and
    options.
    Mitigation options
        Recent research on iron as a remediation material shows promise for
    mitigating mercury and PCB contaminated sediments (Agrawal and
    Tratnyek, 1996; Orth and Gillham, 1996). Various concentrations of iron
    will be applied using appropriate methods to the upper sediment layer.
                          project goals and objectives
        The goal is to reduce the levels of mercury in game fish in an
    effort to decrease the toxicological risks to human health.
        The objective of this project is to continue testing mercury
    mitigation technology in the reservoirs of the lower St. Louis River
    and to then apply the best mitigation approach to a small portion of a
    reservoir area for a pilot mitigation demonstration study. Mercury
    mitigation technology will also be tested in enclosures on a lake which
    has high levels of mercury in game fish. Tests will focus on reducing
    the amount of mercury entering the aquatic food chain thus resulting in
    lower mercury levels in game fish.
                              project description
    Source Mechanisms and Toxicity
        a. Baseline data on mercury levels will be collected in water,
    sediment, benthos, and fish to assess and identify the degree of
    mercury in various components of the aquatic ecosystem.
        b. The data from the monitoring of mercury levels in local
    precipitation, by the Fond du Lac Environmental Program, will be
    assessed to determine the influence of wet deposition on the local
    mercury cycle.
        c. Modeling of mercury flux and the formation and sources of
    organic mercury compounds [ie. methyl mercury] in a reservoir and on a
    natural lake will be conducted to access the importance of these
    sources of contamination and to focus remediation efforts.
        d. The model results together with data on the magnitude of various
    mercury compounds in contaminated sediment will be used to determine
    the most effective mitigation options.
    Mitigation Mechanisms and Options
        a. Laboratory tests and pilot field tests will be conducted on
    various methods of immobilizing sediments on identified contaminant hot
    spots on St. Louis River reservoirs. Fish, benthic organisms, water,
    and sediment from test areas will be analyzed to determine reductions
    in contaminant levels.
        The mitigation strategies selected for demonstration testing must
    be cost effective and practicable to implement. The mitigation strategy
    to be demonstrated is the addition of contaminant binding substrates,
    such as iron. Recent research shows promise in utilizing iron treatment
    to alter the micro-environment of the mercuric compounds and transform
    them into less bio-accumulative or toxic forms.
        b. Mitigation tests will also be conducted in enclosures on a
    moderately contaminated water body that has high levels of mercury in
    game fish. The results of field testing on this site will be compared
    to the effectiveness of tests on the highly contaminated sediments in
    the reservoir.
        c. Methods which show significant reductions in toxic residues in
    fish will be further tested on sites with high test levels of
    contaminants to determine the effectiveness of this approach and
    applicability to whole water-body treatment.
                                project benefits
        A successful means to reduce this toxic contaminant in fish would
    protect human health. The results would be transferable to aquatic
    systems in other regions.
                                  project cost
        Fiscal year 1994--Fond du Lac received $70,000 for a St. Louis
    River Assessment Study.
        Fiscal year 1995--Fond du Lac requested $275,000--received $100,000
    from Congressional appropriation and $100,000 from Great Lakes National
    Program Office for phase 1 of mitigation study.
        Fiscal year 1996--Fond du Lac requested $250,000--no additional
    funds were appropriated.
        Fiscal year 1997 and 1998--$275,000 requested by Fond du Lac to
    continue research.
        Fiscal year 1999--Requesting $275,000 to continue research in
    mercury mitigation technology.
                                   references
        Agrawal, A. and Tratnyek, P.G. 1996. Reduction in Nitro Aromatic
    Compounds by Zero-Valent Iron Metal. ``Environmental Science and
    Technology.'' 30: 154-160.
        Orth, W.S. and Gillham, R.W. 1996. Dechlorination of Trichlorethene
    in Aqueous Solution Using Feo. ``Environmental Science & Technology.''
    30:66-71.
        MDH 1996. Minnesota Dept. of Health. Minneapolis MN 84 pp.
        Glass, G.E., J.A. Sorensen, K.W. Schmidt and G.R. Rapp. Jr. 1990.
    New source, identification of mercury contamination in the Great Lakes,
    ``Environ. Sci. Technol.'' 24: 1059-1069.
        Glass, G.E., Sorensen, J.A., Schmidt, K.W., Rapp, G.R. Jr., Huber,
    J.K. 1992. Mercury in the St. Louis River, Mississippi River, Crane
    Lake, and Sand Point Lake: Cycling, Distribution, and Sources. ``Report
    to the Legislative Commission on Minnesota Resources.'' Minn. Pollut.
    Ctrl. Agency, 520 Lafayette Rd., St. Paul, MN. 55155.
        Glass, G.E., Sorensen, J.A., Rapp, Jr. G.R., Balcer, M.,
    Schwarzkopf, L. 1997. Mercury Sub-Surface Maxima in Sediments: a
    Diagnostic for Anthropogenic Origins. In review, Springer Environmental
    Science Book Series.
        MPCA/WDNR 1992. St. Louis River System Remedial Action Plan Stage
    One. Minn. Pollut. Cntrl Agcy., St. Paul, MN, and Wisc. Dept. of Nat.
    Res., Madison, WI.
    [GRAPHIC] [TIFF OMITTED] TVA.001

    [GRAPHIC] [TIFF OMITTED] TVA.002

    [GRAPHIC] [TIFF OMITTED] TVA.003

                              resolution # 105/98
        The Fond du Lac Reservation Business Committee, on behalf of the
    Fond du Lac Band of Lake Superior Chippewa, hereby enacts the following
    Resolution:
        WHEREAS, the Fond du Lac Reservation is a sovereignty, created by
    the Treaty of September 30, 1854, 10 Stat. 1109, as the perpetual home
    of the Fond du Lac Band of Lake Superior Chippewa, which possesses the
    inherent jurisdiction and authority to exercise regulatory control
    within the boundaries of the Fond du Lac Reservation; and
        WHEREAS, it is the sovereign obligation of the Fond du Lac
    Reservation Business Committee, as the Governing Body of the Fond du
    Lac Band, under the Indian Reorganization Act, 25 U.S.C. section 461 et
    seq., and in accordance with the Indian Self-Determination Act, 25
    U.S.C. section 450 et seq., to assume responsibilities of self-
    government; and
        WHEREAS the Fond du Lac Reservation Business Committee supports
    continued funding for the Indian Housing Program and is committed to
    providing affordable housing for Band Members, and
        WHEREAS the Fond du Lac Reservation Business Committee is greatly
    concerned about protecting the aquatic resources and environment of the
    Fond du Lac Band of Lake Superior Chippewa, and is very concerned about
    the impact on the health of Fond du Lac Band Members from mercury
    contamination of the fish in this region, and
        WHEREAS the Fond du Lac Natural Resources Program is cooperating on
    the study, Sediment Contaminant Mitigation and Prevention for Mercury,
    to find a practical means to prevent mercury from entering the aquatic
    food chain.
        NOW THEREFORE BE IT RESOLVED, that the Fond du Lac Reservation
    Business Committee does fully support the Testimony to the Subcommittee
    on Appropriations for VA, HUD, and Independent Agencies for fiscal year
    1999.
        We do hereby certify that the foregoing Resolution was duly
    presented and enacted upon by a vote of 3 for, 0 against, a quorum of 4
    being present at a Special Meeting of the Fond du Lac Reservation
    Business Committee held on March 3, 1998, on the Fond du Lac
    Reservation.
    ____________________
    Daryold Blacketter
    Vice-Chairman
    ____________________
    Peter J. Defoe
    Secretary/Treasurer
                                     ______

     Memorandum From Hon. Willard M. Munger, Minnesota State Representative

        continued funding for project: sediment contaminant mitigation
                             prevention for mercury
        Larry Schwarzkopf, Manager of the Fond du Lac Natural Resources
    Program, along with colleagues from the University of Minnesota-Duluth
    and University of Wisconsin-Superior, have been cooperatively studying,
    various methods of preventing mercury contamination in aquatic
    sediments from getting into the food chain. Congress appropriated
    $100,000 for the first please of this study in 1996.
        Their current research was successful in initial tests to utilize
    iron as a means to sequester mercury in contaminated or natural lake
    and river sediments so that the uptake of mercury into the food chain
    was reduced. Now they must test cost effective mitigation technologies
    on a larger scale in order to develop practical methods to be used full
    scale on lakes, rivers, reservoirs, and watersheds. The most cost
    effective and economical method will be tried on a large scale.
        Mr. Schwarzkopf testifies before you today, Earth Day, to request
    additional funds for this expanded research. His proposal asks for
    $275,000 in fiscal year 1999 to continue the funding of the Sediment
    Contaminant Mitigation and Prevention for Mercury project either
    directly or through the U.S. Environmental Protection Agency.
        I encourage you to support the project and Larry's funding proposal
    so that work can continue on this vital research. As I am sure you are
    aware, the conversion of mercury into methyl mercury in our northern
    lakes threatens not only the fish we eat but the fish-eating wildlife
    of our northern waters. We must continue to both reduce mercury in our
    environment and prevent it from entering the food chain.
        Thank you in advance for your cooperation. Best wishes for a
    successful session.
                                     ______

                        Letter From George R. Rapp, Jr.

                                University of Minnesota-Duluth,
                                            Duluth, MN, March 16, 1998.
    Robert B. Peacock,
    Chairman, Fond du Lac Reservation,
    Cloquet, MN.
        Dear Chairman Peacock: The problem of mercury contamination in our
    environment continues to be extremely serious. It has recently been
    shown to affect not only sensitive fish eating birds and animals at
    levels once thought to be safe, but humans as well. See the enclosed
    copy of a journal article entitled ``Cognitive Deficit in 7-Year-Old
    Children with Prenatal Exposure to Methylmercury'' published in
    Neurotoxicology and Teratology, Vol. 19, pp. 417-428, 1997.
        We are working to reduce the exposure of individuals catching and
    eating fish from Minnesota lakes by studying the factors that affect
    the rates of mercury bioaccumulation in fish. We find that airborne
    mercury is the primary source of mercury to Minnesota lakes and that
    mercury concentrations have been increasing in recent years.
        In addition to atmospheric sources, mercury sources from
    contaminated sediments in the St. Louis River from past industrial uses
    are important sources of contamination to the fish-food chain and the
    fishery of the river. Ways and means must be found to reduce or
    eliminate these contributions from the sediment sources in order to
    affect a significant improvement in the river fish mercury residue
    levels.
        We strongly support your initiatives to explore new ways to
    research solutions to this problem and will work with you, where
    possible, to reach a significant reduction in the levels of mercury
    presently contaminating the river and the fishery.
                Sincerely,
                                                   George R. Rapp, Jr.,
                                                    Regent's Professor,
                                     Director, Archaeometry Laboratory.
                                     ______

                                     [GRAPHIC] [TIFF OMITTED] TVA.004

                                     ______

     Prepared Statement of John R. Wodraska, General Manager, Metropolitan
                     Water District of Southern California

     fiscal year 1999 appropriations for the u.s. environmental protection
                                     agency
        The Metropolitan Water District of Southern California (MWD) is
    pleased to submit comments for the record, regarding programs contained
    in the U.S. Environmental Protection Agency's (EPA) fiscal year 1999
    budget for your Subcommittee's hearing record.
        MWD is responsible for meeting the supplemental water requirements
    of 16 million people living in the Southern California coastal plain
    and the economy which supports them. Our sources of water supply are
    the Colorado River and surface waters from Northern California. Of
    particular interest to MWD and our 27 member agencies are those federal
    programs that provide assistance and facilitate partnerships for
    addressing critical water resources issues.
        MWD urges that you provide the full amount authorized by Congress
    for the Safe Drinking Water Act State Revolving Fund for fiscal year
    1999 and that you fully support the President's proposed fiscal year
    1999 budget for other EPA programs benefiting drinking water quality.
    While significant progress has been made in improving the quality of
    our nation's water, many surface and ground waters do not meet water
    quality standards. Further, as our understanding of the relationship
    between the contaminants found in our water supply and their effect on
    human health increases and detection methods are improved, new risks
    have been uncovered. Adequate protection of drinking water quality
    requires research to identify contaminant sources and effective control
    methods, financial assistance for implementation of end-of-the-pipe
    treatment and source water protection measures, and compliance
    monitoring to ensure existing laws and regulations are upheld.
             drinking water and source water protection activities
        Source water protection is key to ensuring a safe and healthy
    drinking water supply and provides an important contaminant
    ``barrier''. The Safe Drinking Water Act (SDWA) Amendments of 1996
    recognized the importance of protection activities and created a new
    voluntary source water protection program. Protection, however, begins
    with assessment of potential sources of contamination and the
    vulnerability of drinking water supplies to those contaminants. Such
    assessments are important to both the goals of the SDWA and Clean Water
    Act and help ensure that resources are targeted where they are likely
    to have the greatest effect. MWD asks you to supports the President's
    request for $13.7 million for source water assessment activities.
        EPA's budget also includes funding for increased assistance to
    states to help develop and implement watershed management plans and for
    other activities related to watershed management. The watershed
    approach addresses water quality problems in an integrated fashion and
    facilitates protection efforts. California is finalizing its own
    Watershed Management Initiative which has already been implemented in
    some parts of the State. We ask that you support EPA's budget request
    for watershed management activities.
        Further, we urge your support of EPA's request for $46.4 million
    for pollution prevention technologies. Utilization of technologies
    which are less or non-polluting is a core element of source water
    protection, and these technologies can significantly reduce the costs
    which would otherwise be incurred to remove contaminants released into
    the environment by less-efficient processes. EPA's pollution prevention
    program will facilitate development and adoption of more-efficient
    technologies.
                             state revolving funds
        The 1996 amendments to SDWA made available, for the first time,
    low-cost financing for drinking water infrastructure and source water
    protection projects through a drinking water State Revolving Fund
    (SDWA-SRF). The SDWA-SRF also provides funding for source water
    assessment, water supply operator training, implementation of
    ``capacity development'' programs, and health effects research.
    Adequate funding for all of these activities is essential, and MWD
    strongly urges that you provide $1 billion for the SDWA-SRF, the amount
    authorized by Congress for fiscal year 1999. This amount, while greater
    than the amount requested in the President's budget, is still only a
    small fraction of the funding needed by drinking water suppliers to
    meet existing Safe Drinking Water Act requirements.
        In California alone, water suppliers have identified projects
    totaling in excess of $7 billion that could benefit from the SDWA-SRF.
    Nationwide, community water systems estimate they must invest over $138
    billion over the next 20 years to ensure delivery of safe drinking
    water. Of this amount, approximately $12 billion is needed to meet
    current SDWA requirements. Low-cost financing for projects which ensure
    safe drinking water supplies is critical for protecting the health of
    the more than 240 million Americans served by public water systems.
        Significant investments are also needed to repair and replace aging
    municipal wastewater infrastructure as well as to meet the needs of
    future population growth. Low-cost financing is necessary to support
    the estimated $137 billion of municipal water quality infrastructure
    needs over the next 20 years as well as capital investments to protect
    against nonpoint pollution sources. The President has requested $1.075
    billion for fiscal year 1999 for the Clean Water Act State Revolving
    Fund (CWA-SRF) to support such activities which are also vital for
    ensuring protection of drinking water sources. MWD asks that you
    support the President's budget request.
                             nonpoint source grants
        Another critical source of funding for source water protection
    projects is grants under the Clean Water Act's Section 319 Nonpoint
    Source Program (NPS). NPS grants are particularly important for smaller
    projects and projects where debt financing is unsuitable. Further, the
    NPS grant program is necessary to support the many watershed management
    activities fostered by the states. Consistent with the actions
    described in the Clean Water Initiative, the President has requested
    $200 million for NPS grants for fiscal year 1999, and MWD requests your
    support at the level in the President's budget.
        Other EPA grant programs which help maintain or improve water
    quality and need your support are the CWA Section 106 Control Agency
    Resource Supplemental Grants ($115.5 million), Wetlands Program
    Development Grants ($15 million), and the Water Quality Cooperative
    Agreements (WQCA; $19 million). Among other activities, section 106
    grants provide funding for monitoring, water quality planning, and
    development of Total Maximum Daily Loads for impaired water bodies. The
    wetlands grants program will enable EPA to meet its goal of a net gain
    of 100,000 acres of wetlands by the year 2005. Wetlands provide an
    important cleansing mechanism which can protect drinking water sources.
    WQCA provides funding to address water quality problems created by
    storm water, combined sewer overflows, and confined animal operations,
    all of which potentially threaten drinking water sources. Your support
    for the President's fiscal year 1999 budget request for the above
    programs will enable EPA to carry out its mission.
        We also ask that you restore funding of $20 million for the CWA
    Section 314 Clean Lakes Program. Activities for this program are now
    funded from the Section 319 NPS Grant Program. While lakes have
    benefited from 319 funding, they have rarely been the focus of the
    grant projects. Lakes present unique water quality problems since they
    serve as settling basins and allow nutrients to accumulate. Some lakes
    serve as drinking water reservoirs and management of these reservoirs
    presents unique challenges for both protecting drinking water
    beneficial uses and aquatic resources. Restoring funding for the Clean
    Lakes Program will provide dedicated funding for this water resource.
                            drinking water research
        Scientifically sound research provides the underpinnings for
    effective drinking water quality programs and MWD asks you to fully
    support various EPA water quality-related research programs. EPA's
    fiscal year 1999 budget, under its strategic goal of clean and safe
    water, includes $35.6 million for drinking water research. This
    research agenda includes development of dose-response relationships for
    disinfectant by-products (DBP), waterborne pathogens, and arsenic. EPA
    is required to re-evaluate the standard for arsenic, and is in the
    process of promulgating revised regulations for DBP's and pathogens.
    Dose-response data is critical for the development of drinking water
    standards which protect public health in a cost-effective manner. Other
    important activities which are part of EPA's clean and safe water goal
    include research on sensitive sub-populations, treatment and
    maintenance of the distribution system to protect against microbial
    intrusion, and assessment of non-DBP drinking water contaminants.
        MWD also requests your support for EPA's budget request of $47.6
    million for its Human Health Risk Assessment program. Under this
    program, EPA will develop approaches for more biologically defensible
    health assessments instead of relying on default assumptions which may
    be at variance with known mechanistic data. The program will also carry
    out research on sensitive sub-populations, particularly children and
    infants, and will develop improved methods for measuring total exposure
    from multimedia sources and multi-pathways. This research will help
    bring better science to the risk assessment process used in the
    development of drinking water standards.
        EPA's 1999 budget includes $55.4 million for research into Emerging
    Risk Issues such as endocrine disruptors. Endocrine disruptors can
    cause adverse reproductive outcomes affecting both human and ecologic
    health. The Endocrine Disruptor Screening and Testing Advisory
    Committee (EDSTAC), a stakeholder group formed by EPA to develop
    screening and testing recommendations, has identified DBP's as one of
    the chemical classes which should be subject to early testing. DBP's
    are formed as part of the disinfection process for drinking water.
    Disinfection is necessary to protect against microbial disease and has
    been responsible for the virtual elimination of widespread outbreaks of
    waterborne disease in the U.S.
         american water works research association foundation (awwarf)
        AWWARF has separately requested that $5 million in drinking water
    research funds be specifically designated for drinking water research
    by AWWARF, including $1 million for arsenic research. AWWARF and public
    water suppliers will provide 100 percent matching funds, and thus offer
    an opportunity to leverage EPA's research program. We strongly urge
    that you make this designation.
                         perchlorate treatment research
        The American Water Works Research Foundation (AWWARF) and others
    have requested $2,650,000 for research to be conducted through East
    Valley Water District in San Bernardino, California, on treatment
    technologies to remove perchlorate from drinking water supplies.
    Perchlorate, which is used in the manufacture of munitions and rocket
    fuel, can interfere with thyroid activity and is associated with
    adverse reproductive outcomes. Perchlorate has been found in drinking
    water wells throughout California, resulting in well closures, and may
    be of concern in other parts of the country. We urge you to support
    this funding request for this critically needed research.
                            other research programs
        We ask that you support EPA's request for $85.5 million for the
    Ecosystem Protection Research program. This research will help increase
    our understanding of current environmental conditions, the stressors
    that affect current conditions, and options for ecosystem management.
    This research should also help our understanding of fragile aquatic
    ecosystems such as the Sacramento San Joaquin Bay-Delta which is the
    source of part of MWD's imported water supplies.
        drinking water--public water systems supervision program grants
        EPA's 1999 budget allocates$93.8 million for Public Water Systems
    Supervision Program grants. This funding is necessary for states with
    primary enforcement responsibilities to carry out their duties,
    including implementation of the 1996 SDWA regulations. Additional
    resources will be necessary to implement the changes resulting from the
    1996 SDWA amendments, and we ask that you support the requested funding
    level..
                                   compliance
        While MWD favors encouraging voluntary actions to reduce pollution,
    we recognize that strong enforcement of water quality regulations is
    critical for reducing non-compliance. MWD fully supports EPA's approach
    which couples compliance incentives and assistance programs with
    vigorous enforcement, where necessary. We ask that you support the
    President's request of $331.0 million for compliance-related
    activities.
        I thank you for this opportunity to offer our comments on the
    fiscal 1999 appropriations for the EPA. If we can answer any questions
    or provide additional information, please contact Brad Hiltscher, MWD's
    Legislative Representative in Washington, D.C. at (202) 296-3551.
                                     ______

          Prepared Statement of the American Museum of Natural History

                enhanced interagency multi-disciplinary strategy
        A critical element of the Museum's ongoing scientific research and
    educational programming is an interagency and multi-disciplinary
    approach, consistent with the federal government's own stated
    commitment to an interagency and multi-disciplinary direction in these
    areas. The Museum has several vehicles to achieve these goals: the
    National Center for Science Literacy, Education and Technology (``The
    National Center'') and the Center for Biodiversity and Conservation
    among them. The partnership and collaboration between the scientific
    and educational resources of NASA and the National Center and its
    partners has been exceptional. It is now time to further develop the
    involvement and participation of other appropriate and relevant federal
    agencies, such as the Environmental Protection Agency (EPA) and
    Department of Energy (DOE).
                    the environmental protection agency role
        The EPA has been playing a leadership role in environmental science
    and technology, biodiversity, education, and training, making the EPA
    an invaluable partner and participant with the American Museum of
    Natural History and its National Center for Science Literacy,
    Education, and Technology.
        The Museum and its Center for Biodiversity and Conservation are
    extensively involved in global environmental research, education and
    training and in a broad range of biodiversity initiatives. The National
    Center has developed the much-heralded ``Biodiversity Counts: Student
    Inventory Project.'' Working in close cooperation with both the Center
    for Biodiversity and the National Center, we are developing an entirely
    new world class exhibition facility--The Hall of Biodiversity (opening
    in May, 1998)--where cutting edge technology will be utilized to
    translate science to the public and advance the National Center's
    educational outreach initiatives.
    I. Programmatic Activities: Research, Exhibition And Education
        Overall, the objectives of this component of the EPA partnership
    can be characterized as the further development of a sound scientific
    underpinning for environmental risk research; expanded educational
    outreach and the translation of science for the general citizenry,
    especially schoolchildren; and the development of innovative approaches
    for addressing critical environmental and scientific challenges.
        The Center for Biodiversity.--The Museum sponsors a collaborative
    effort among various departments for the study of biodiversity and
    conservation methods and disseminates its data to local, national, and
    international governments, research and educational institutions, and
    community groups. The Center's activities include the study of
    biological data relevant to the conservation of threatened species, the
    development of the infrastructure needed to maintain conservation
    programs, and the integration of scientific data into the field of
    conservation. The Center also sponsors a Graduate Training Program
    which offers fieldwork training programs for students from all over the
    world. Additionally, the Center makes grants available to Museum
    curators for a variety of conservation projects that demonstrate the
    role of science in conservation. This Center also focuses on the
    relationship between the loss of biodiversity and its affects on human
    health. For instance, the Museum's recently published book,
    ``Biodiversity and Human Health,'' examines the ways in which the
    destruction of threatened plant and animal species increase human
    exposure to disease and infection.
        Environmental Science and Educational Activities.--Further
    development and expansion of programs such as ``Biodiversity Counts,''
    a project which is now being pilot tested in almost two dozen schools
    across the nation is ongoing, to allow middle-school students to
    conduct their own biodiversity inventory of local environments. By the
    fall of 1998, the number of participating schools throughout the
    country will reach close to 100. Students observe species behavior and
    collect data, and examine plants and insects that live in their
    immediate surroundings. They take measurements and make identifications
    and analyses, and then share their findings on a national student
    database on the World Wide Web. They share observations and interests
    in an on-line field journal and in on-line discussion groups. The main
    purpose of this program is to enable children to participate actively
    and directly in the process of scientific investigation.
        Environmental Science Education and Curriculum Development.--The
    Museum has an unusual opportunity and responsibility to encourage
    audiences of all ages and interests to explore the wonders of the
    natural world and to experience the excitement and adventure of
    science. With schools, our focus is on aligning the Museum's
    educational efforts with initiatives that can support and improve
    science education: linking the Museum's content resources (its vast
    collections, library, exhibitions, science research and educations
    staff--see Exhibit A) to the latest curriculum standards and
    frameworks, designing professional development programs for teachers,
    providing carefully crafted training sessions for science teachers, and
    exploring ways to use technology to sustain relationships with
    students, teachers and families.
        Endangered Species and Environmental Habitats.--In concert with the
    goals of the EPA, the Museum is committed to research and exhibition in
    the area of endangerment and extinction. In this regard, the Museum is
    proud to include among its resources two research stations:
      --The Southwestern Research Station, where Museum scientists and
            others participate in detailed studies of the ecology and
            biological diversity of the Chiracahua Mountains in
            Southeastern Arizona.
      --The Great Gull Island Project, where the Museum has been
            undertaking a focused study of threatened species (the largest
            nesting population of Common and Roseate Terns) and the effects
            of pollution on threatened species.
        Ecological Contagions and Infectious Disease.--The Museum plans a
    major exhibition on infectious diseases for early 1999 which will take
    the visitor, teacher, school group, and family through a story from
    exposure to infection, outbreak, epidemic and pandemic. At each stage,
    the Museum will discuss the interactions between the ecological,
    evolutionary and cultural perspectives. Understanding how infectious
    disease is related to ecology and ecosystems is one of the main themes.
    To illuminate this theme we will explore the world of microbes and how
    natural events such as El Nino change ecosystems and therefore change
    the human/microbe interaction. The American Museum of Natural History
    has long been involved in public health education and this exhibit will
    go a long way to informing the public about infectious diseases.
    II. Laboratory and Instrumentation Collaboration
        With the goal of maintaining its international leadership in
    scientific research and education, the American Museum of Natural
    History continues to make the investments necessary to provide state of
    the art, technologically-based, research and public facilities. A new,
    centrally located Natural Sciences Building being financed by the
    Museum, the City of New York, and the private sector is currently under
    construction to provide critically needed space to house additional
    public education infrastructure, laboratories, and collection storage
    areas critical to advancing the Museum's increasingly interdisciplinary
    research efforts.
        Digital Imaging and Visualization Analysis Laboratory.--The Museum
    would utilize funding to further establish and develop a Digital
    Visualization Analysis Laboratory in the new Natural Sciences Building.
    Recent developments in digital technologies make imaging and analytical
    methods critical multi-disciplinary research tools. These imaging
    technologies are being utilized in virtually every scientific
    discipline within the Museum. These technologies have brought exciting
    applications in the development and design of our exhibitions and
    educational programs, as well as in our core scientific research and
    collections mission. A state of the art digital analytical facility
    does not now exist in any natural history museum in the world.
        The Museum has already won a national competition for a new
    Scanning Electron Microscope, where the National Science Foundation
    recognized the value and the potential of equipping a comprehensive
    research museum like the Museum with such state of the art
    instrumentation. The Museum now seeks to expand its capacity and
    enhance its capabilities in virtual reality visualization, scanning,
    tunneling, microscropy, atomic force microscopy, and to develop the
    capability to absorb and integrate new visualization technologies.
    These technologies represent exciting means for studying specimens and
    collecting much needed analytical data. The implications for the
    dissemination of research, for improving the quality and variety of
    information collected, and for expanded access, and for distance
    learning techniques are enormous.
        The Molecular Systematics Laboratory.--The Museum currently has two
    Molecular Systematics Laboratories, where more than twenty
    investigators study a broad range of topics, from the systematics of
    population genetics of whales to those of African plants. There is
    scarcely a collection-based scientist today whose work does not have a
    molecular component.
        We plan to expand the laboratory to include frozen samples, with
    the aim of building comprehensive frozen tissue collection. A
    collection of this scale does not exist anywhere today, but would
    quickly become a national and international resource for comparative
    study of biomolecules and their potential uses, as well as DNA. It is
    critical that these elements of biodiversity be preserved for future
    genetic and phylogenetic analysis. Collections that are representative
    of as much of an area's biodiversity as possible or which encompass
    significant taxonomic breadth will be essential for the future growth
    of our knowledge about organisms and their environments (see UNCED
    accords, Systematics Agenda 2000 and the Sustainable Biodiversity
    Initiative). Collections such as the one we propose will contribute to
    the study of biology and biodiversity by preserving the genetic
    resources that will be available to investigators far into the future.
    We also suggest establishing a geographically based, publicly
    accessible Web site that enables users anywhere to access the available
    information.
                         the department of energy role
        One of the four primary strategic goals of the DOE is to utilize
    its assets to advance the nation's science literacy. In addition to our
    mutual commitment to science literacy, the American Museum of Natural
    History and DOE share several other joint goals, including: making
    science/scientific enterprise more accessible to a large and diverse
    audience; harnessing the power of technology to support science,
    exhibition and education; and enhancing the diversity of the science
    workforce working with schools, parents and the community. The DOE has
    enormous resources that can support the activities of the American
    Museum's science, exhibition and education programs. In partnership
    with DOE, the Museum would significantly advance the public's access to
    the expertise, data and technology that has been developed by DOE.
        The DOE has traditionally been one of the major sources of support
    for research and laboratory instrumentation equipment. The types of
    laboratories and instrumentation that we have outlined are indeed
    consistent with the DOE's mission. The Molecular Systematics Laboratory
    and the Digital Imaging and Visualization Analysis Laboratory are both
    critical tools to basic energy research, the human genome project, and
    the DOE's biomedical and environmental research function (the BER
    account).
    I. Programmatic activities: Research, exhibition and education
        The Hall of Planet Earth.--This first of a kind exhibition will
    explore key questions such as: How has the Earth changed through time;
    why do ocean basins continents, and mountains exist; what causes
    climate change; and why is the Earth habitable. As part of the
    exhibition the question of natural resources will be explored: what are
    they; what resources are necessary to generate energy (oil, coal,
    geothermal); where are they located; and how are they formed.
        Partnership with Los Alamos.--The Museum has established a
    partnership with the DOE Los Alamos National Lab to create exhibit
    elements for the Hall of Planet Earth. Los Alamos scientists will
    create five videos based on five models created at Los Alamos: Core
    convection and the generation of the Earth's magnetic field; Mantel
    Convection; Global Ocean Circulation; Flow-through Porous Media (earth
    crust process); Atmospheric Circulation. The Museum seeks to expand and
    deepen its partnerships with DOE labs to interpret, explain, and
    disseminate their important work to the public through the Museum's
    exhibition halls and the National Center's outreach.
        Human Biology and DNA Research.--The Museum currently has a
    significant concentration of biologists on staff, and supports two
    state-of-the-art molecular laboratories that conduct DNA research.
        In addition, the Hall of Human Biology and Evolution at the Museum
    is a major resource for the public, especially students. The Human
    Genome Project of the DOE is an important endeavor. We propose to
    assist the DOE to translate and disseminate its findings to the public
    through a ``Genetics-Bulletin.'' This Bulletin will collect, interpret,
    and transform data and images into comprehensive digital ``snap-shots''
    of events, research, and phenomena in the field of genetics.
        Training.--Data from the National Science Foundation lends support
    to the urgency of our goal of training the next generation of
    scientists. Currently, the Museum, in collaboration with Yale, Cornell,
    Columbia, New York University, and the City University of New York,
    sponsors one of the oldest and largest Museum-based graduate and post-
    graduate training programs of any science museum in the country.
        Science Education and Curriculum Development.--The Museum has an
    unusual opportunity and responsibility to encourage audiences of all
    ages and interests to explore the wonders of the natural world and to
    experience the excitement and adventure of science. With schools, our
    focus is on aligning the Museum's educational efforts with initiatives
    that can support and improve science education: linking the Museum's
    content resources (its vast collections, library, exhibitions, science
    research and educations staff--see Exhibit A) to the latest curriculum
    standards and frameworks, designing professional development programs
    for teachers, providing carefully crafted training sessions for science
    teachers, and exploring ways to use technology to sustain relationships
    with students, teachers and families.
        The Museum will develop curriculum on geology, earth sciences, and
    modeling. The Museum now has three million visitors each year,
    including more than 500,000 children visiting in school groups. We also
    sponsor pre-service and in-service training for teachers. The subjects
    of study by the DOE are of great relevance to the curriculum. A
    partnership with DOE in this area will bring the data and images
    developed by DOE to the public.
    II. Laboratory and Instrumentation Collaboration
        Human Genome Project.--One of the goals of the DOE sponsored Human
    Genome Project is to learn about nonhuman organisms' DNA sequences.
    This, can lead to an understanding of their natural capabilities that
    can be applied toward solving challenges in health care, energy
    sources, and environmental cleanup.
        The Museum currently has two Molecular Systematics Laboratories.
    There are currently more than twenty investigators studying a broad
    range of topics, from the systematics of the population genetics of
    African plants to those of whales. There is scarcely a collection-based
    scientist today whose work does not have a molecular component. We
    propose to expand the laboratory to include frozen tissue samples, with
    the aim of building a comprehensive frozen tissue collection. A
    collection of this scale does not exist anywhere today, but would
    quickly become a national and international resource for the
    comparative study of biomolecules and their potential uses, as well as
    DNA. We also suggest establishing a geographically based, publicly
    accessible Web site that enables users anywhere to access the available
    information.
        Digital Imaging and Visualization Analysis Laboratory.--The Museum
    would utilize funding to further establish and develop a Digital
    Imaging and Visualization Analysis Laboratory in the new Natural
    Sciences Building. Recent developments in digital technologies make
    imaging and analytical methods critical multi-disciplinary research
    tools. These imaging technologies are being utilized in virtually every
    scientific discipline within the Museum. These technologies have
    brought exciting applications in the development and design of our
    exhibitions and educational programs, as well as in our core scientific
    research and collections mission. A state of the art digital analytical
    facility does not now exist in any natural history museum in the world.
        The Museum has already won a national competition for a new
    Scanning Electron Microscope, where the National Science Foundation
    recognized the value and the potential of equipping a comprehensive
    research museum like the Museum with such state of the art
    instrumentation. The Museum now seeks to expand its capacity and
    enhance its capabilities in virtual reality visualization, scanning,
    tunneling, microscropy, atomic force microscopy, and to develop the
    capability to absorb and integrate new visualization technologies.
    These technologies represent exciting means for studying specimens and
    collecting much needed analytical data. The implications for the
    dissemination of research, for improving the quality and variety of
    information collected, and for expanded access, and for distance
    learning techniques are enormous.
                                     ______

                                   Exhibit A

                     the american museum of natural history
        The American Museum of Natural History, founded in 1869, is well
    positioned as a partner for the federal government. The resources at
    the Museum's disposal include:
      --an extraordinary collection of more than 32 million artifacts and
            specimens, the cumulative product of acquisitions and more than
            1,000 major national and international field expeditions
            sponsored by the Museum throughout its history;
      --more than 200 active research scientists who possess top-ranked
            international expertise in many fields;
      --an internationally renowned research arm: The Center for
            Biodiversity and Conservation;
      --a newly created educational vehicle: National Center for Science
            Literacy, Education, and Technology;
      --a new Hall of Biodiversity (opening May, 1998) dedicated to
            educating the public about biodiversity and its critical role
            in maintaining life on Earth;
      --the long-respected Hayden Planetarium, soon to be completely
            updated as part of the Rose Center for Earth and Space, which
            also includes a new Hall of the Universe and a new Hall of
            Planet Earth, and which is adjacent to the new Hall of
            Biodiversity;
      --3 million visitors annually, of whom 1.5 million are children,
            including 500,000 schoolchildren visiting in school groups;
      --the largest natural history library in the western hemisphere,
            including a special collection devoted to astrophysics;
      --a tradition of creating some of the greatest scientific and
            anthropological exhibitions in the world in its 1.2 million
            square feet of exhibition space;
      --a staff of educators who seek to inspire curiosity and a desire to
            learn in both children and adults; and
      --an institutional reputation for the highest standards of quality,
            accuracy, integrity, and reliability.
        With the establishment of the National Center for Science Literacy,
    Education, and Technology, the Museum recognizes an opportunity to
    match its incomparable resources to the pressing nationwide need to
    increase science literacy and foster scientific achievement. The
    National Center creates materials and programs that reach beyond the
    Museum's walls into homes, schools, museums, and community
    organizations around the nation, developing ways to use distance
    technologies to link citizens of all ages with the scientific and
    educational resources the Museum can provide.
                                     ______

              Prepared Statement of the American Chemical Society

        The American Chemical Society calls on Congress to provide the
    Environmental Protection Agency's Office of Research and Development
    (EPA's ORD) with a budget of not less than $614 million in fiscal year
    1999 in order to provide the Agency with the scientific support needed
    to carry out its mission. This recommendation of a $40 million, or 7
    percent, increase above the fiscal year 1998 operating level for EPA's
    ORD is supported by an effort of the leaders of 110 scientific,
    engineering, and higher education organizations to double the federal
    research budget in the next ten years.
        For the American Chemical Society, ORD is the highest priority in
    the EPA budget because of its important role in supporting research
    that will increase the scientific knowledge needed to solve the
    nation's environmental problems. The ORD budget, therefore, should be
    increased even at the expense of other EPA programs. The additional
    monies could be well spent if used for pollution prevention research as
    well as for identifying and avoiding future environmental problems.
        While the American Chemical Society believes that the ORD \1\
    funding level of $527 million proposed by the Administration will not
    provide for adequate resources, the Society does support initiatives in
    this budget proposal that strengthen both in-house and extramural
    research, and that address problems of greatest risk or with the
    greatest potential to reduce risk. The Administration's fiscal year
    1999 budget request is expected to support the following programs and
    activities:
    ---------------------------------------------------------------------------
        \1\ ORD's budget is comprised of transfers from Appropriation
    Accounts, primarily Science and Technology ($485 million in fiscal year
    1999) and Superfund ($40 million, up $5 million from fiscal year 1998
    enacted).
    ---------------------------------------------------------------------------
      --The Science to Achieve Results program will fund extramural grants
            and fellowships, which are awarded in peer-reviewed
            competitions to conduct important research related to EPA
            needs.
      --In-house research will be strengthened through a new postdoctoral
            fellowship program that brings in highly trained scientists and
            engineers with state-of-the art knowledge and techniques.
      --Work will continue to reduce uncertainties in priority areas such
            as risks to children, endocrine disruptors, pfiesteria,
            drinking water disinfectant byproducts and microbes,
            particulate matter, and urban toxics, as well as to provide
            sound science for decisionmaking in implementing the 1996 food
            safety and safe drinking water laws.
      --Research will lead to a better understanding of climate change
            stresses on the ecosystem and human health.
      --New monitoring and measurement technologies for pollution
            prevention will be developed and introduced.
        The Superfund Account also transfers funds for research purposes to
    the National Institute of Environmental Health Sciences and to the
    Agency for Toxic Substances and Disease Registry. These transfers
    should be supported at least at the fiscal year 1998 level of funding--
    $35 million and $74 million, respectively.
        Support for increases above the Administration's request for the
    Science and Technology Account and for transfers for research from the
    Superfund Account will help to secure the quality science and research
    needed for sound decisionmaking and cost-effective regulations. The
    American Chemical Society urges the Congress to provide a strong
    science budget for EPA.
                                     ______

       Prepared Statement of Raymond J. Campion, Ph.D. President, Mickey
                Leland National Urban Air Toxics Research Center

                                    summary
        Legislative authorization.--Clean Air Act Amendments of 1990 (Title
    III, Sec. 301).
        Mission.--Study the health effects of the 189 air toxics designated
    in the Clean Air Act, via sound, peer-reviewed health and environmental
    research designed to address regulatory needs. Current emphasis is on
    the assessment of actual human exposures to air toxics.
        Current request.--$2.6M via EPA in fiscal year 1999.
        Anticipated funding.--$2.0M via EPA fiscal year 1998 Assistance
    Grant, received April 1998.
        Past record of Federalgrants received.--$1.15M via fiscal year 1997
    Assistance Grant from EPA Office of Research and Development (ORD),
    National Center for Extramural Research and Quality Assurance (NCERQA),
    received October 1997.
        $480,000 via fiscal year 1996 Assistance Grant from EPA ORD/NCERQA
    (as above), received January, 1997.
        Research projects.--
        1. Human exposures to gaseous air toxics in the outdoor, indoor and
    personal environments in a major NUATRC field study.
        2. Participation in CDC's National Health and Nutrition Examination
    Survey (NHANES) via personal exposure assessments on NHANES subjects.
        3. Feasibility studies on human exposure research involving air
    toxic metals.
        4. Initiation of acute human health effects research, with the
    emphasis on effects on the human respiratory and immune systems.
          the mickey leland national urban air toxics research center
        Mr. Chairman, and Members of the Subcommittee, thank you for the
    opportunity to provide this written testimony on behalf of The Mickey
    Leland National Urban Air Toxics Research Center (NUATRC). My name is
    Dr. Raymond J. Campion, and I am the President of the Leland Center,
    ``the Center.''
        The Center was established under Title III, Section 301 of the
    Clean Air Act Amendments of 1990 as a non-profit, public/private
    research entity, with the mission of developing new multidisciplinary
    scientific approaches to assessing the potential public health risks
    from exposure to air toxics. Our effort is designed to provide
    independent, sound scientific data for prioritizing toxic risks.
    Environmental Protection Agency (EPA) is required to determine, over a
    8-9 year time frame, the residual health risks present to the American
    public from toxic materials.
        The NUATRC has been operational for about five years, and receives
    EPA assistance awards based on Congressional appropriations. Private
    sector funding along with joint work with state and local agencies is
    used to leverage these federal monies, with national industrial firms
    being the major contributors. The Center has used these monies to
    develop a small staff, utilizing an administrative service agreement
    with The University of Texas-Houston Health Science Center. This
    arrangement allows the Center to take advantage of the scientific
    synergies created by this relationship with The University of Texas and
    the Texas Medical Center, as directed in the Clean Air Act
    authorization language.
        In this testimony, we will provide an update of our strategic
    research directions, in order to meet our Congressional charge in a
    cost-effective and scientifically-sound manner. We continue to focus
    our research in several areas, in which we believe we can have the
    greatest impact. As a small and relatively new entity, we believe it is
    important to focus our efforts to provide the greatest potential payout
    in terms of environmental and public health advances. These focused
    research areas are:
      --human exposure assessment in the indoor and outdoor environment,
            with an emphasis on volatile organic compounds (VOC), aldehydes
            and toxic metals on particles,
      --characterization of acute health effects from air toxics exposures,
            primarily associated with the respiratory and immune systems.
                         strategic research directions
        The NUATRC has made continuous progress over the past four years in
    addressing the Congressional charge to carry out a well-designed and
    focused research program on air toxics health effects. The NUATRC has
    profited significantly from the advice and counsel of our Board of
    Directors, appointed by Congress and the President, and from the
    research direction of the NUATRC Scientific Advisory Panel. The Panel,
    drawn from nationally-prominent academic and private sector scientists
    as well as EPA scientists, has defined a prioritized research program
    that recognizes the major needs in air toxics research as well as the
    range of expertise of organizations like NUATRC to address those needs.
    A major component of our activity is to reach out and involve other
    national scientific resources in leveraged efforts to most efficiently
    and collegially carry out these investigations. Through national
    workshops and symposia, with publication in the peer-reviewed
    literature of the findings of these studies, we have established a
    national scientific presence. We have interacted with the Centers for
    Disease Control (CDC) via their National Center for Health Statistics
    (NCHS), the National Institute for Environmental Health Science
    (NIEHS), the Health Effects Institute (HEI) and the EPA to assure that
    our research directions are complementary to these larger
    organizations. Both HEI and EPA have recently begun to work with
    academic scientists under NUATRC grants to further leverage and broaden
    the scope of the Center's research.
                           human exposure assessment
        We reported to you last year a significant research result from our
    two-year feasibility study on personal exposure assessment technology
    development which demonstrated:
        (1) That simple, inexpensive `passive' dosimeters can be used in
    urban population field studies to assess actual human exposures to
    specific air toxics such as benzene and toluene.
        (2) That the relative importance of indoor, outdoor and personal
    exposures can be assessed under a variety of conditions, to allow the
    data obtained to be well understood in terms of experimental variables
    such as temperature and humidity.
        The Center now has two major research programs extending the
    developmental work now being conducted by Columbia and Environmental &
    Occupational Health Sciences Institute (EOHSI) in New Jersey. Both of
    these programs are underway in urban areas of Houston, Los Angeles and
    New York City. The research carried out will characterize the personal
    exposures to VOC's and metals on airborne particles to which
    individuals living in these areas are exposed. The work will address
    how these exposures are influenced by indoor and outdoor sources, as
    well as determining the relative importance of mobile, point and area
    emissions. These data will then be factored into risk assessments to
    establish the most cost-effective means of reducing public health
    risks.
        The NUATRC is also about to sign a contract with the NCHS to
    participate in the National Health and Nutrition Examination Survey
    (NHANES). We view this as an excellent opportunity to gather personal
    environmental data at the same time as public health data are being
    obtained on a statistically significant portion of the U.S. population.
    We are committing $150,000 annually to this effort, which again will be
    focused on determining the actual public health risks associated with
    air toxics.
                  nuatrc research on toxic metals on particles
        In addition to the Center's ongoing research at Columbia and EOHSI
    on individual personal exposures to gaseous VOC's and aldehydes, the
    Center has restructured its research plans for 1998-2000 to emphasize
    peer-reviewed work on personal exposures to particles, and specifically
    the toxic metal component of that particulate matter. The Center has
    received approval from its Board of Directors to sponsor two new
    exposure research programs in 1998, that address the toxic metal-
    particle issue. Data from these studies and the two comprehensive
    personal exposure studies now underway at Columbia and EOHSI will be
    available for incorporation in the next National Research Council
    (NRC)/EPA review of the particulate standard.
        The NRC, has just published its Congressionally-mandated report,
    ``Research Priorities For Airborne Particulate Matter: Immediate
    Priorities and a Long-Range Research Portfolio.'' In that document, the
    NRC describes as ``crucially inadequate'' EPA's resource deployment of
    3-4 percent to `` * * * investigating the relationships between fixed-
    site outdoor monitoring data and actual human exposures to ambient
    particulate matter, and to identifying the most biologically important
    constituents and characteristics of particulate matter * * *.'' This is
    the research area on which the Center has chosen to focus.
        In addition, the NRC identified 10 research topics as ``highest
    priority'' including the following:
      --``Investigate quantitative relationships between (outdoor)
            particulate-matter concentrations--and the actual breathing
            zone exposures of individuals to particulate matter and gaseous
            copollutants, taking ambient outdoor and indoor pollutant
            sources and human time-activity patterns into account, * * * ''
            and,
      --``Investigate exposures to the most biologically important
            constituents and characteristics of particulate matter that
            might adversely affect health, * * *.''
        Both of these research topics are being addressed in depth in the
    Center research program.
                           air toxics health effects
        As indicated earlier, the second priority research area for the
    NUATRC is that related to the health effects associated with air
    toxics, but particularly those effects of an acute nature dealing with
    the human respiratory and/or immune systems. The Scientific Advisory
    Panel (SAP) elected to focus the NUATRC attention in that area, as
    considerable work is already underway on cancer effects and the nation
    seems to be experiencing increasing incidences of respiratory problems
    such as asthma among inner city children. A Request for Applications
    will soon be released by the NUATRC that will initiate our research
    efforts in this area. Here again, the focus will be on the potential
    health risks of toxic metals from airborne particles.
                              small grants program
        Based on the need to involve the community in air toxics health
    risk issues, the NUATRC is beginning a small research grants program,
    wherein young and minority investigators could compete for limited
    funding that could allow more focused research approaches. This program
    should result in a greater degree of involvement by the local community
    and thus a greater sense of empowerment in these studies. We could also
    anticipate the development of better scientific resources in smaller,
    community-oriented institutions. These studies would be subject to the
    same rigorous peer-review and quality control requirements as the
    broader-scope national programs receive. This area of small grants or
    pilot studies offers us the opportunity to tap a reservoir of
    scientific talent that may be underutilized and which may also provide
    a improved sense of participation on the part of local community
    leaders. The NUATRC Board is expected to approve release of this RFA in
    April, 1998, with selection of awardees before year-end.
                             appropriations request
        The Mickey Leland National Urban Air Toxics Research Center
    respectfully requests a fiscal year 1999 Appropriation of $2.6 million.
    The studies described above, some of which are continuing efforts from
    the fiscal year 1997 and 1998 research programs, can be estimated as
    follows:

    Human Personal Exposure.................................        $860,000
    Participation in NHANES.................................         140,000
    Toxic Metals Exposure Studies...........................         300,000
    Metals Methodology Development..........................         250,000
    Small Grants Program....................................         200,000
    Risk Assessment Symposium...............................          50,000
    Metal/Particle Exposure Assessment......................         300,000
    Administrative..........................................         500,000
                        --------------------------------------------------------
                        ____________________________________________________
          Total.............................................       2,600,000
                               nuatrc management
        As mentioned at the outset, the NUATRC is led by a nine-member
    Board of Directors, composed of leading academics, regulatory and
    private sector executives, all of whom are conversant with the air
    toxics environmental health research issues. The Board has been active
    in overseeing and directing the activities of the SAP, which has
    evolved into a cohesive, effective and independent research advisory
    group. The SAP numbers scientists and physicians from Harvard, the
    Universities of Minnesota, Pittsburgh and Washington, Brigham Young
    University, the National Jewish Hospital (Denver), the U.S.
    Environmental Protection Agency, and private companies, including
    DuPont, Exxon, ICF Kaiser and Dow Chemical. These thirteen scientists
    bring different areas of scientific expertise to the table, allowing a
    broad range of input to our research program.
                                    funding
        NUATRC has relied on Congressional appropriations and support from
    the private sector. NUATRC continues to expand its support base with
    the addition of private sector partners, which now include DuPont,
    Exxon, FMC Corporation, Goodyear Tire and Rubber Company, Houston
    Industries, Mobil Oil, Phillips Petroleum, Rohm and Haas Company,
    Shell, Sun Company, Texaco, and Union Carbide. Corporate contributions
    have been consistent through the years and we are continually seeking
    new partners to participate in this environmental health research
    initiative. An intensive development effort is planned in 1998 to
    address alternative private sector sources such as trade organizations,
    foundations and other possible source. This is vitally important in
    light of increased federal support.
                                   conclusion
        We are most appreciative of the support we have received from the
    U.S. Congress. We believe that NUATRC is progressing in the manner
    anticipated by Congress, and is poised to make a significant
    contribution to the science underlying air toxics health effects.
        Although we are hopeful that EPA will provide funding in the
    future, we are gratified by the recent good support we have enjoyed
    from EPA scientists in our Panel deliberations, and we hope that these
    relationships will build and bear additional benefits to NUATRC and to
    the nation. Thank you for your attention to this request.
                                     ______

      Prepared Statement of Billy Frank, Jr., Chairman, Northwest Indian
                              Fisheries Commission

        Mr. Chairman, and honorable members of the Committee, I am Billy
    Frank, Jr., Chairman of the Northwest Indian Fisheries Commission
    (NWIFC) and on behalf of the tribes in Washington State I would like to
    thank you for the opportunity to offer written testimony concerning the
    Environmental Protection Agency's (EPA) fiscal year 1999
    appropriations.
        We are specifically requesting that programmatic funding levels to
    the Northwest tribes be included in EPA's budget under Section
    104(b)(3) of the Clean Water Act. The purpose of our request is to
    continue implementation of the model Coordinated Tribal Water Quality
    Program for twenty-six participating tribes and tribal organizations in
    Washington State for fiscal year 1999. Strong congressional support for
    implementation of this tribal initiative began in 1990 and is present
    today.
        However, we are losing ground in the implementation of these
    efforts. Erosion of base level funding is jeopardizing the federal
    government's long-term investment of this efficient and effective
    tribal water quality protection program. Support for this model tribal
    initiative is timely now as it implements the goals and objectives of
    the President's Clean Water Action Plan as it is an existing program
    that centers around watershed-based water quality protection by
    building partnerships and fostering inter-jurisdictional cooperation.
        We respectfully request Congress to either:
        (1) Appropriate $3.10 million into the EPA's funding base.--Under
    Section 104(b)(3) of the Clean Water Act, Section 319 of the Clean
    Water Act, or within EPA's Assessment and Watershed Program,
    appropriate $3.10 million into EPA's funding base for 26 participating
    tribes and tribal organizations in Washington State to fully implement
    the model cooperative tribal water resource program for environmental
    protection; or
        (2) Direct the Agency to utilize existing $3.10 million in agency
    funding.--From existing Section 104(b)(3) of the Clean Water Act,
    Section 319 of the Clean Water Act, or EPA's Assessment and Watershed
    Program funds, provide $3.10 million for 26 tribes and tribal
    organizations in Washington State to continue implementation of the
    model cooperative tribal water resource program for environmental
    protection.
        Justification for this funding request is based on:
      --legal rights and obligations for the federal government to protect
            the treaty-reserved rights of the tribes,
      --the United State's trust responsibility to protect the health and
            environment of the tribes on a government-to-government basis,
      --cost effectiveness by utilizing a cooperative intergovernmental
            strategy to accomplish national clean water goals, and
      --minimize conflict between multiple jurisdictions who manage water
            quality.
        We ask that you put monies in the above mentioned mechanisms. By
    placing these funds in the EPA General Assistance Program (GAP), which
    are dedicated to planning, it limits the tribe's ability to proceed
    with implementation activities.
        To assist the Committee members, I would like to summarize
    background relevant to our request.
                                   background
        The NWIFC request is on behalf of our 19 member treaty fishing
    tribes and the Hoh, Chehalis and Shoalwater Bay Tribes in western
    Washington, and the Yakama Indian Nation, Colville Confederated,
    Spokane, and Kalispel Tribes in eastern Washington. The funding request
    is to continue implementing the model Coordinated Tribal Water Quality
    Program that began in 1990.
        Washington State has been blessed with bountiful rivers and
    streams. Five species of Pacific salmon and three species of anadromous
    trout utilize Washington State's streams during the fresh water stages
    of their life cycles. Historically, there were ample supplies of fish
    for ceremonial, subsistence, commercial and recreation purposes. Old
    growth conifer removal, riparian zone impacts, farming activities, and
    channelization of the streams has reduced the productive capacity of
    these streams to extremely low levels. Currently, there are concerns
    that hundreds of salmon stocks are at significantly low levels, some
    warranting listing under the Endangerd Species Act.
        In 1979, the United States Supreme Court re-affirmed the treaty
    tribes' right to harvest half of the harvestable number of anadromous
    fish passing through tribal usual and accustomed areas. In 1980, the
    federal district court held that the United States and the State of
    Washington must not permit degradation of fish habitat which would
    diminish the treaty harvest right, including point and non-point
    pollution sources. The federal courts have recognized that protection
    of water quality and other attributes of fish habitat are necessary to
    secure the Constitutionally protected rights of the tribes to harvest
    fish.
        The sovereign authorities of the Tribes and the legal principles
    enunciated in United States v. Washington and other federal court
    decisions support the basis upon which the tribes are involved with on
    and off-reservation environmental issues. As a result of federal court
    decisions, the state of Washington has recognized the tribes as ``co-
    managers'' of the fish resource and water quality in our state. As co-
    managers in Washington, the tribes must have the resources to
    adequately participate in environmental protection programs.
        The Environmental Protection Agency's (EPA) Indian policy (1984) of
    working with federally recognized tribes on a government-to-government
    basis concerns more than 375 Indian tribes in the lower 48 states
    controlling over 52 million acres of land base. In our state, tribal
    reservations make up approximately 6 percent of the State of
    Washington. Our tribes also have retained treaty rights not ceded to
    the United States. These usual and accustomed fishing grounds include
    most of the State of Washington. The combined area of Indian
    reservations nationally is larger than all of New England, yet EPA now
    devotes only a tiny fraction of its personnel and funds to
    environmental protection for the tribes.
        This is clearly a discriminatory prioritization of federal funds.
    On a national level, tribal reservations represent 3 percent of the
    land base of this nation. Although the EPA has worked closely with the
    states to implement adequate environmental programs, until recently
    little has been done to accomplish the same for the tribal governments.
    Indian tribes are over two decades behind the states both in resources
    received from the EPA and in technical assistance provided by the EPA
    in developing tribal water program offices. A ``front end'' investment
    will promote cooperation and increased tribal involvement in
    environmental protection as has been the case between the EPA and state
    governments for the past 20 years. The Coordinated Tribal Water Quality
    Program is already enabling cooperative interjurisdictional
    partnerships and has been matched by an additional $3 million in
    federal, state and tribal funds.
        We recognize, support and appreciate the successful efforts that
    have been made to improve EPA Indian Programs and tribal funding. And
    further, we support the President's fiscal year 1999 budget request
    increasing this years programs by $20 million. Particularly, the $4
    million increase to the General Assistance Program, and the $2.6
    million increase for tribal water quality management programs through
    Section 106 of the Clean Water Act. We see these activities as
    important and positive steps, but believe that we have a long way yet
    to go in meeting the existing environmental protection needs in Indian
    Country.
        Additionally, since the GAP funding is legislated for program
    development, there must be complimentary sources of implementation
    funding for these tribal programs. Tribes in Washington State are
    further along in the development of their programs than EPA's Indian
    funding policy development. While EPA is accomplishing important
    strides in improving their Indian Programs, tribes with previously
    established programs are experiencing a break in support while EPA
    plays catch-up with tribes across the nation. Our request for Section
    104(b)(3) funding is intended for stabilizing existing program
    implementation activities. Another possibility may be within Section
    319 of the Clean Water Act. However, because of legislated formula, the
    $100 million available nationally translates into only $300,000 (1/3 of
    1 percent restriction) for tribal programs. This means that 535 tribal
    governments (including Alaska Native Villages) must compete for a very
    small pool of tribal nonpoint source pollution management program
    funds. Clearly, a means must be found to support the long term funding
    of tribal programs that seek to protect tribal treaty rights such as
    ours, or the efforts being made by EPA will not be successful.
                               tribal/state roles
        Beginning in 1990, the State of Washington has supported tribal
    involvement in environmental protection both off and on-reservation.
    The state is committed to work with the tribes on a government-to-
    government basis as ``co-managers'' of the water resource in the
    implementation of this program. The federally recognized Indian tribes
    in Washington have developed a process with state, local government
    officials, and representatives of agriculture, industry, and
    environmental communities to address water resource issues on a
    government-to-government basis. The results of these discussions have
    outlined a cooperative process between the tribes, state agencies and
    programs, and local units of governments in areas of environmental
    protection. This process was highlighted as a case study example to
    countries around the world at the 1992 United Nations Conference on
    Environment and Economic Development in South America.
        The Coordinated Tribal water Quality Program, an EPA/Tribal
    partnership, has generated successful models of state/tribal
    interjurisdictional cooperation. Examples of these models are:
      --the Tribal Water Quality Standards Template encouraging inter-
            governmental uniformity and coordination of water quality
            management and;
      --the Cooperative Management of the Clean Water Act Sec. 303(d)
            Program, enabling state/tribal government to government process
            throughout the CWA Sec. 303(d) listing and implementation
            processes.
        The tribes must be part of the solutions to prevent and control
    water pollution in Washington State. The tribes must participate in
    these activities to protect their governmental interests and treaty
    fishing rights. In this time of existing and pending listings of salmon
    stocks under the Endangered Species Act, neither we, nor the resources,
    can afford to lose programs integral to our inter-governmental
    cooperative watershed program. The Coordinated Tribal Water Quality
    Program is part of protecting our nation's environmental heritage.
                                   conclusion
        For seven years, Congress has recognized and supported the
    Coordinated Tribal Water Quality Program by appropriating funding to
    maintain its operations. Last year, Congress recognized the program
    without specifying monies. Our understanding of this change in
    Congressional action was due to the increased General Assistance
    Program/Indian Set aside and the expectation that the Coordinated
    Tribal Water Quality Program would be maintained with a portion of
    those monies. This has not occurred. General Assistance Program monies
    are designated for capacity building--the Coordinated Tribal Water
    Quality Program is an existing and successful tribal initiative
    requiring stabilized implementation funding. This model program
    demonstrates how tribes can participate in environmental programs
    working with EPA to realize its long-range objective of including
    tribal governments as partners in decision-making and program
    management of tribal lands and resources.
        We appreciate the difficulty Congress is facing in making decisions
    for this next fiscal year. In the case of the EPA, Congress and the
    Administration will probably direct their resources to address those
    areas of highest risk to human health and the environment. Therefore,
    we want to reiterate that tribal reservations and protection of their
    treaty resources have not been adequately addressed for the past 20
    years and represents the highest of risks to this nation. To do
    otherwise would represent environmental genocide to Native Americans.
        Sufficient and permanent funding is necessary to continue the
    tribal cooperative program. Certainty of funding is necessary for the
    tribes to hire permanent and professional staff to implement this
    program. Without an ongoing investment by Congress much of the good
    that has been accomplished to date will be lost.
        Please consider our request for $3.10 million for the Washington
    State Tribal Water Quality Program. Once again, thank you for the
    opportunity to provide testimony. Thank you also for your assistance in
    helping to develop a national model program of how tribal governments
    can address environmental protection in a cooperative watershed
    approach with state and local governments.
        Thanks to this committee, we are making significant progress. This
    initiative is being supported at all levels of our governments. We hope
    you and the committee will continue to look favorably on our request.
                                     ______

        Prepared Statement of the Water Environment Research Foundation

        The Water Environment Research Foundation (WERF or Foundation)
    appreciates the opportunity to submit this statement and request for
    funding to the Subcommittee. WERF is a non-profit organization that
    funds and manages water quality and wastewater technology research. It
    is a unique public/private partnership between municipal utilities,
    corporations, academia, industry, and the federal government, together
    focusing resources on developing good science and technology for
    rational environmental decision making. The results of WERF's research
    allow regulators to better understand the costs and benefits of
    different regulatory approaches and to select the least-cost
    environmentally-beneficial approach.
        WERF was created in response to the fact that federal funding for
    practical wastewater treatment technology and process research has
    declined from $15.6 million annually to virtually nothing today.
    Likewise, funding for municipal water pollution engineering research at
    the U.S. Environmental Protection Agency's (EPA's) Water Research
    laboratory in Cincinnati has fallen from $7.4 million in 1982 to almost
    zero today. Overall EPA water quality research funding has fallen from
    $67 million in 1980 to $26 million in 1997. Most of the available money
    is being used by EPA to support the development of regulations. This
    has resulted in the stagnation of advances in wastewater control
    technology and missed opportunities for better, more cost-efficient
    wastewater management, and has prevented our nation from achieving full
    benefit from the $65+ billion federal investment in wastewater
    infrastructure.
        The need for research has never been greater. New approaches to
    environmental problems, such as watershed management, require a new set
    of tools to ensure success. Addressing non-point source problems
    through watershed-based trading demonstration projects allows
    stakeholders to maximize cost to benefit ratios. Understanding all
    elements of water quality criteria, creating methodologies to develop
    credible site-specific criteria, and implementing reliable monitoring
    procedures, however, are just a few of the scientific challenges before
    us. Whether we are discussing ``pfiesteria,'' nutrients, TMDL's,
    metals, ``cryptosporidium,'' or a myriad of other issues--tens of
    millions of dollars are needed. WERF provides one of the most cost
    effective and credible means of leveraging funds and involving
    stakeholders to advance our scientific knowledge and create practical
    solutions to our water quality problems.
        WERF provides an objective forum for peer reviewed water pollution
    control research to benefit the public and private sectors. Each year
    WERF surveys its Subscribers, as well as a broad cross section of the
    water quality profession, to develop consensus on the most pressing
    scientific and technological research needs. Once the statistical
    analysis of the survey is complete, WERF synthesizes the data into a
    comprehensive 5-Year Research and Development Plan. To the extent
    funding allows, research proposals are solicited on a priority basis.
    An independent advisory Research Council, made up of experts from
    municipal utilities, academics, engineering firms, regulatory agencies
    and equipment manufacturers, helps WERF select researchers, oversees
    studies, and provides periodic review and advice. WERF's customer
    orientation facilitates creation of a consensus-based research agenda
    addressing the needs of the people who govern and manage water quality
    protection facilities. WERF's close association with the users of
    research results, the Water Environment Federation, and EPA ensures the
    practical application of findings.
        WERF's funding is overwhelmingly contributed by municipal agencies
    that represent more than half of the sewered population of the United
    States. WERF members also include equipment manufacturers, consulting
    firms and large industrial companies. These members are geographically
    diverse and represent most of the country, including 39 states. WERF
    has also received modest federal funding through the EPA budget (in
    fiscal years 1991, 1993, 1994, 1995, and 1996) and through
    Congressional add-ons to EPA's budget (in fiscal years 1991, 1992,
    1993, 1996, and 1997). The appropriations bill passed by the Congress
    for fiscal year 1998 included $3 million for WERF.
        Since its inception in 1989, WERF has leveraged federal funding at
    a 6:1 ratio including in-kind contributions and co-funding from
    municipal utilities and the private sector. Only 13 percent of the
    Foundation's budget is used to pay for fund raising and administrative
    costs. The rest is spent on research. Since its inception in 1989, WERF
    has initiated over 100 research projects valued at some $30 million.
    Completed research has resulted in 28 published reports, with 21
    additional reports expected to be printed by the end of 1998. Reports
    due in 1998 include studies on pollution prevention, whole effluent
    toxicity testing, watershed management, biosolids, toxic compounds,
    nutrient removal and disinfection.
        WERF respectfully requests that this Subcommittee include a $5
    million appropriation for the Foundation in the fiscal year 1999 EPA
    budget so that the critical research agenda developed by the Foundation
    and its public and private partners (including EPA) can be carried out
    to the fullest extent possible. This amount would reflect federal
    matching of state and local government commitments to WERF. We also
    wish to note our support and high regard for the work being done by our
    colleagues at the American Water Works Association Research Foundation
    (AWWARF). AWWARF and WERF are currently engaged in several cooperative
    research projects which impact both the water and wastewater priorities
    of our nation. Simply stated, the technology of today is based upon the
    research of the past. The promise of the future is based on the
    research of today.
                                     ______

      Prepared Statement of Father William L. George, S.J., and Father T.
    Byron Collins, S.J., Special Assistants to the President of Georgetown
                 University, and Father Leo J. O'Donovan, S.J.

        Mr. Chairman and Members of the Committee: We are Father William L.
    George, S.J., and Father T. Byron Collins, S.J., Special Assistants to
    the President of Georgetown University, the Father Leo J. O'Donovan,
    S.J. We appreciate this opportunity to testify before your
    Subcommittee.
        Although there were few combat-related casualties associated with
    the deployment to the Persian Gulf in 1990 and 1991, many veterans of
    this conflict suffer from non-specific and unexplained illnesses. This
    constellation of symptoms has been termed Gulf War Illness, but in fact
    these same types of symptoms have been noted in veterans of other
    conflicts in which the U.S. has been involved in the past. Furthermore,
    these symptoms occur fairly frequently in the general population, with
    the terms presently being used to describe the syndromes being
    Fibromyalgia, Chronic Fatigue Syndrome, and Somatoform Disorders.
    Although pathogenesis of these symptoms is poorly understood, there is
    a general agreement that these symptoms are due to some type of
    dysregulation of the central nervous system. The illness can be
    triggered or exacerbated by exposure to a variety of types of
    biological stressors such as physical trauma, emotional distress,
    drugs, toxins and immune stimulation. Regardless of the semantic terms
    used to describe these symptom complexes, they have serious impact in
    providing optimum health care in the context of readiness. We expect
    that the frequency of such symptomatic occurrence will increase as the
    military deploys a greater number of reserves and guards.
        What we are dealing with does not fit traditional models of patient
    care that tend to deal with a single illness at a time. A new
    interdisciplinary program with strong academic rigor is urgently needed
    to address this complex problem for our fighting men and women of today
    and tomorrow. The Institute of Readiness and Environmental Health will
    conduct research, patient care, and education in collaboration with
    government agencies such as the Department of Veterans' Affairs, the
    Department of Defense, and the National Institutes of Health. Such an
    institute has been recommended by numerous committees and organizations
    responsible for oversight of these efforts, including GAO and the House
    Committee on Government Reform and Oversight. The Institute will focus
    on the following key aspects of the illness:
      --Understanding the pathogenesis and risk factors for the development
            of the illnesses
      --Develop risk factors and preventative measures
      --Establish treatment methods for these patients
      --Train the health care workers in the VA and DOD with new findings
        The institute will be managed by Georgetown University under the
    guidance of the consortium board consisting of representatives of
    Georgetown University, the VA Medical Center in St. Louis, Missouri,
    the VA headquarters and other participating government agencies. Its
    activities will be closely integrated with complimentary activities in
    other government agencies. This institute would provide a unique
    opportunity for a comprehensive and scientifically rigorous study of
    all facets of these illnesses. It is hoped that the work of this
    institute will improve the readiness and environmental health for our
    fighting men and women.
        We request $15 million for fiscal year 1999.
                                     ______

    Prepared Statement of Margaret H. Nellor, Research Project Manager, Los
    Angeles County Sanitation Districts and Dr. Peter Fox, Research Project
                       Manager, Arizona State University

        We would like to thank you for the opportunity to submit testimony
    to the Subcommittee in support of federal funding in fiscal year 1999
    for an exciting research program focused on strengthening scientific
    understanding of the efficiency and sustainability of Soil Aquifer
    Treatment (SAT) for indirect potable reuse of highly treated recycled
    water. This research, which is taking place in California and Arizona,
    has national implications for enhancing sustainable development of
    communities by augmenting and protecting valuable groundwater supplies
    with recycled water. Over $5 million in cash and in-kind services have
    already been committed to the investigation by various research
    sponsors and participants. Last year, Congress appropriated $1 million
    for the SAT project, which will be used for capital equipment needed to
    expand the project's monitoring and analytical capabilities, to expand
    and enhance groundwater modeling methods, and to create a public
    education program. We are seeking an additional $1 million in fiscal
    year 1999 to fully utilize the expanded monitoring and analytical
    capabilities developed with fiscal year 1998 funding.
        The Soil Aquifer Treatment Project is designed to provide the data
    necessary to support the rational design and operation of SAT systems,
    to predict water quality improvements provided by SAT, and to answer
    important public health questions. The County Sanitation Districts of
    Los Angeles County, who serve over five million people in 78 cities in
    Los Angeles County, California, and Arizona State University are the
    project managers for the research in cooperation with the University of
    Arizona, the University of Colorado, Stanford University and the U.S.
    Geological Survey. We are joined in support of this funding by the
    Cities of Phoenix, Glendale, Mesa, Scottsdale, Tempe, and Tucson,
    Arizona; the Orange County Water District; the Water Reclamation
    District of Southern California; the Los Angeles Department of Water
    and Power; the City of Riverside, California; the Bureau of
    Reclamation; and the American Water Works Association Research
    Foundation.
        As the arid West continues to develop and as sources for additional
    water supplies become more and more scarce, an increasingly important
    source of water for agricultural and urban use is recycled water. This
    water has the potential to alleviate water shortages and to provide
    important augmentation to existing sources. Soil Aquifer Treatment,
    which is currently in use in California and Arizona, is one technology
    that has the potential to economically supplement traditional treatment
    and storage systems for existing and future potable water supplies.
    This study will be of value not only in the West but in a number of
    other areas around the county where groundwater recharge is used to
    supplement potable water supplies, to control sea water intrusion in
    coastal groundwater aquifers, to control land subsidence caused by
    declining groundwater levels, to raise groundwater levels to reduce the
    cost of groundwater pumping, and to provide a means of treating
    wastewater prior to discharge. Most notably, the states of Florida,
    Massachusetts, Nebraska, Michigan, New Hampshire, New Jersey, New York,
    South Dakota, Texas, and Wisconsin, who already operate groundwater
    recharge facilities, will benefit from this research. This research
    will also benefit aquifer storage and recovery systems located in
    eleven other states.
        Further, our investigations of SAT will help address the public
    health issues that all water suppliers in the nation face, such as
    source water protection and disinfection practices. The questions that
    will be answered by our study will be instrumental to the
    identification, characterization, and treatment of compounds in our
    nation's water supply so that we may better protect the health of our
    citizens.
                             the need for the study
        While groundwater recharge using recycled water has been used in
    the United States for several decades and has been the subject of a
    number of studies, the scientific and technical community's ability to
    fully address a number of complex public health questions has been
    limited by the nature of existing testing and study methodologies. The
    capital improvements funded by Congress in fiscal year 1998 will enable
    a higher standard of research on SAT by expanding the project's
    monitoring and analytical capabilities, and will thus help enhance
    scientific understanding of the various biological, physical, and
    chemical processes in SAT that modify and improve the characteristics
    of recycled water.
        With additional funding for fiscal year 1999, we will be able to
    utilize the expanded capabilities that we developed with fiscal year
    1998 funding. Funds will be used in part to follow up on research
    recommendations from the National Research Council's (NRC) Water
    Science and Technology Board study on the viability of augmenting
    potable supplies with recycled water. This work will address critical
    areas of research necessary to address the myriad of unknowns
    concerning SAT and the indirect use of recycled water for potable water
    supply including the fate and significance of disinfection byproducts,
    organics, and microbial pathogens.
        The results of our investigation will help us to better understand
    the complex nature of recycled water and SAT so that we may take
    advantage of the benefits offered by indirect potable reuse based on
    groundwater recharge such as: additional water quality improvements;
    seasonal or longer-term storage without evaporative losses; protection
    of water resources against recontamination (with coliforms and
    parasites) by birds, mammals, and even humans; and prevention of algae
    growth and associated water-quality problems such as algae-derived
    taste and odor.
                                  sat defined
        Soil Aquifer Treatment can best be described as a groundwater
    recharge method using recycled water. SAT relies on percolation of the
    recycled water through soil and groundwater transport to further
    improve water quality prior to reuse.
      --Soil percolation encompasses several processes that occur as water
            seeps downward through the soil under the influence of gravity
            to enter the groundwater system. The soil acts as a filter to
            improve the characteristics of the recycled water through
            physical, chemical, and microbiological processes.
      --Groundwater transport: After reaching the underlying aquifer,
            groundwater moves slowly to extraction wells. During transport,
            further water quality benefits are realized through a number of
            physical, chemical, and biological processes.
                         purpose and goal of the study
        The SAT Project is the first research program to focus broadly on
    SAT as a system. Its goals are to provide the data necessary to support
    the engineered design and operation of SAT systems, and to address
    factors that are of interest to health regulators for the development
    of regulations governing groundwater recharge projects.
        Specific objectives of the project are to:
      --characterize processes that contribute to organic chemical removal
            and transformation during transport through the soil
            percolation zone and underlying groundwater aquifer;
      --investigate and model relationships among above-ground treatment,
            wetlands polishing, and SAT;
      --identify monitoring criteria that will provide proper assurances
            regarding the elimination of viruses and other pathogens; and
      --produce a framework or model within which SAT systems can be
            designed and operated to meet regulatory criteria.
        The effectiveness of SAT will be investigated and systematically
    analyzed to determine the efficacy of the protective barriers inherent
    in SAT systems: the interface at the soil-water boundary of the
    infiltration surface; soil percolation; and groundwater transport. The
    water quality benefits derived from the treatment in each barrier will
    be evaluated based on the reductions achieved in levels of organic
    carbon, nitrogen, and pathogens.
        Field investigations and data gathering are being performed at at
    least seven full- or pilot-scale recharge sites in California and
    Arizona. These sites offer a range of different effluent qualities and
    physical conditions such as depth to groundwater, soil and sediment
    type, etc. Laboratory work is also being conducted to analyze the data
    and develop the applicable models. These facilities are located in
    Phoenix, Mesa, and Tucson, Arizona; and Riverside, Los Angeles, Los
    Angeles County, and Orange County, California. Some of the more unique
    research elements include use of genetic techniques to isolate and
    identify viruses; analytical methodologies capable of identifying over
    90 percent of the materials comprising the organic makeup of
    groundwater and recycled water; unique tracers to track the movement of
    recycled water as it infiltrates the groundwater; and a public
    education/outreach component to disseminate the results of the study.
        On behalf of the many public agencies, cities, and universities
    that are participating in this exciting and promising research project,
    we would like to thank the Subcommittee once again for the opportunity
    to submit this statement and for your previous support for this
    project. Soil Aquifer Treatment has great potential to alleviate the
    coming critical water shortages in the arid western United States and
    provide valuable information on a national level for source water
    protection and supply. We thank you again for your commitment to this
    project in fiscal year 1998, and ask you for your renewed support to
    complete the level of funding requested for this project.
                                     ______

    Prepared Statement of Dr. Robert J. Mason, Director, Environmental Lung
        Center, National Jewish Medical and Research Center, Denver, CO

        Mr. Chairman, and Members of the Subcommittee, thank you for the
    opportunity to submit testimony to the hearing record regarding the
    newly established Environmental Lung Center at the National Jewish
    Medical and Research Center in Denver, Colorado. The National Jewish
    Center, formerly the National Jewish Center for Immunology and
    Respiratory Medicine, is the world's foremost center for the study and
    treatment of lung disease.
        As you know, there were included in fiscal year 1997 and fiscal
    year 1998 EPA Appropriations, funds for research at the Environmental
    Lung Center. We have now successfully completed the Environmental
    Protection Agency peer review process for the fiscal year 1997 funds
    and are currently in the process of applying for the second round of
    funding. We believe that a very productive relationship with the agency
    has been fostered. Essentially, the mission of the Environmental Lung
    Center will be to provide the sound science necessary to assist the
    agency with regulatory policy in specific areas.
        Generally speaking, the Environmental Lung Center is building upon
    100 years of expertise in this specific science. The goals of the
    Center include discovering the molecular mechanisms for environmental
    and lung disease, including asthma and lung cancer; providing a
    scientific basis for evaluating health hazards of indoor air pollution;
    identifying the genetic and molecular basis for individual
    susceptibility to environmental lung disease; and identifying the risk
    and effect of air pollution on patients with pre-existing pulmonary
    disease.
        This research is extremely important given the fact that in the
    United States, lung disease is a leading cause of death. It is now well
    known that man-made environmental and occupational pollutants
    contribute significantly to the rising numbers of those afflicted,
    particularly impacting residents and commuters to urban areas and those
    who work in occupations such as mining, construction, textiles and
    manufacturing. Indoor air pollution and improper ventilation also cause
    the spread of respiratory illnesses. To eradicate these illnesses and
    address general environmental concerns, the Clean Air Act authorized
    EPA to set exposure standards for six widespread air pollutants. As you
    know, these standards continue to provoke heated debate in the
    scientific and regulatory communities. Our task is to find out the
    extent to which the exposure thresholds are true, as measured against
    individual susceptibility, and to assist the regulatory bodies in this
    country to come up with decisions regarding toxic thresholds of
    compounds and the medical relevance of the EPA's fixed testing-station
    data to surrounding populations.
        As the only high ranking institute in the nation that concentrates
    on lung disease and the only one that sees patients as well as conducts
    research, National Jewish has made great contributions to the
    advancement of medical knowledge about the effects of environmental
    pollutants on the human pulmonary system. Its location in Denver is
    significant in that the city is plagued with environmental pollutants
    (nearly 300,000 Colorado residents have chronic lung disease, which is
    well above the national average, although our patients come from all 50
    states). Our dedicated research at National Jewish has shown definite
    linkages between certain types of ambient air pollutants and asthma. We
    are currently exploring this further, along with the effects of certain
    pollutants on other lung diseases.
        The Environmental Lung Center's research efforts will range broadly
    from studies of molecular biology and immunology to direct studies of
    air pollution on patients with lung disease. The focus of our work
    during the current year will be on the special features of the lung as
    an immune organ, the pathogenesis of oxidant and particulate inhalation
    injuries, and two specific cohorts of patients, chronic beryllium
    disease and asbestosis. For the purposes of this testimony, I will
    describe the proposed studies in a very general way that will give the
    Subcommittee a view into the complexities of determining safe levels of
    airborne toxins given human susceptibility factors.
        We know that the lung has a unique microenvironment to suppress
    inflammation so as to minimize injury to its delicate gas exchange
    units. We believe that alterations in these specific adaptations
    account for individual susceptibility to environmental hazards. So, in
    terms of the immune system, we will focus on the critical components of
    immunity affecting the mucosal (pertaining to the mucous membranes)
    immunity. These components are called the gamma/delta T lymphocytes. In
    addition, we will focus on two surface-active proteins which are a
    unique part of the immune system of the lung. We have been able to
    clone these proteins and make recombinant proteins for determining
    precise structure and function relationships. We are studying the
    effects of these proteins to block specific infections. In another
    project, we will characterize the antioxidant properties of the lung
    that are critical to protection to the ozone and particulates. We will
    begin our studies on respiratory viral infections, which we believe
    greatly worsen the effects of air pollution, particularly those with
    pre-existing lung disease. One of the most common occupational
    pulmonary diseases in the aerospace industry is chronic beryllium
    disease. We are close to determining the molecular mechanism of this
    important immunologic disease. This will be the first time that an
    antigen receptor on a T lymphocyte has been defined precisely for a
    metal. We also have a cohort of patients with asbestosis, which will
    provide us with the opportunity of evaluating the value of sputum
    cytology for the detection of lung cancer in this highly susceptible
    population. Although it may seem that sputum cytology would be useful
    for screening for lung cancer, earlier studies (which may have been
    flawed) with lower risk patients did not establish the benefit of this
    approach for this purpose. This may be worth exploring again in the
    future since lung cancer is the number one killer in this country.
        In the next year we are requesting $1.75 million to continue these
    projects and develop our ability to perform gene transfer and gene
    knock out experiments in mice. The most exciting new technology is the
    use of inducible promoters to turn on a certain gene in a specified
    cell at a particular time. The technical components for doing this in
    the respiratory epithelium are available, but accomplishing this feat
    remains an exciting but formidable challenge for the next year. With
    this technology we will be able to turn on a specific gene at a
    particular site in the lung to defend against an environmental agent of
    interest.
        The major thrust for the next five years is to take advantage of
    modern molecular biology and genetics in order to study environmental
    lung disease. Never before have researchers had the ability to
    determine the genetic basis for individual susceptibility and the
    molecular mechanisms of disease. Our institution is internationally
    known for its research in immunology, and we want to utilize this
    expertise to study environmental lung disease. In order to accomplish
    this goal, we need to expand our research facilities and core units in
    order to accommodate these new programs. We will commit at least 2.5
    million dollars in matching funds, and we are requesting 2.0 million
    dollars to develop these research facilities.
        Mr. Chairman, we believe that we are the best partner to provide
    the type of sound scientific research necessary to assist the agency
    with its regulatory decision-making goals. Our desire is to grow this
    relationship and hope that the subcommittee will again provide $1.75
    million to continue this relationship for another year. Mr. Chairman,
    our mission is taking us to a new level of research, compounding our
    need to renovate and expand our current research laboratory. Therefore,
    we would also like to take this opportunity to present our need for $2
    million as a federal share, to be matched by National Jewish, in order
    to expand our research space. This federal investment will enhance our
    nation's commitment to protecting the health and safety of its workers,
    citizens and individuals the world over. The research conducted by the
    Center will lead to medical breakthroughs and environmental findings
    that will assist the federal government to set new standards for both
    government and business. Your support for these efforts will save lives
    and ultimately, save costs for the federal government and for
    businesses who are currently struggling to comply with new standards.
        Thank you.
                                     ______

      Prepared Statement of Dr. Sven-Erik Bursell, Ph.D., Joslin Diabetes
                                     Center

        Mr. Chairman and Members of the Subcommittee, we at the Joslin
    Diabetes Center in Boston appreciate the opportunity to appear before
    you again this year. We are extremely eager to report to you the
    progress on the two region, two year diabetes pilot demonstration
    project Joslin proposed to you last Spring.
        The Joslin diabetes demonstration project will institute pilot
    programs of detection, prevention and care in two regions: (1) Hawaii,
    through Tripler Army Medical Center; and (2) New England through VA's
    VISN-1. The objectives involve a training and technology transfer
    exercise of Joslin's expertise utilizing Telemedicine infrastructures,
    personnel and employee/patient bases of the Departments of Defense and
    Veterans Affairs.
        We at Joslin would like to thank you for the supportive language in
    the fiscal year 1998 VA/HUD Conference Report Appropriations Act
    regarding the diabetes research project we are participating in with
    the Department of Defense and the Department of Veterans Affairs in New
    England and Hawaii. We would like to express our appreciation for the
    support on diabetes issues to the majority and minority professional
    staff of the Committee for their advice and counsel on the legislative
    process and VA interface.
        My testimony focuses on two aspects of the project: (1) A status
    report on the current year; and (2) A summary of our request for second
    year funding through DOD.
                      status report: first year activities
        As you recall, the two objectives of the project are (1) Screening
    for diabetes among DOD's and VA's patient populations in New England
    and Hawaii, using an innovative technology which requires nothing more
    than shining a light in the eye; and (2) Implementing improved diabetes
    prevention and care protocols for the DOD's and VA's patient
    populations in New England and Hawaii.
        We were delayed in implementation somewhat this year due to DOD's
    deliberations on where to place this project programmatically. While
    the funding flow was being cleared, we have continued to invest
    resources and develop elements of the program at Joslin. We have now
    settled those issues and are linked with TATRC, the Telemedicine &
    Advanced Technology Research Center at Fort Dietrick, Maryland.
        Significant progress has been made towards establishing initial
    pilot studies to study patients with diabetes. We have reached
    understanding, with the support of DOD and VA personnel, on
    implementation of the work plan we brought to the Committee last year.
    We are in active discussions on implementation with both Departments.
        Shortly, we will begin:
      --Three Phase I pilot projects to provide information on the expected
            magnitude of the proposed interventions and to evaluate the
            feasibility of the application of these protocols at multiple
            sites. After the Phase 1 pilot study, we will move to a Phase 2
            large-scale study on both the Joslin Vision Network (JVN) and
            the Diabetes Intensive Treatment Program (DOIT).
      --The process of developing the Phase 1 and Phase 2 studies for both
            the JVN and the DOIT Program at the DOD.
      --The process of organization and distribution of the remote access
            diabetic detection units at multiple sites.
        By September 30, 1998, we will have accomplished the following,
    despite the delay in our start date:
      --Completion of Phase 1 studies in the New England area for the VA;
      --Implementation of Phase 2 studies in the New England area for the
            VA;
      --Implementation of Phase 1 studies at Tripler Army Medical Center,
            Hawaii;
      --Deployment of three remote examination sites in New England;
      --Initiation of the deployment of three remote examination sites in
            Hawaii; and
      --Further maturation of the technology at Joslin.
                       second year plan and funding needs
        In Year 2 we will have accomplished the following objectives:
      --Provide DOD and VA diabetes patients cost-effective access to the
            benefits of annual retinal examination, diagnosis, and
            treatment as necessary to reduce the risk of vision loss;
      --Develop the utilization of a quick, efficient and easily acceptable
            method of screening for diabetes at remote sites;
      --Demonstrate efficient and effective methods to improve the
            metabolic control for patients with diabetes.
        Anticipating early implementation in November of 1997, Joslin began
    procuring the necessary equipment to carry out the project. To date,
    Joslin has expended approximately $2.0 million, without any
    reimbursement from Federal funds. This has been a particular challenge
    for a nonprofit institution whose annual shortfall is made up through
    gifts from foundations and private donors.
        Joslin was a little naive in the preparation of the budget we
    prepared for the current fiscal year. We were not aware that at each
    stage of DOD review and decision-making, a percentage of the funds
    available would be deducted for program management and administrative
    overhead. Nor did we anticipate several unforeseen expenses required by
    the Department of Defense. We are also now faced with a budget from the
    VA for $500,000 for the two-year period for their participation in this
    project. As a result, the bare bones budget we submitted last year has
    been reduced to an insufficient level. DOD officials have recognized
    and appreciated Joslin's plight in this regard. The DOD program
    managers have indicated that they will support a second year budget of
    $6.4 million to assure that this important initiative can proceed.
        In total, assessments by DOD and VA are projected at $2,000,000
    from the funds we had originally budgeted for the first year costs of
    $4.0 million.
        The supporting detail for the second year request is in the final
    stages of preparation. We are grateful that we have the programmatic
    support of DOD in our efforts. We are also very fortunate that VA and
    DOD officials understand the budget and funding issues, and will
    support the second year effort at $6.4 million.
        Mr. Chairman, in order to implement this project properly, and
    conduct the project in the manner and under the terms established by
    DOD and the VA, we will require an appropriation of $6.4 million in
    fiscal year 1999 through the Department of Defense.
        Mr. Chairman, that concludes my brief statement. We are pleased to
    be a part of this project with the Department of Veterans Affairs and
    appreciate your Committee's support.
        I would be pleased to answer any question from you or any other
    Members of the Subcommittee.
                                     ______

       Prepared Statement of the Bad River Band of Lake Superior Chippewa

                                  introduction
        The Bad River Band of the Lake Superior Tribe of Chippewa Indians
    live on the shores of Lake Superior in northern Wisconsin. The
    Chippewa, or Anishinabe, migrated from the east and settled on Madeline
    Island in the early 1600's. In 1825, the Treaty of Prairie du Chien
    recognized the ownership of northern Wisconsin, Minnesota, and Michigan
    by the Chippewa. By 1842, the Chippewa had ceded a large portion of
    this land base to the United States. Today there are 6,291 Bad River
    Tribal members; 1,199 reside on the reservation and 5,092 live off-
    reservation. The Tribe manages social services, natural resources,
    education, health, housing, administration and legal departments as
    well as a lodge and gaming facility.
        The Bad River Reservation, established by the Treaty of 1854,
    includes over 124,000 acres in Wisconsin's Ashland and Iron Counties
    and is a highly valued ecological region. Bordering the shores of Lake
    Superior, the reservation is the mouth of a large watershed that drains
    much of northern Wisconsin. The rivers flowing through the reservation
    are important spawning grounds for lake-run trout, salmon, sturgeon and
    walleye as well as many other fish which make up a significant
    subsistence resource for tribal members. In addition, the unique
    drainage area known as the Kakagon Slough provides abundant wild rice
    habitat that is a significant contribution to the Tribe's cultural and
    economic health. The sloughs are the cultural and spiritual center of
    the Bad River Tribe. They host the only remaining extensive coastal
    wild rice marsh in the Great Lakes Basin. This area is relatively well-
    sheltered, providing exceptional habitat for a variety of wildlife.
        The challenge to preserve and enhance this and other areas of the
    reservation is a daily concern of the Bad River Tribe. Half of the land
    within the reservation borders is owned privately and subject to
    intensive timbering which causes severe sedimentation in the waterways.
    The larger rivers that flow through the reservation extend well beyond
    the reservation boundary and are exposed to upstream contamination
    sources. The encroachment of development threatens the protection of
    nesting sites, rare and endangered vegetation species, and cultural and
    historic features. To protect its resources, the Tribe is using a
    watershed approach to resource management which will hopefully guide
    land management practices throughout the 690,000 acre Kakagon/Bad River
    watershed. Currently, the Tribe is producing a comprehensive watershed
    management plan and continuing to build cooperation with off-
    reservation stakeholders.
    Indian Environmental General Assistance Program
        The Tribe wishes to express its support for President Clinton's
    budget initiative, particularly the increase of funding for the General
    Assistance Program, and the increases in both Clean Air and Clean Water
    Act implementation funds.
        In 1991, Bad River proposed and received a Multi-Media Pilot
    Project to develop an environmental protection program on the
    reservation. This nationwide pilot was the beginning of the General
    Assistance program (GAP). While GAP funding has continued since 1991,
    the level has never been sufficient for the development of
    infrastructure that will enable the Tribe to manage its own
    environmental programs, adequately represent itself, and make decisions
    affecting its people and assert jurisdiction of its rights. At the
    current level of funding, the GAP program exists in a reactionary mode.
    One staff person is insufficient to handle all the air, water, solid
    waste and hazardous waste issues on the reservation. This lack of
    resources inhibits proactive steps such as long-range watershed
    planning, development of environmental protection codes and
    regulations, cooperative work with other governments on Lake Superior
    issues, and sound environmental planning for sustainable economic
    development.
    Clean Water Act Funding
        The Bad River Tribe supports the increase of 106 monies under
    President Clinton's budget proposal. The reservation's water resources
    quality and preservation are inextricably woven into fish, wildlife,
    vegetation, human health and cultural issues. The surface waters of the
    reservation provide nourishment and supporting the environment for the
    tribal fish and game resources and are a host to the vast wild rice
    beds previously described. Groundwater is the sole source of drinking
    water on the reservation. As development in the watershed increases,
    both groundwater and surface water are effected. The increase is 106
    funding will enable the Tribe to continue development of a Water
    Resources Office and a Tribal Water Resources Laboratory to establish
    baseline parameters for the waters of the reservation. With this
    information, the Water Resources Office can then begin to focus
    monitoring, remediation and education efforts in the best possible
    direction. The additional monies will also allow the Tribe to complete
    the drafting of Water Quality Standards and an application for
    Treatment as A State-regulatory.
    Clean Air Act Funding
        The increase of funding in the President's budget coincides
    perfectly with the long-awaited publishing of the Tribal Authority Rule
    in February of this year. Increased monies are necessary for Bad River
    to establish baseline data about the air quality resources on the
    reservation. A recent study by Dr. Peter Lee of Lakehead University
    found that a variety of heavy metals including mercury had a
    significant impact on the germination and growth of wild rice. The
    Tribe would therefore like to monitor for mercury as well as
    particulate matter and sulfur dioxide.
        In 1992, the Tribe embarked on the process to redesignate its
    airshed as a Class I Area under the Prevention of Significant
    Deterioration (PSD) provisions of the Clean Air Act. The Tribe
    completed its final draft redesignation report in June 1995 and is now
    entering the final phase of the redesignation process. The additional
    air monies will be necessary to complete this process.
        We thank the Committee for its consideration of this request.
                                     ______

      Prepared Statement of James H. Schlender, Executive Administrator,
                Great Lakes Indian Fish and Wildlife Commission

        Agency involved.--Environmental Protection Agency
        Fiscal year 1999 appropriations requested.--$174,476
        Project.--Intertribal Lake Superior basin initiative
        Project description.--To build on previous successes, the
    Commission requests that Congress earmark $174,476 from the EPA's
    fiscal year 1999 Great Lakes National Program Office and Coastal
    Environmental Management (CEM) Programs to:
      --develop, coordinate, and implement tribal strategies to protect the
            Lake Superior ecosystem in conjunction with the Binational
            Program, Lake Superior Lakewide Management Plan (LaMP);
            International Joint Commission (IJC) meetings; and State of the
            Lakes Ecosystem Conference (SOLEC) forums at a cost of $70,000;
            and
      --expand cooperative contaminant studies for fish, animals, and
            plants used by tribal members under rights reserved in the 1837
            and 1842 treaties with the United States at a cost of $104,476.
        Authorization.--The Clean Water Act designates the Great Lakes
    National Program Office (GLNPO) to develop and implement action plans
    to carry out the United States' responsibilities under the Great Lakes
    Water Quality Agreement and subsequent amending Agreements. GLNPO is
    directed to perform these functions in cooperation with tribal
    agencies, among others. 33 U.S.C. Sec. 1268(c). In the Commission's
    view, this is sufficient authority for Congress to provide funding for
    tribal organizations, such as the Commission, to undertake initiatives
    related to Great Lakes water quality. In 1998, GLIFWC will administer
    over $70,000 in Coastal Environmental Management (CEM) funds from the
    EPA to facilitate tribal participation in the Binational program.
        On behalf of the eleven Great Lakes Indian Fish and Wildlife
    Commission, the Commission would like to thank you for the opportunity
    to submit testimony regarding the administration's fiscal year 1999 EPA
    budget. The Commission's fiscal year 1999 request centers on two major
    objectives:
      --support of the EPA's Coastal Environmental Management Program and
            its continued funding of tribal participation in
            intergovernmental partnerships to develop, coordinate, and
            implement tribal strategies to protect the Lake Superior
            ecosystem in conjunction with the Binational Program, Lake
            Superior Lakewide Management Plan (LaMP); International Joint
            Commission (IJC) meetings; and State of the Lakes Ecosystem
            Conference (SOLEC) forums at a cost of $70,000.
      --the need to expand cooperative contaminant studies for fish,
            animals, and plants used by tribal members under rights
            reserved in the 1837 and 1842 treaties with the United States
            at a cost of $104,476.
      importance of lake superior and its environment to anishinabe people
        Comprised of eleven tribal governments located throughout
    Minnesota, Wisconsin, and Michigan, the Commission's purpose is:
      --to protect and enhance treaty guaranteed rights to hunt, fish, and
            gather on inland territories ceded under the Chippewa treaties
            of 1836, 1837, 1842, and 1854;
      --to protect and enhance treaty guaranteed fishing on the Great
            Lakes; and
      --to provide cooperative management and protection of these
            resources.
        Tribal members rely upon fish, wildlife, and plants for religious,
    ceremonial, medicinal, subsistence, economic, and cultural purposes.
    The importance of Lake Superior and its environment is documented in
    the history and culture of the Anishinabe (i.e. Chippewa, Ojibwa)
    people.
        The seven prophets came to the Anishinabe when the nation lived
    along the east coast. The prophets told the people that if they didn't
    move they would be destroyed. There would be seven stops during this
    migration. A turtle shaped island was the first stop in this migration
    located in the St. Lawrence River, a little northeast of present day
    Montreal. The Sacred Megis Shell guided the nation along the rivers and
    streams leading the people to last stop at Madeline Island. Madeline
    Island is located in Lake Superior off the northern shore of Wisconsin.
        It was said that when the Sacred Shell was present that the Ojibway
    would find a good way of life and that the Great Spirit would provide
    for the people. These predictions came true for the people who found
    bountiful food throughout the year in the forests, lakes, and wild rice
    beds. The Ojibway people reaffirmed their commitment to preserving this
    homeland for future generations when Chippewa nation signed treaties
    with the United States Government at Madeline Island in 1842 and 1854.
        While federal court rulings have reaffirmed the rights of tribes to
    hunt, fish, and gather from lands and waters ceded under these
    treaties, these rights will mean little if the resources are too
    contaminated to be utilized by tribal members. Any contamination from
    environmental degradation threatens the health, safety, and economy of
    Chippewa people.
        great lakes decision making and intergovernmental partnerships
                                   component
        Because Lake Superior is so important to tribes, they are vitally
    concerned about its welfare. For tribes to participate in protection
    initiatives to restore and protect this resource, they need to work
    with other jurisdictions on a government-to-government basis, and need
    strong governmental institutions to enable effective participation.
    These needs are consistent with the goals of EPA's Indian Policy, which
    are to promote self-government and work with tribes on a government-to-
    government basis.
        To further EPA's policy, and address tribal needs, adequate, long
    term funding will be necessary to enable sustained participation in
    initiatives to protect the Great Lakes ecosystem. The Commission is
    requesting that Congress earmark $70,000 immediately from the Great
    Lakes National Program office or Coastal Environmental Management (CEM)
    Program to:
      --provide a grant to enable the Commission to continue its
            participation in Great Lakes environmental policy making, and
      --provide funds for technical projects so that the Commission is able
            to contribute to technical working groups and adequately review
            technical documents.
        EPA funding will be used by GLIFWC to research environmental
    issues, facilitate discussions and build consensus between tribal
    leaders, and develop formal positions to be forwarded to appropriate
    agencies. These efforts would complement the ongoing efforts by
    Commission member tribes to develop and advance their governmental
    positions.
        Funding from EPA is also needed to facilitate the Commission's long
    term participation in the Binational Program to Restore and Protect
    Lake Superior. The Commission proposes to participate in both the
    Binational Program's Task Force of senior governmental natural resource
    managers and Workgroup composed of technical and scientific
    professionals.
        The Commission generally supports the continuation of CEM funding.
    These funds are vital to development of programs to further the goals
    of Remedial Action Plans (RAP's) and Lakewide Management Plans (LaMP's)
    in the Great Lakes basin. The Great Lakes are a precious, freshwater
    resource that need and deserve special protection. Specifically, funds
    are needed to assure the long term viability of the Binational Program
    to Restore and Protect Lake Superior. Tribes have begun to participate
    in the Binational Program, however, the process has proceeded for some
    years without their input. Tribes have much to offer to Great Lakes
    policy making; intergovernmental bodies such as the Binational
    Workgroup and Task Force offer an opportunity for tribes to advance
    issues of concern, and to work with other governments to ensure that
    those issues are adequately addressed from a tribal perspective.
                cooperative ceded territory contaminant studies
        Tribal members retain a close relationship to their environment and
    are directly impacted when toxins enter the Great Lakes food chain.
    Under off-reservation treaty reserved rights, tribal members harvested,
    processed, and consumed: 86,045 walleye; 1,740 musky; 1,757 northern
    pike; 11,045 whitetailed deer; 153 bear; 5,725 ducks; and 70,424 pounds
    of wild rice from 1993 to 1995.
        In addition to harvesting natural resources for subsistence and
    cultural purposes, tribal members also harvest and market Lake
    Superior's fishery resources. This fishery is important to the economy
    of tribes on Lake Superior. Between 1993 to 1995, tribes harvested a
    total of 405,319 pounds of lake trout; 366,563 pounds of siscowet
    trout; 977,023 pounds of whitefish; and 143,317 pounds of herring from
    1842 ceded territory waters.
        In recent years, potentially dangerous levels of mercury, PCB's,
    and other chemicals have been documented in fish throughout the Great
    Lakes region. Scientific studies have confirmed the direct correlation
    between consumption of fish with high mercury and PCB levels and
    adverse health effects. These include short-term memory and attention
    deficits in children. The Wisconsin Department of Health recommends
    limiting consumption of fish with .5 ppm and no consumption of fish
    with 1 ppm or greater. Given the tribes' heavy consumption of fish, the
    risks are obvious. This is why tribes have developed GIS maps to convey
    important health information to tribal members.
        To protect the health and safety of tribal members the Commission
    is requesting funding to determine contaminant levels for eight
    indicator species of Lake Superior fish harvested by tribes at a cost
    of $40,150; determine contaminant levels for methyl mercury in fish
    harvested by tribal members in Mille Lacs Lake at a cost of $9,000;
    establish a long term monitoring program to access methyl mercury
    levels in fish harvested and consumed by tribal members at a cost of
    $35,326; and determine contaminant levels for heavy metals in wildlife
    harvested by tribal members at a cost of $20,000.
                                     ______

      Prepared Statement of Tom Maulson, Tribal Chairman, Lac du Flambeau
                     Band of Lake Superior Chippewa Indians

        Mr. Chairman and members of the Committee, my name is Tom Maulson
    and I am the Tribal Chairman of the Lac du Flambeau Band of Lake
    Superior Chippewa Indians, located in Wisconsin. I am here to testify
    on behalf of my people, to discuss their issues, concerns and needs.
        The message from my people is that the United States must keep its
    obligations to the Lac du Flambeau Band. The United States is obligated
    by Treaty to provide critically needed social, education, health and
    governmental services to the Band and its members in exchange for the
    land and peace our forefathers provided. This is the heart of the
    federal government's trust responsibility to the Band. And, this trust
    responsibility is very much on the minds of my people who know how much
    we gave up in exchange for the promises of the federal government. We
    urge you to keep this in mind as well, as you consider funding for
    Indian environmental programs.
        The Lac du Flambeau Indian Reservation is located in north-central
    Wisconsin. The area is commonly called the ``Lakeland Area'' or the
    ``Northwoods'' and is the home for more than 1,500 members of the Lac
    du Flambeau Band of Lake Superior Chippewa. The descriptive names
    indicate an area which is rich with lakes and forests. The Lac du
    Flambeau Indian Reservation is 144 square miles which comprise
    approximately 92,000 acres. Of our Reservation homeland, 55,000 acres
    are forested with aspen, oak, hard maple, sugar maple, and various
    evergreen species, 20,000 surface acres of lakes (158), 34 miles of
    creeks, rivers, and streams, 14,500 acres of wetlands, and 2,500 acres
    designated for housing and lease property. Approximately 25 percent of
    the reservation area is owned by non-Band members and is considered fee
    land. The Band was blessed with a very diverse ecosystem and a huge
    responsibility to protect, enhance, and conserve the natural resources
    for present and future generations of tribal members.
        Because water resources represent such a significant portion of the
    Reservation and are the foundation of our subsistence way of life, the
    Lac du Flambeau Band requests $100,000 in fiscal year 1999 to
    accomplish the following: implement a drinking water protection plan;
    conduct a non-point source pollution inventory; conduct public
    education forums for lakefront property owners; and revise Band water
    quality standards.
        Over the past eight years, EPA funding has played a vital role in
    environmental management on the Lac du Flambeau Reservation. While Lac
    du Flambeau is eager to expand and improve environmental management
    programs on the Reservation, tribes for many years received virtually
    no funding. Even now, as EPA has begun to recognize tribal needs, we
    have struggled to receive merely a pittance of the total EPA funding
    budget. While the Band is grateful for past monies received, continued
    support is necessary in order to maintain and develop environmental
    management programs on the reservation.
        Currently, the Lac du Flambeau Band only receives between $60,000
    per year from the Clean Water Act program. This funding level has
    allowed the Band to complete a baseline water quality study on more
    than 90 percent of the reservation's surface waters as well as to
    receive extensive training in the federally mandated water quality
    standards program. While this has been essential to the operation of a
    water resource program on the reservation, much more needs to be done.
    In the upcoming years, the Lac du Flambeau Band must continue to
    protect and manage water resources on the Reservation. The requested
    $40,000 increase will ensure the Band's success in these efforts.
        Under the provisions of the Clean Water Act, the Band has both the
    responsibility and the authority to manage the water resources of the
    Lac du Flambeau Indian Reservation. It is evident to the Band that to
    effectively manage the water resources of the Reservation this
    authority must remain with the Band. The Clean Water Act recognizes
    that it would be impossible to manage water resources under any other
    authority than the Lac du Flambeau Chippewa themselves. However,
    because of State resistance to full tribal authority over Reservation
    resources, State standards control.
        At the present time, toxic pollutants, such as mercury, have
    entered into Reservation waters and have led to a tribal ban on all
    fish consumption of walleye from one of the best fisheries and most
    beautiful lakes on the Lac du Flambeau Indian Reservation. These toxic
    pollutants have been allowed to enter Lac du Flambeau waters under
    current State of Wisconsin standards. Because the State does not
    incorporate subsistence lifestyles in setting its water quality
    standards, the notion that the State's level of protection is adequate
    for the people of Lac du Flambeau is not a responsible one. Because of
    the higher rate of fish consumption the Lac du Flambeau Chippewa Band,
    as well as other subsistence based Indian Tribes, require more
    stringent water quality standards to support their culture and
    lifestyle. We urge this Committee to support tribal primacy in this
    area.
        In addition, it is clear that Clean Water Act Programs, such as the
    106 Water Pollution Control Program, are essential to water quality
    protection on the Lac du Flambeau Reservation. Unfortunately, the EPA
    allocates only 3 percent of the 106 Water Pollution Control funding for
    tribal governments. States have been receiving this money for nearly
    thirty years in order to build an environmental infrastructure. Indian
    Tribes must be afforded time and money to bring environmental programs
    on par to those of the states. The Lac du Flambeau Band requests that
    the U.S. Congress mandate that the EPA to increase the 106 Water
    Pollution Control set aside for Indian Tribes to 10 percent of the
    total national allocation.
        In addition to surface water resources, U.S. EPA has also assisted
    the Band in implementing underground storage tank, radon, solid waste,
    and wetland management programs on the reservation. These programs have
    succeeded largely due to the U.S. EPA General Assistance Program (GAP)
    to tribes. The General Assistance Program has helped to increase
    environmental awareness on the reservation since it began in 1992.
    Continued support of GAP will allow the Band to build on past
    accomplishments as well as to ensure proper compliance with various
    environmental regulations and mandates. At the present time, the Band
    has begun the second year of a projected four-year budget for this
    program. We request that $100,000 for fiscal year 1999 be earmarked for
    the Band. This is essential in order to maintain two educated and
    experienced individuals on our staff.
        Currently we have more than 200 underground storage tanks on the
    Reservation, most on non-Indian fee land, that need to be removed in
    order to protect the Band's groundwater supply. The solid waste
    management program also needs to be continued and expanded in order to
    comply with Federal, State, and Tribal solid waste regulations. This,
    in itself, is a monumental task for one individual. As mentioned above,
    the environmental specialist is also responsible for radon testing in
    tribal homes and governmental buildings, emergency response to toxic
    spills, investigation of solid waste violations, conducting
    environmental education awareness programs and developing and
    implementing other environmental codes and ordinances. Increasing
    funding in fiscal year 1999 to $100,000 will support additional staff
    which will assist the Band in protecting and conserving our natural
    resources.
        We need the Committee's strong support to enable us to preserve and
    expand our environmental programs. From our perspective, this effort is
    vitally important to protect the future of ``Mother Earth.'' We look to
    the United States to work with us to maintain our natural resources and
    environment at a superior level.
                                     ______

      Prepared Statement of Martin G. Barnes, Mayor, City of Paterson, NJ

        Mr. Chairman and members of the Subcommittee, I appreciate the
    opportunity to submit this statement for the record. My statement is in
    support of a request for $5,500,000 from the Environmental Protection
    Agency State and Tribal Assistance Grants special needs funds for costs
    of a Combined Sewer Overflow Project in the City of Paterson. This sum
    constitutes the capital costs to be incurred in the first year of a six
    year Combined Sewer Overflow (CSO) Project which will cost $35,000,000.
    The project would remove solids and floatables from CSO discharges into
    the Passaic River. It is one of the largest and most complex CSO
    projects of its kind.
        Paterson is New Jersey's third largest city. It is situated in a
    bend in the Passaic River in northern New Jersey. The city was founded
    200 years ago at the inspiration of Alexander Hamilton, to take
    advantage of the water power at the Great Falls on the river.
        Once a proud industrial city (the oldest in the nation), it now
    suffers from all the ills of an old urban area, from which much of its
    wealth, upper and upper middle classes have fled. Its present
    population is approximately 170,000. Unemployment (12 percent) is high;
    poverty is high (25,677); median family income is low ($30,145); median
    household income is low ($26,960). In a state with the highest property
    taxes in the nation, Paterson has one of the highest property tax
    rates. And its property tax ratables have been shrinking. The city's
    bonded indebtedness is so high that its additional bonding capacity is
    only some $12,000,000, making it impossible to issue bonds to pay for
    the cost of the mandated sewer construction. Nor can any combination of
    property taxes and sewer fees, or sewer fees or taxes alone solve this
    dilemma. It is just too great a cost burden for the people of this city
    to handle.
        Nonetheless,Paterson has moved as rapidly as possible to comply
    with EPA and State CSO requirements, and is anxious to come into full
    compliance because it thoroughly understands the implications of the
    present and further pollution of the Passaic River. The river
    constitutes half of Paterson's boundary and is the city's greatest
    natural asset. The people celebrate the river's Great Falls and the
    Historic District surrounding the falls. But almost no use is made of
    the river because it is so polluted. It has been established that
    poisons contaminate the river less than a mile south of the city. The
    pollution of the river has been condemned by a number of environmental
    organizations. The state is working hard to clean up the pollution
    sources and lawsuits are underway addressing various aspects of the
    river pollution.
        The project is important because it is quite complex, quite large
    and has a huge impact on the environmental enhancement of the river. To
    appreciate the cost and time required to correct the pollutant
    condition in question, it is important to note the relative size and
    complexity of Paterson's CSO's and the unusual work that will be
    required to install a system that will remove the solids/floatables.
    The city has 29 CSO discharge pipes ranging in size from 24 inches to
    120 inches in diameter with peak discharge rates of 4 MGD to more than
    1,000 MGD. In comparison, the Passaic Valley Sewerage Commission Water
    Pollution Control Facility in Newark has an average daily flow of only
    300 MGD. Overall the Combined Sewer Overflow discharge pipes in the
    city have a combined flow capacity of more than 2.5 billion gallons per
    day.
        In fact the total of 31 Combined Sewer Overflows which must be
    addressed cannot be designed and constructed all at once without
    bringing the city to a standstill and overwhelming its capacity to
    administer the project. Construction must be carefully staged and
    managed with great care. Accordingly, the city has divided the work
    into three categories to facilitate both design and construction.
        In addition to the above, because of the size of a number of CSO'S
    the proposed Romag/Netting facilities which have been recommended at
    sites with peak wastewater flows in the range of 250 to 800 MGD have
    never been designed nor constructed for this type of application in the
    United States in the past.
        The Romag screen is in use in Europe for CSO and Storm water
    management, in more than 100 installations.
        Also, the use of netting technology is in its infancy and its use
    for solids/floatables capture from the fouled sewer has never been
    demonstrated. For these reasons it is recommended that one of the
    smaller Romag/Netting facilities be designed, constructed, and operated
    for a reasonable time period to demonstrate the viability of this
    option and/or design modifications which may be necessary for these
    facilities to operate properly.
        The proposed design and construction schedule has been grouped into
    three categories as follows:
        1. Those facilities which can be designed and constructed within a
    reasonably short time period (netting technology);
        2. Those facilities which may have an impact on the operations of
    the Passaic Valley Sewer Commission (PVSC) Interceptor System and
    therefore require PVSC approval prior to design and construction, and
    (separation);
        3. Those facilities which, because of the new technology and
    difficulty in designing facilities to treat extremely high flows (<200
    MGD), require an extended design and construction schedule to provide
    for construction and operating data for smaller units prior to full
    implementation (Romag/Netting).
        Capital costs commence with easement negotiation and acquisition.
        The city and the surrounding environment are in a desperate
    situation. It is too late and pointless to assign blame. But the need
    nevertheless exists. Therefore, Mr. Chairman, and members of the
    Subcommittee, I earnestly request your assistance with Federal funding
    to remedy the situation.
                                     ______

    Prepared Statement of Gary Kaatz, Chief Operating Officer, Forum Health

        Mr. Chairman, I appreciate the opportunity to present this
    statement for the record to the VA-HUD Subcommittee in support of the
    Southside Medical Center re-use initiative in Youngstown, Ohio. This
    major community enhancement effort is taking place in collaboration
    with numerous local political, community and civic leaders throughout
    Youngstown.
        As you know, many of our nation's cities, formerly dominated by
    industrial employment bases, have slipped from their strong economic
    positions as the forces of low-cost, foreign competition and new
    technology waves have evolved. One of those cities, Youngstown, was
    once a major steel producing ``hub'' with all of the infrastructure
    attendant to supporting a vibrant local economy.
        A strong component of the local Youngstown infrastructure, over the
    years, has been the health care component of the economy. Developed to
    support the local industrial economy, the health care sector has
    provided not only traditional health services, but also employment to a
    large sector of the population; thus it has been an important component
    to the economic base.
        Just as a major change came to the local economic landscape in the
    industrial arena, so too did change come to Youngstown's health care
    system in the form of market forces in managed care. In order to meet
    these changes, Forum Health has undergone numerous adjustments,
    including facility, resource and service consolidations.
        As part of Forum's efforts to ``re-tool'' its health care system to
    operate more efficiently, officials have decided that it is no longer
    financially prudent to maintain the 500,000-plus square foot Southside
    Medical Center campus. The ``re-tooling'' effort is helping to reduce
    regional health care costs and implement efficiencies, but at a price
    to the local employment base.
        The various changes which Forum has made to the operations at the
    Southside campus have not been made without community involvement. In
    fact, numerous local officials and community leaders have discussed
    those needs in South Youngstown which should be addressed, and put
    forth an assortment of recommendations as to the ways in which the
    Southside campus facilities can best be utilized.
        These recommendations have guided the efforts of Forum over the
    past two years while officials have implemented the various
    consolidations and other cost-cutting efforts. What has become apparent
    in this effort is that the local needs of the Southside Youngstown
    community pose a challenge much greater than any one organization can
    address.
        Based on the recommendations, Forum Health believes that numerous
    opportunities exist for multiple re-uses of the Southside medical
    campus. In fact, these opportunities can be a ``natural fit'' with the
    needs of highest priority.
        Southside Youngstown is a good example of a city with a long list
    of problems, including: chronic unemployment, crime, below-average
    schools and an underserved population with respect to health care. It
    is these needs which the Southside campus can play a part in
    addressing.
        All of the recommendations, which have come forth as a result of
    Forum's discussions with local officials, dovetail well with community
    development themes, and are ones for which the Southside Hospital
    facility could serve as a base. Potential tenants for the facility
    include:
      --Educational program space for welfare-to-work transitions
            (including computer-assisted learning). The facility is already
            wired to support extensive computer use, with a potential for a
            fiber optic link to Youngstown State University. Collaboration
            with agencies dedicated to job training and welfare-to-work
            transitions could be launched on a substantial scale.
      --Opening of a police substation would add a needed sense of security
            to the area.
      --Office accommodations for local social agencies. These entities,
            many of which are interested in this project, can benefit from
            the modern facility design, the synergy with other building
            tenants and a location close to public transportation routes.
      --Job training programs for adults and youths. In cooperation with
            local job training agencies, there are opportunities for job
            training programs in numerous disciplines.
      --Clinical health outpatient services. The facility is equipped and
            configured for outpatient health services in this medically
            underserved area of Youngstown.
      --Future assisted living space could be an option in the large and
            well-constructed rooms which are part of the complex.
        The above-noted examples are simply a few of the numerous
    possibilities for re-use of the Southside Medical Center campus. All of
    the possibilities are enhanced by the condition in which the facilities
    have been, and are, maintained, including compliance with current
    building life-safety and fire codes.
        Mr. Chairman, the ultimate re-use of this facility will be a
    community development/enhancement effort which fits well within the
    guidelines of the HUD Economic Development Initiative guidelines. The
    $1 million in federal grant aid which Forum is requesting will assist
    with renovation and conversion as well as other components of the
    project.
        Forum Health is prepared to donate the entire complex to a local
    community development entity so that the Southside complex continues to
    play a vital role in the South Youngstown community. A foundation of
    civic partnership and community collaboration can ensure that the
    facilities continue to serve the community just as they have over many
    years.
        I urge your strong consideration and I thank you for allowing this
    statement for the record.
                                     ______

    Prepared Statement of William Polf, Deputy Vice President for External
      Relations and Strategic Programs, Health Sciences Center, Columbia
                                   University

        I am Dr. William Polf, Deputy Vice President for External Relations
    and Strategic Programs at the Health Sciences Center of Columbia
    University. I appreciate the opportunity to submit testimony before the
    Subcommittee to update you on the progress of development of the
    Audubon Biomedical Science and Technology Park.
        As you know, the Audubon Biomedical Science and Technology Park,
    located on the Health Sciences campus of the Columbia-Presbyterian
    Medical Center in New York City, is one of the first urban scientific
    research parks dedicated to biomedical research and the development of
    the emerging new biotechnology industry. It is the first research park
    in New York City, and one of the few in the nation devoted specifically
    to housing both academic and commercial research to help create a
    synergy between university research and the development of commercial
    applications in pioneering new medical technologies, pharmaceuticals,
    and diagnostics. Development of the Audubon Park is supported by a
    partnership among Columbia University, New York City, New York State,
    and the Federal government. The past support of this Subcommittee has
    been critical in ensuring the success of Audubon.
        Audubon combines three functions that together serve the national
    interest by providing a vital and innovative mechanism for expanding
    the availability of innovative medical treatments and enhancing health
    care to medically underserved citizens, while maintaining America's
    leadership in one of our most important economic sectors, biomedical
    research and development. Audubon provides a location for the
    continuing progress of biomedical science in the discovery of the root
    causes of many diseases and the development of the most advanced
    methods to diagnose and treat them. Audubon offers facilities and
    programs for translating the discoveries achieved in the scientific
    laboratory into the treatments that reach the bedsides of patients
    across the country. Audubon is an instrument for the creation of new
    business and jobs in the economically depressed neighborhoods of
    Washington Heights and Harlem. As a central element of the new
    Empowerment Zone program in New York, Audubon is providing job training
    and business development services to the north Manhattan neighborhoods.
    When the Park is completed, nearly 2,500 new jobs will have been
    created, including scientific, research, laboratory, clerical,
    administrative, retail, and building operations and support.
        Audubon will provide a center for enabling American biomedical
    science to generate new business in advanced pharmaceutical and medical
    technologies, two cornerstones upon which the American economy can hold
    its own and grow in an increasingly competitive international business
    setting. By helping build the research and development base that
    provides a scientific and technological foundation for American
    business, Audubon will create new American jobs. In addition to this
    important economic stimulus, the health benefits from new discoveries
    at the Park will flow directly to the surrounding community which is
    characterized by high rates of illness associated with poverty,
    inadequate healthcare, and urban distress.
        Audubon houses New York City's only biotechnology business
    incubator, the Mary Woodward Lasker Research Facility (Audubon I), home
    to fifteen companies, and the Russ Berrie Medical Sciences Pavilion
    (Audubon II), with research programs in genetics, cancer, diabetes, and
    other disciplines, and new medical services to the community. Together,
    these first two buildings constitute a major resource for discovering
    important new medical science in a host of diseases, transferring new
    knowledge into new diagnostics and medical treatments, developing
    revolutionary pharmaceutical based on breakthroughs in biotechnology,
    and applying those benefits to people who need health care throughout
    the world.
        Audubon III will move the concept to a new stage by creating space
    for the expansion of new science, new mechanisms of technology
    transfer, new opportunities for research collaborations, and new
    locations for biotech companies. The Audubon Park is proving that
    medical breakthroughs are enhanced when academic and commercial
    research move forward together. Audubon III will take that fact to the
    next step by providing opportunities for academic research programs and
    biomedically-related companies to locate in the same facility.
        As your Subcommittee works to establish its funding priorities for
    fiscal year 1999, I respectfully request that $10 million be dedicated
    from the Department of Housing and Urban Development's Economic
    Development Initiative (EDI) for the development of Audubon III.
        Thank you again, Mr. Chairman, for the opportunity to present
    testimony on behalf of this important and exciting initiative to the
    Subcommittee.
                                     ______

       Prepared Statement of Otto Raabe, Professor Emeritus of Radiation
                      Biophysics, University of California

        Good afternoon Mr. Chairman and Members of the Subcommittee. I
    thank you for this opportunity to discuss specific radiation safety
    issues currently under consideration. My name is Otto Raabe, I am
    Professor Emeritus of Radiation Biophysics at the University of
    California, Davis, California. I am also a board-certified health
    physicist, and the current President of the Health Physics Society. I
    have a doctoral degree in Radiation Biophysics and I have worked in the
    field of radiation safety for almost forty years. I have published over
    200 scientific papers. I am an expert in the field of radiation safety
    and radiation bioeffects.
        the health physics society (``specialists in radiation safety'')
        The Health Physics Society, formed in 1956, is a scientific
    organization of scientists and professionals who specialize in
    radiation safety. Its mission is the safeguarding of human health and
    the environment from potentially harmful exposures to radiation or
    radioactive materials in both public and private activities. Today our
    over 6,000 members represent all scientific and technical areas related
    to radiation safety including academia, government, medical
    institutions, research and development laboratories, analytical
    laboratories, consulting firms, and industry in all 50 states and the
    District of Columbia. The Society is chartered in the United States as
    an independent non-profit scientific organization, and, as such, is not
    affiliated with any government or industrial organization or any
    private entity. Its headquarters are in McLean, Virginia. The Society
    is dedicated to the development, dissemination, and application of
    scientific and practical knowledge regarding radiation safety and
    control.
        I have attached three Health Physics Society position statements
    that are relevant to this testimony. They are entitled: (1) Radiation
    Risk in Perspective, (2) Radiation Dose Limits for the General Public,
    and (3) Radiation Standards for Site Cleanup and Restoration. I ask
    that these be included in the record with this testimony.
     environmental protection agency activities affecting radiation safety
                                   standards
        I am aware that the Subcommittee has previously considered the
    interaction of various Federal agencies in radiation safety matters and
    has expressed concern about the role of the U.S. Environmental
    Protection Agency (EPA) in setting radiation safety standards. Before
    the establishment of the U.S. Environmental Protection Agency (EPA),
    federal guidance and recommendations concerning ionizing radiation
    protection standards were the responsibility of the Federal Radiation
    Council (FRC) which was formed in 1959 by Executive Order 10831. As the
    Subcommittee knows, the functions of the FRC were transferred to the
    EPA in 1970. This gave EPA the authority to ``advise the President with
    respect to radiation matters, directly or indirectly affecting health,
    including guidance for all Federal agencies in the formulation of
    radiation standards in the establishment and execution of programs of
    cooperation with States.'' Other federal agencies, such as the
    Department of Energy (DOE) and the Nuclear Regulatory Commission (NRC),
    themselves have extensive experience, expertise, and regulatory
    authority regarding radiation safety practices and in the promulgation
    of radiation protection standards that affect workers, the public, and
    the environment. The perspective of the EPA may not always be shared by
    these other agencies.
        Several guidance and policy reports have been prepared by EPA under
    its federal guidance role that have addressed worker and public doses
    and standards. For the most part, the guidance reports have been
    tabulations of doses calculated by methods developed by the
    International Commission on Radiological Protection (ICRP). These have
    been non-controversial and useful documents. However, recently EPA has
    attempted to generate precise estimates of cancer risks that they
    associate with exposure to very small doses of ionizing radiation
    (smaller than natural background levels of ionizing radiation) using
    simplistic linear models relating risk to dose. Actually, the only
    human risk data available involve very high doses such as occur in
    atomic bomb detonations. There are no valid data demonstrating any
    risks from radiation at low doses such as doses associated with natural
    background (300 mrem per year or 20,000 mrem [20 rem] in a normal life
    time). There is, in fact, a body of data that suggests that low level
    exposure to radiation may be beneficial.
        Everyone is continuously exposed to low doses of ionizing radiation
    associated with natural background sources. We always have been and we
    always will be! In addition, we are all exposed to small amounts of
    man-made radioactive materials in the environment representing less
    than 1 percent of other normal exposures. Also, medical exposures add
    about 15 percent to the total. These background exposures are not
    hazardous! At best, the risk estimates that EPA has calculated for
    small doses have very large unspecified uncertainties. Actually, these
    calculated risks are gross overestimates and are truly meaningless.
        The seriousness of the situation has recently been emphasized by
    the publication of the ``Interim Version'' of Federal Guidance Report
    No. 13 (FGR-13), entitled ``Health Risks from Low-Level Environmental
    Exposures to Radionuclides,'' that has been prepared by the U.S.
    Environmental Protection Agency (Federal Register, Vol. 63, No. 70/
    Monday, April 13, 1998/Notices, page 18008). FGR-13 contains
    tabulations of risk coefficients that are intended to provide estimates
    for about 100 important radionuclides of ``* * * the probability of
    radiogenic cancer mortality or morbidity per unit activity inhaled or
    ingested, for internal exposure, or per unit time-integrated activity
    concentration in air or soil for external exposure'' for low doses
    (<0.2 gray, which for gamma radiation equals 0.2 sievert or 20 rem,
    where the gray is a unit of absorbed dose and sievert and rem are units
    of equivalent dose applicable to humans and where 1 rem equals 1,000
    mrem) and calculated for the whole U.S. population (adjusted for age,
    sex, and life span distributions). Only cancer risks are considered in
    FGR-13.
        The numerical cancer risk values found in FGR-13 were created by
    merging a highly sophisticated organ dosimetry methodology with
    speculative linear dose-response risk models (see EPA 402-R-93-076,
    1994). Within FGR-13 are tabulations of risk coefficients for
    inhalation of radionuclides in air, for ingestion of radionuclides in
    tap water, for ingestion of radionuclides in food, for external
    exposure to radionuclides in air, for external exposure to
    radionuclides on the ground surface, and for external exposure to
    radionuclides in soil. Although the tabulated values are given to three
    or four significant figures, the values are neither precise nor
    accurate. The models used are imaginary, unreliable, and grossly
    overestimate the risk associated with low doses. The tabulated values
    are wrong, and the estimated risks are unverifiable.
        The recommendation of the Health Physics Society position statement
    ``Radiation Risk In Perspective'' (www.hps.org) has apparently not been
    considered in preparing FGR-13. That position statement specifically
    ``recommends against quantitative estimation of health risk below an
    individual dose of 5 rem in one year or a lifetime dose of 10 rem in
    addition to background radiation.'' The HPS position statement further
    states: ``below 10 rem (which includes occupational and environmental
    exposures), risks of health effects are either too small to be observed
    or are non-existent.'' This is the main range of doses for which FGR-13
    claims to provide specific risk estimates! I believe that the formal
    codification of FGR-13 would be a serious mistake. The Subcommittee
    should direct EPA to discontinue these unnecessary attempts to assign
    cancer risks to doses too small to lead to any public health
    consequences.
        As an example of the implications of the use of the tabulated
    values from FGR-13 for estimating risks associated with exposures to
    radioactive materials, consider the first entry in Table 2.1,
    ``Mortality and morbidity risk coefficients for inhalation.''
    Radioactivity that is taken into the body produces an internal
    radiation exposure. The first entry is for inhaled tritiated water
    vapor. Tritium is the radioactive form of hydrogen found to some extent
    in all water on the earth, and is formed by both natural processes
    (cosmic radiation in the atmosphere) and by people (nuclear
    technologies). A single glass of tap water typically contains about 1
    becquerel (unit of radioactivity) of tritium. This first entry in the
    table states a morbidity (occurrence of cancer) risk of
    0.00000000000152 per becquerel and a mortality of 0.00000000000104 per
    becquerel. FGR-13 here implies that one person would be expected to
    develop some unspecified form of radiation-induced cancer and have a 68
    percent chance of dying if all 270,000,000 people in the U.S. were each
    to inhale 2,440 becquerel of tritiated water vapor. This calculation is
    meaningless because the tiny risk assigned to tritiated water has a
    gigantic uncertainty that includes zero (no risk at all). The
    tabulations in FGR-13 are the product of unproven mathematical models
    rather than data on actual risks. Some people reading the tables in
    FGR-13 may rely on these inaccurate values and reach incorrect
    conclusions about radiation risks. The risk coefficients given for
    about 100 other radionuclides in FGR-13 are likewise misleading. My own
    research with internally deposited radionuclides suggests that zero
    risk is the most likely value for such a small exposures.
        There are many technical errors in FGR-13, but the more important
    issue is its underlying philosophy. The type of risk calculations
    suggested by FGR-13 are truly ridiculous. Such calculations might be
    used to frighten people into believing a risk exists when, in fact, no
    known or expected risk is associated with low doses of ionizing
    radiation. The use of population risks depends on a speculative (and
    inappropriate) mathematically linear model. If the FGR-13 calculations
    had assigned error bars, zero risk would have been within the error of
    every risk value that is given.
        With respect to radiation safety standards, there has been a trend
    in the direction of increasingly stringent standards designed to
    control very low doses to the point that the standards being used are
    based only on speculative, unproven, and controversial models of
    potential radiation risks to the public at radiation doses of which
    there are no known or expected risks. This trend is based on faith
    among some in a simplistic idea that radiation risks are proportional
    to dose no matter how small the dose: the so-called linear no-threshold
    (LNT) model. The extensive data that cast major doubts on the
    applicability of mathematically linear models have apparently been
    discounted as aberrations. It is easy to show that this model does not
    apply to protracted radiation exposures such as experienced by workers
    and the public. In my own studies, I have found radiation
    carcinogenesis to be highly non-linear and dose-rate dependent. An
    effective threshold occurs because the cancer latent period is not a
    constant as assumed by EPA but increases without limit as dose rate
    decreases.
        The EPA has also promulgated excessively stringent suggested limits
    for radon in homes. Again, EPA depends on mathematically linear models
    of risk that are derived primarily from studies of lung cancer in
    uranium and other underground miners who were heavy cigarette smokers
    and were exposed to extremely high levels of radon in mines several
    years ago. The recent BEIR VI report funded by EPA depended on these
    mathematically linear models for its main conclusions, meanwhile
    concurrently stating that the actual data on radon in homes could not
    disprove the hypothesis that there is no risk at low levels (such as
    radon concentrations in air that are less than 10 picocuries/L). The
    standard for homes used by EPA would suggest the evacuation of most
    homes in the State of Colorado, although Coloradans enjoy one of the
    lowest lung cancer rates in the U.S. Some important elaborate studies
    of radon in homes in the U.S. have consistently shown that U.S.
    counties with the very lowest radon concentrations in homes do not tend
    to have the lowest lung cancer rates. Actually, almost all lung cancer
    is caused by exposure to tobacco smoke.
        Trying to comply with stringent standards involving levels of
    radiation exposure that are much smaller than natural background levels
    is very expensive and unnecessary since there are no known or expected
    adverse effects at these low levels. More stringent standards would be
    overly restrictive for the public and the nation without actual
    benefits. Excessively stringent standards will cause costs to the U.S.
    Government associated with remediation of contaminated sites to
    skyrocket with no measurable improvement in human health. For example,
    the $300 billion estimated cost of DOE site remediation could double if
    more stringent standards are required. Do we really want to pay to move
    virtual mountains of nearly clean dirt from one State to another in the
    name of decontamination? The Health Physics Society is concerned about
    safeguarding health and the environment, but it is counterproductive to
    attempt to enforce unnecessarily restrictive standards.
        Recently, the NRC concluded that clean-up standards for sites
    contaminated with radioactive materials should reduce levels to the
    point where calculations indicate that no member of the public will
    receive more than 25 millirem dose per year from the site. The EPA
    objected based on the results of one of their speculative radiation
    risk models and insisted that the NRC 25 millirem/year standard was
    ``not adequately protective''. EPA claimed that the NRC standard needed
    to be lowered to 15 millirem per year. This is unfortunate! Would the
    EPA require reopening and recleaning of already released sites at great
    public expense? Neither of these two dose limits would pose any cancer
    risk to anyone. In fact, the current 100 millirem standard is more than
    adequate protection and would also not involve any meaningful risk! [A
    dose of 100 millirem is about equal to the extra whole body radiation
    dose received by a person each year by moving to Denver, Colorado, from
    New York, Washington, or San Francisco.)
        Consider the somewhat inconsistent mix of current radiation
    standards. As the EPA moves towards lower values, the International
    Commission on Radiological Protection (ICRP) and the National Council
    on Radiation Protection and Measurements (NCRP) promote a 100 mrem/year
    dose limit for members of the public; NRC and DOE have codified this
    limit in 10CFR20 and 10CFR835, but current Federal guidance still uses
    500 mrem/year. At the same time EPA uses a public limit of 4 mrem/year
    received from ingestion of radionuclides in drinking water in 40CFR142,
    a 10 mrem/year limit for the air exposure pathway in 40CFR61, 25 mrem/
    year for all pathways for the nuclear fuel cycle in 40CFR192, and a
    mixed standard for uranium mill tailing clean-up and indoor radon. Even
    professionals are puzzled!
        Should EPA be successful in forcing their unnecessarily stringent
    standards on the other agencies, the costs to the U.S. Government
    associated with remediation of contaminated sites will climb
    dramatically. If we adapt EPA's interpretation of radiation protection
    standards and cancer risks, we would recommend evacuation of the State
    of Colorado where the altitude and natural radioactivity in the soil
    result in background radiation that is about two times higher than in
    San Francisco, New York, or Washington. In fact, Colorado has one of
    the lowest cancer rates in the U.S. The Health Physics Society position
    statement ``Radiation Dose Limits for the General Public'' recommends a
    100 mrem per year standard from nuclear technologies, and the position
    statement ``Radiation Standards for Site Cleanup and Restoration''
    recommends a 25 mrem per year standard for cleanup activities.
        The Subcommittee should consider the possibility that the roles and
    inter-relationships of EPA, DOE, and NRC in the setting of radiation
    protection standards need to be markedly improved. FGR-13 needs to be
    withdrawn. The NRC should be allowed to set clean-up standards that
    will not be questioned by EPA. Your Subcommittee should consider
    alternative mechanisms for Federal guidance for radiation safety.
    America needs a new interagency council to provide Federal guidance and
    establish consensus standards that utilize the best scientific
    information and provide both safety and practicability. Congressional
    action to resolve radiation standards issues and set appropriate limits
    could markedly reduce the costs associated with radiation safety and
    the restoration of contaminated sites.
                                     ______

        Prepared Statement of Virgo Lee, Trustee, NYU Downtown Hospital

        Thank you Chairman Specter and Members of the Subcommittee for the
    opportunity to submit testimony for the record. I am Virgo Lee, a
    partner in M.R. Partners, an investment banking firm based in New York.
    I have a life-long commitment to serving the Asian community in the
    United States. I have been Director of the Mayor's Office for Asian
    Affairs in New York City from 1990 through 1994 and a Trustee of NYU
    Downtown Hospital from 1994 to the present.
        I appreciate the opportunity to appear before you today on a matter
    vital importance to Lower Manhattan's 350,000 residents and 375,000
    member workforce who depend on the emergency services of NYU Downtown
    Hospital. I am here today to seek your Subcommittee's support for a
    project to rebuild the Hospital's aging emergency room facilities. This
    project impacts the health and safety of all of Lower Manhattan's
    population and is of particular importance to the Chinese community of
    New York and the Wall Street business community.
        NYU Downtown Hospital is the only acute care health facility and
    the only emergency center in Lower Manhattan, an area as populous as
    the tenth largest city in the United States. Located in the heart of
    the World's Financial District and adjacent to New York's Chinatown,
    the Hospital provides daily emergency care for the most vulnerable and
    frail of the city's residents, as well as for its most powerful.
        Because of a shared acknowledgment of the Hospital's importance to
    the overall health of our community and to the economic vitality of
    Downtown Manhattan, many of Wall Street's corporate leaders serve on
    the NYU Downtown Hospital Board along with leaders of New York's
    growing Chinese community. The Board of Trustees of NYU Downtown
    Hospital has designated renovation of its emergency room as its highest
    priority.
        This level of community support is relatively new, having emerged
    and grown since 1990 with a change in Hospital leadership. We are now
    attempting to reverse three decades of neglect due to losses incurred
    by the Hospital's forerunner that left it mired in debt and unable to
    make improvements to critical facilities such as the emergency room.
        The value of the Hospital's emergency services to the Downtown
    community was dramatically underscored by the 1994 terrorist bombing of
    the World Trade Center. Due to the proximity to the Trade Center of the
    Hospital's Emergency Department, NYU Downtown Hospital served as the
    primary emergency facility and treated more than 200 persons injured in
    the disaster. The Hospital, long known for its expertise in mass
    emergencies and in emergency heart attack treatment, earned city,
    state, national and international recognition for its response to the
    World Trade Center disaster.
        Leaders of the Financial District, while recognizing this project's
    significance in meeting the day-to-day emergency medical needs of our
    employees, join with me in supporting the pressing need to provide
    adequate and efficient service facilities for members of New York's
    immigrant Chinese community.
        The growing population of Chinese immigrants in need of special
    services and the increasing residential population in Lower Manhattan
    are expected to place a further strain on a facility that averages
    30,000 visits a year. Complete renovation of the emergency facilities
    is not only imperative, it is urgent. NYU Downtown Hospital, the single
    largest provider of inpatient and outpatient healthcare services to New
    York's underserved Chinese community, seeks federal support to redesign
    and renovate inadequate hospital emergency facilities to improve
    healthcare access for Chinese immigrants.
        This renovation plan, known as Project 2000, is the centerpiece of
    the Hospital's $25 million capital campaign. The remaining funds, which
    will also be directed to programs that improve healthcare access to an
    underserved Chinese community, will be raised through private
    philanthropic sources. These funds will go towards general operating
    support; key programs including maternal and child health and Hepatitis
    B intervention, and to the Chinese Community Partnership for Health
    Endowment Fund to continue the hospital's community-based health
    screening and outreach services to new immigrants.
                                    problem
        Recent Chinese immigrants to the United States, often from
    impoverished rural communities and having little formal education, no
    English-language skills, limited financial resources and virtually no
    experience with Western medical practices, face daunting obstacles in
    accessing healthcare. In New York where the Chinese population doubled
    between 1980 and 1990 and is projected to double again by 2005,
    barriers to medical services represent a public health time bomb with
    implications for the general population.
        NYU Downtown Hospital, designated as a financially distressed
    hospital by the New York State Department of Health, is located in
    direct proximity to New York's Chinatown community and has become the
    primary provider of acute care health services to this growing
    underserved population. The Hospital has 30,000 emergency room visits
    annually and more than 10,500 inpatient admissions. Some 58 percent of
    NYU Downtown Hospital's inpatients are Chinese, many of whom are first
    generation immigrants with little or no ability to pay for healthcare
    services. The Hospital's uncompensated care for 1997 was $9 million, or
    10.7 percent of the total Hospital budget. Another 40 percent of
    patients are covered by Medicaid.
        The barriers to healthcare faced by new Chinese immigrants served
    by NYU Downtown Hospital go beyond language issues. Other obstacles to
    healthcare access are the distinctive beliefs and practices of the
    Chinese regarding health and illness. Often unaware of healthcare
    services and programs vital to disease prevention and health
    maintenance, many new immigrants lack basic information about risk
    factors and symptoms of disease. Preventive healthcare is rarely sought
    and Emergency Room treatment becomes a last resort for many new
    immigrants only after home remedies and herbal medications fail.
                             addressing the problem
        Committed to serving the Chinese community and the growing
    immigrant population, NYU Downtown Hospital has joined with the
    leadership of 32 major Chinese community service organization
    associations, garment industry unions and businesses to implement an
    array of programs and services to minimize obstacles to healthcare. The
    first segment of that effort focused on bringing health screenings and
    education directly into the Chinese community. In less than four years,
    the Hospital has served more than 29,000 people through the services of
    the Chinese Community Partnership for Health and earned national
    recognition for the success of the program.
        The second segment of the Hospital's plan to improve healthcare
    access for Chinese immigrants focuses on encouraging use of Hospital-
    based services in the early stages of illness or injury. NYU Downtown
    Hospital, a patchwork of four buildings constructed at different times
    from 1949 through 1972, is daunting to navigate for even the most
    sophisticated of Hospital visitors. To make the Hospital more
    accommodating to our Chinese patients, major improvements must be made
    to the facility overall, and to the 1970's-era Emergency Room, in
    particular.
        Our plan is to consolidate and integrate virtually all inpatient
    services, including emergency services, into one wing that would be
    designated as the Hospital's new main entrance. Once inside the new
    main entrance, patients and visitors will enter an enlarged lobby where
    key services such as triage, inpatient registration, information and
    security, cashier and the patient advocate's office, are within steps
    of entering. This design provides easy access to key services, on-the-
    spot communication with problem-solvers and continuity of services for
    greater efficiency.
        Walk-in patients seeking emergency treatment will be met at the
    door of the new main entrance and directed to the triage nurse. Pre-
    treatment for ER patients and the ER lobby area will be located
    adjacent to the new Emergency Room in a physically distinct section
    within the main lobby.
        The Emergency Room, considered state-of-the-art when it was built
    in the early 1970's, would undergo major reconstruction and upgrades to
    meet the pressing needs of the people we serve. Planned renovation
    includes:
      --a designated area for PromptCare, a service designed to treat and
            release patients with routine problems within 20 minutes
      --construction of treatment room for women to provide greater privacy
            and to accommodate specialized medical equipment
      --reconstruction of all patient rooms for easier access and greater
            visibility by staff
      --upgrade of an existing pediatric emergency room to provide
            appropriate amenities for children and their parents
      --relocation of supply facilities and redesign of traffic patterns to
            enhance efficiencies in patient care
                                   conclusion
        As your Subcommittee works to establish funding priorities for
    fiscal year 1999, I respectfully request that $10 million be allocated
    from the Department of Housing and Urban Development's Economic
    Development Initiative (EDI) Account for renovation of the Hospital's
    emergency room.
        Thank you again, Mr. Chairman, for the opportunity to present
    testimony on this important project to the Subcommittee.
                                     ______

                Prepared Statement of the Society of Toxicology

        The Society of Toxicology appreciates the opportunity to submit
    testimony concerning fiscal year 1999 funding for the Environmental
    Protection Agency (EPA).
        The Society of Toxicology (SOT) is a professional organization that
    brings together over 4,000 toxicologists in academia, industry, and
    government. A major goal of SOT is to promote the use of good science
    in legislative and regulatory decisions. With scientific data as our
    guide, we can use sound judgment in addressing numerous environmental
    issues. Too often, you are asked to make decisions without the benefit
    of sound science. We work closely with the EPA in its cooperative role
    with the National Institute of Environmental Health Sciences (NIEHS) in
    addressing issues related to environmental health risk. The research
    supported by these agencies is critical to ensuring that policies
    affecting health and the environment are based on the most up-to-date
    scientific knowledge.
        We would like to begin our testimony today by thanking you for your
    past support for research programs that foster links between science
    and environmental policy. In particular, the Society appreciates the
    Subcommittee's support of the Superfund Basic Research Program. As we
    stated in our testimony last year, the Administration continues to
    request cuts to this program and each year it is this Subcommittee that
    takes a leadership role in restoring funding. We hope you will do the
    same this year.
                        superfund basic research program
        Funding for the Basic Research Program is passed through the EPA to
    NIEHS as established in Section 311 of the Superfund Amendments and
    Reauthorization Act of 1986. The NIEHS administers the Superfund
    Hazardous Substances Basic Research Program which supports university
    and medical school research to understand the public health
    consequences of local hazardous waste sites, as well as to develop
    better methods for remediation. Currently, there are 18 programs at 70
    universities involving more than 1,000 scientists. This research
    program complements other research programs carried out by the EPA and
    the Agency for Toxic Substance and Disease Registry. It is the only
    scientific research program focused on health and cleanup issues for
    Superfund hazardous waste sites.
        Research funded by the program focuses on developing methods and
    technologies to detect hazardous substances in the environment,
    assessing and evaluating the effects of hazardous substances on human
    health, developing methods to better assess risks to human health
    presented by hazardous substances, and developing basic, chemical, and
    physical methods to reduce the amount and toxicity of hazardous
    substances.
        For example, researchers are studying the health affects of
    chromium, a hazardous substance found at many Superfund sites.
    Researchers at the University of Cincinnati are looking at basic
    mechanisms by which chromium exposure causes cancer. To date, mouse
    models have indicated that the introduction of chromium into the lungs
    causes cell mutations in the lung tissue. Further research will be
    conducted to look at other factors that may play a role in triggering
    cancer development depending on the level of chromium exposure. Once
    this information is available, it may be possible to develop specific
    mechanisms and strategies for minimizing the health effects of chromium
    in the environment.
        Remediation research conducted under the auspices of the Superfund
    Basic Research Program has led to the development of several modified
    clays which have proven effective in removing pentachlorophenol (PCP)
    from groundwater and water systems. Results of recent studies conducted
    by Texas A&M University indicate that concentrations of PCP as high as
    10 mg/l are reduced to non-detectable levels using these modified
    clays. It also appears that the clays are useful in removing other
    organic compounds. Using these clays to decontaminate water is an
    inexpensive and effective alternative to charcoal.
        As indicated above, there have been many significant
    accomplishments over the last eleven years as a result of the research
    conducted through the Superfund Basic Research Program. These
    discoveries have improved our cleanup efforts and have helped the
    public to understand the health risks of many contaminants found at
    hazardous waste sites. However, we have much more to learn about the
    health effects of hazardous waste. Therefore, SOT hopes you will
    continue to fund this program at a sufficient level. Specifically, we
    urge the Subcommittee to provide $40 million in fiscal year 1999 to
    fund the Superfund Basic Research Program. This increase of $5 million
    over last year's funding level would cover additional programmatic
    costs associated with the competitive grants coming up for renewal,
    including the establishment of committees to conduct peer reviews and
    performance of the peer reviews.
                            worker training program
        We would also like to take a moment to mention the Worker Training
    Program that was established at the same time as the research program
    to provide classroom instruction and field expertise for Superfund site
    and emergency response workers. Similar to the Basic Research Program,
    funds are provided to the EPA and passed through to NIEHS. Since the
    Worker Training Program began, over 450,000 workers nation-wide have
    been trained in both classroom seminars and hands-on exercises. NIEHS
    develops technically-proficient curriculum materials and quality-
    controlled course presentations for training these workers. NIEHS
    courses have established new benchmarks for quality in worker safety
    and health training. Included among the NIEHS grantees are labor
    management trust funds, university consortia, labor organizations,
    public health consortia and community college consortia. The Society
    urges the Subcommittee to continue funding this important program at
    least at the level provided in fiscal year 1998.
                      airborne particulate matter research
        The Society is pleased by the approach taken by the Subcommittee
    last year to initiate a comprehensive peer-reviewed research program
    relating to airborne particulates. The research process laid out by the
    Subcommittee allows for science to lead regulatory efforts. SOT
    supports the involvement of the National Academy of Sciences (NAS) in
    developing both a near-term research plan and a long-term research
    plan. It is critical that the development of the plan include
    consultations with the NIEHS, the Department of Energy, industry, and
    advocacy organizations.
        It is my understanding that the first report by the NAS proposes a
    comprehensive research program with short-term research efforts focused
    on developing a better understanding of how particulate matter affects
    health. We believe this is an appropriate focus in the first few years
    of the research program. Therefore, the Society urges the Subcommittee
    to provide at least $49.6 million in fiscal year 1999 for the
    particulate matter research program.
                     national institute for the environment
        The Society is aware of Congressional efforts to create a National
    Institute for the Environment, including direction by this Subcommittee
    to the National Science Foundation to provide a report on how they
    would create such an institute and the potential costs of such an
    endeavor. The purpose of the Institute would be to fund environmental
    research in order to provide a science base for public policy
    decisions. It is believed that such an institute could help inform the
    current debates involving clean air, nonpoint source pollution, and
    global warming. While on its face creating a separate institute appears
    to be a way to better coordinate environmental science and research
    efforts, SOT is concerned that creating a National Institute for the
    Environment will duplicate existing research programs and agency
    functions. The Society does not see the need at this time to create
    another bureaucracy which will become isolated from the other science
    functions.
                              endocrine disruptors
        Endocrine disruptors are compounds in our environment which may
    have an affect on thyroid and reproductive function and development. At
    the present time, there is diverse scientific opinion as to the extent
    that such environmental agents affect human health. The Society is
    supportive of Congressional initiatives to pursue research on the
    effects of environmental agents. We believe, however, that Congress
    should use scientific experts to assist in the development of
    legislation, but should refrain from mandating specific approaches such
    as the development of screening and testing procedures. The Society
    recommends that Congress involve a scientific body such as the National
    Academy of Sciences to assess the nature and the extent to which
    environmental endocrine disruptors are a human health problem and, as
    necessary, to recommend the most appropriate approach to resolve any
    problem.
        In the case of particulate air pollution mentioned above, Congress
    involved the National Academy of Sciences and required the development
    of an integrated research strategy to address this issue in the absence
    of mandating specific scientific approaches. This example is more in
    keeping with the scientific process and is the approach that the
    Society of Toxicology believes that Congress should now take for the
    endocrine disruptor issue.
                                   conclusion
        Sound science should be the essential underpining of our
    environmental health regulatory efforts. The Society of Toxicology is
    made up of many of the leading experts in the field of toxicology who
    are happy to be a resource for the Committee when questions arise
    concerning environmental health and safety issues.
        The public wants to know whether their communities are safe from
    hazardous contaminants in the air they breathe and the water they
    drink. The research conducted by EPA and NIEHS provides policymakers
    with the data you need to make decisions about the appropriateness of
    environmental health regulations. We urge you to continue to support
    the important research programs outlined in our testimony.
                                     ______

       Prepared Statement of Dr. W. Richard Ott, Provost, Center for the
              Engineered Conservation of Energy, Alfred University

        Mr. Chairman, thank you for the opportunity to submit testimony to
    the hearing record of this Subcommittee regarding an important economic
    development initiative in Allegheny County, New York. This statement is
    to urge the Subcommittee's support to obtain an Economic Development
    Initiative grant of $2 million for a ``living laboratory'' to deploy
    and test new energy efficient technologies at the Alfred University
    Center for the Engineered Conservation of Energy (EnCo). This
    laboratory will be a gateway to the business incubators in the
    ``ceramics corridor'' between Alfred and Corning, New York.
        Alfred University is comprised of undergraduate, graduate and
    professional schools. It is best known as the home to the Center for
    Advanced Ceramics Technology and the NSF Industry-University Center for
    Glass Research. The University currently produces \1/3\ of the
    country's ceramic engineers and has the only doctoral program in glass
    science in the United States.
        The laboratory Alfred University is seeking to construct will be a
    smart, self-powered building where promising energy efficient
    technologies can be tested and demonstrated full-scale, and will be
    flexible to allow it to be continuously adapted to emerging
    technologies. This laboratory will provide a critical link to the end
    of a research continuum where applied development and demonstration are
    essential for commercialization. Many such efforts get caught in a
    ``valley of death'' which comes between laboratory testing and
    investment. A research demonstration of technologies, combined with the
    business incubators in the area, will provide an impetus for venture
    capital in the region to generate new businesses and jobs.
        Currently, one of Alfred University's most unique capabilities is
    its ability to work with the small, start-up energy and environmental
    technology companies where a large percentage of the region's job
    growth occurs. While Allegheny County is the second poorest in New
    York, the potential for growth in this particular area is outstanding.
    Local businesses as well as the New York State Energy Research and
    Development Authority (NYSERDA) support the development of this
    laboratory. Alfred University's location in the ``ceramics corridor,''
    comprised of industry and academic talent in these areas of research
    will feed into the business incubators and enhance this consortial
    initiative, which currently involves not only industry but also state
    and local agency partners. The State of New York invested the initial
    $10 million to develop the business incubators. Besides growing new
    energy-related companies, the incubator buildings themselves are
    ideally suited to incorporate new energy conservation technologies in
    their operations. In addition, several area industrial parks, including
    those in Alfred, Hornell and Wellsville, NY also offer the opportunity
    for fledgling companies to develop and utilize newly developed energy
    technologies through close ties with EnCo and Alfred University.
        It is a fact that industries often have difficulty in getting the
    help that they need from universities. In contrast, a core competency
    of Alfred University is its ability to open the door for both
    individual companies and groups of companies to obtain that assistance,
    and to get answers to questions by locating people who are willing to
    work together with them. The University's ability to locate and provide
    rapid technical services to companies is well established. This service
    aspect of the University is being further developed. Companies have
    traditionally come to Alfred because of its ability to react more
    quickly and innovatively to their needs than can the larger research
    institutions.
        EnCo is also interacting with the Appalachian Regional Commission
    (ARC). As you know, ARC is a unique partnership of Federal, state and
    local governments that participate in projects that benefit the
    business and industrial community, funding infrastructure, business
    development, and human resources projects. In assigning project
    priorities, the highest consideration is given to promotion of jobs and
    private investment through direct creation of jobs, attracting private
    investment, or upgrading the workforce for regional jobs. EnCo's
    interaction with ARC will further enhance regional economic development
    goals.
        It is for these reasons that we ask your consideration for funding
    in the amount of $2 million to build the ``living laboratory'' at the
    Center for the Engineered Conservation of Energy at Alfred University.
    The potential for the economic development of the region will be
    greatly enhanced by the success of this initiative.
        Thank you for your consideration.
                                     ______

      Prepared Statement of Barbara J. Cole, Director, Lane Regional Air
                              Pollution Authority

        My name is Barbara J. Cole. I am the director of the Lane Regional
    Air Pollution Authority (LRAPA) on whose behalf I am submitting this
    written testimony. LRAPA is a local air pollution control agency in
    Lane County, Oregon.
        I am writing to you regarding the President's fiscal year 1999
    budget request for the U.S. Environmental Protection Agency (EPA),
    specifically with regard to funds for state and local air pollution
    control agencies. The President's request includes an $8.3 million
    increase in grants to state and local air quality agencies under
    Sections 103 and 105 of the Clean Air Act, totaling approximately
    $190.2 million. While I am pleased that the President's budget
    acknowledges the need for additional funds, this increase is grossly
    inadequate to support state and local air quality air pollution control
    efforts that are needed to protect public health. LRAPA is currently
    faced with increased federal requirements associated with the new fine
    particulate monitoring network and other programs under the Clean Air
    Act. Accordingly, I recommend an increase of $121 million above the
    President's request for fiscal year 1999, which includes $23 million
    more in Section 103 funds for the fine particulate monitoring network
    and an additional $98 million for the Section 105 program.
        LRAPA has been delegated authority by the U.S. Environmental
    Protection Agency and the Oregon Department of Environmental Quality to
    administer federal and state air quality laws within Lane County,
    Oregon. LRAPA and other air pollution control agencies nationwide must
    carry out numerous activities to implement federal, state and local
    clean air requirements--both new initiatives that focus on emerging
    problems and ongoing activities to preserve the gains and improvements
    in air quality that have already made. In the past, air quality in
    areas of Lane County did not meet the National Ambient Air Quality
    Standards for carbon monoxide and fine particulate matter. Our efforts
    over the past 20 years have culminated in compliance with federal air
    quality standards in all Lane County communities. We and our member
    jurisdictions have made substantial investments in control strategies
    and public education efforts. The communities within Lane County are
    struggling with the adverse effects of growth. Even though we are
    currently meeting the National Ambient Air Quality Standards, we can
    not afford to relax our air pollution control efforts. If we do, air
    quality will once again degrade to unhealthy levels again. In fact, we
    must increase our air pollution control efforts in order to offset the
    increased emissions that result from growth. We are also concerned
    about compliance with the new National Ambient Air Quality Standards
    for ozone and particulate matter. It is our goal to work with sources
    in Lane County to encourage emission reductions sufficient to avoid
    violating the new standards. These efforts all require resources.
        I am very concerned about EPA predictions of decreased funding for
    EPA's Region 10 the future. EPA Region 10 includes Oregon, Washington,
    Idaho and Alaska. EPA expects a national reallocation of federal air
    pollution control grant money among their regions. The plan is to
    apportion more resources to regions of the country that have not yet
    attained the National Ambient Air Quality Standards and less to regions
    that have. Oregon promptly, responsibly and competently did what was
    necessary to meet federal air quality standards. All areas of Oregon
    currently are in compliance with all National Ambient Air Quality
    Standards although not all have been formally redesignated by EPA as
    attainment areas. Maintaining compliance in Oregon will require
    additional resources, not less. I understand the logic of shifting
    federal dollars to regions where the health risk is the greatest;
    however, this approach in effect rewards communities that were less
    aggressive in cleaning up their air and punishes communities that
    cleaned up their air sooner. Communities that are struggling to
    maintain clean air will have to make greater state and local
    investments if the proposed reapportionment is implemented. The
    apportionment of a smaller piece of the air quality funding pie to EPA
    Region 10 is being discussed for future fiscal years at the same time
    EPA and the President are recommending a smaller pie for air programs
    nationwide. This would result in substantially less federal funding for
    Oregon's air quality programs.
        In light of our many responsibilities, I am extremely concerned
    about additional recent trends in federal funding for state and local
    air pollution control agencies. With respect to fiscal year 1999, there
    are two major problems: the new cost of monitoring for fine particulate
    matter (PM-2.5) and the operating costs for other Clean Air Act
    programs.
        EPA has estimated that $98.3 million is needed to deploy a national
    fine particulate matter (PM-2.5) monitoring network comprising 1,500
    sites (including purchase of equipment and the costs of operating and
    maintaining the system and analyzing data). On many occasions, EPA
    committed to fully funding this program with new money; unfortunately,
    EPA has not met its commitment and the full funding the agency promised
    has not become a reality, making the new federal air quality
    requirements are unfunded mandate. If the promised funding is not
    provided, the LRAPA will have to find new local sources of revenue to
    comply with these new federal requirements. EPA is funding the initial
    purchase and operating costs for the monitors. However, the monitors
    are very expensive to operate and maintain. We do not have the
    resources to conduct the monitoring after the first year or two that
    EPA is partially funding.
        Instead of providing the promised $98.3 million over two years for
    the new PM-2.5 monitoring network, EPA has allocated (or proposed) only
    $75.3 million in new money between fiscal year 1997-1999--a shortfall
    of $23 million--and has reprogrammed $13.7 million away from other
    extremely important and grossly underfunded non-PM-2.5-monitoring
    activities that state and local agencies must perform by federal law.
    We urge Congress, therefore, to increase Section 103 grants for the PM-
    2.5 monitoring network by $23 million over the President's request. The
    U.S. Senate shared our concern with this problem and, in response,
    approved an amendment to the Intermodal Surface Transportation
    Efficiency Act (Senator Inhofe's amendment) on March 4, 1998, that
    called for EPA to fund 100 percent of the cost of the PM-2.5 monitoring
    network by fiscal year 2000, through Section 103 of the Clean Air Act,
    and to do so without reprogramming funds from other clean air
    activities. Further, the amendment calls for EPA to restore to state
    and local air programs in fiscal year 1999 any funds previously
    reprogrammed or diverted from Section 105 grants.
        While PM-2.5 monitoring activities are very important, state and
    local air quality agencies have many other critical responsibilities.
    Yet, even as the need for federal funds is increasing, Section 105
    grants (for non-PM-2.5-monitoring activities) have steadily decreased
    in recent years. Since fiscal year 1995, federal grants for
    implementing the Clean Air Act (not including PM-2.5 monitoring) have
    decreased by over $40 million (not including the effects of inflation),
    representing a 23 percent cut. These cuts have made it extremely
    difficult for us to effectively address the critical air quality
    problems that need our attention and resources. The diminishing
    resources are being felt in Lane County. LRAPA, like most local and
    state air pollution control agencies nationwide, is years behind
    schedule in implementing the federal operating permits program for
    industrial sources. We have not had enough resources to compile a
    comprehensive emissions inventory identifying the cumulative sources of
    air pollution for more than five years. An accurate emissions inventory
    is necessary for air quality planning. Our monitoring equipment is old
    and in need of replacement. We have been forced to drop enforcement
    actions for air pollution violations due to a lack of resources. A
    large portion of air pollution is from transportation and individual
    activities. We have lacked the resources to invest in the public
    education and incentive programs that are needed to reduce emissions
    from these sectors. These activities are essential to our efforts to
    assure healthy air in Lane County.
        EPA also is well aware that state and local air grants should be
    much higher to support our activities. Beginning in January 1997, the
    agency in cooperation with the associations of state and local air
    quality agencies--STAPPA and ALAPCO--undertook a four-month, intensive
    effort to identify and estimate the costs related to the activities
    that should be funded in fiscal year 1999 with state and local air
    grants under Section 105 of the Clean Air Act. This project relied upon
    the expertise and efforts of approximately 70 federal, state and local
    participants.
        Based upon an analysis of what it would take to operate a good
    (although not perfect) program, the study concluded that Section 105
    grants should be increased by $98 million in fiscal year 1999 (this
    estimate does not include PM-2.5 monitoring costs, since those are
    addressed under Section 103). The study identified many activities that
    should receive increases in fiscal year 1999 over fiscal year 1998
    levels, including, among other things, minor source inspections and
    permits; development, replacement and/or upgrade of monitors (in
    addition to PM-2.5 monitoring); collection of emission and pollutant
    data; training; implementation of ozone strategies; compliance
    assistance activities, especially for small businesses; multi-state
    approaches to regional air quality problems; monitoring of emissions of
    toxic air pollutants; and implementation of strategies to address toxic
    air emissions in urban areas. Specifically in Lane County, an increase
    such as the one I am recommending is needed to catch up with the
    backlog in our compliance assurance efforts for industrial sources, to
    evaluate and abate the public health risks associated with toxic air
    pollution in our communities, and to take the steps necessary to
    prevent violation of the new ozone and fine particulate matter (PM-2.5)
    National Ambient Air Quality Standards, to provide citizens and small
    business owners information and assistance to minimize their air
    quality impacts, and to modernize our monitoring network.
        In spite of the significant funding shortfall identified by the EPA
    needs assessment study, EPA has not only not proposed budget increases
    in operating programs in fiscal year 1999, it has actually called for
    decreases in Section 105 grants and has proposed reprogramming funds
    away from these operating activities. We urge you to reverse this trend
    and provide state and local air agencies with $98 million above the
    President's request for Section 105 grants.
        Since state and local air quality agencies have the primary
    responsibility for implementing our nation's clean air laws, we at
    LRAPA are diligently seeking healthful air quality for our citizens. We
    cannot do this without adequate funding.
        Other environmental laws and public demand are decreasing the
    availability of timber harvests in the Pacific Northwest. This has
    caused severe economic stress in many communities including Lane
    County. Economic development agencies are aggressively working to
    attract new industries to offset the losses in forest products
    enterprises. Air quality regulation of these new facilities is very
    resource intensive, especially in the first few years. Reduced federal
    funding of our air programs is making the transition to an economy less
    dependent upon timber more difficult. The burden of these federal
    actions taken together pose a serious hardship for our communities.
        Thank you very much for the opportunity to provide testimony on a
    matter of great importance to community. If I can answer any questions
    or provide any additional information please feel free to contact me.
                                     ______

     Prepared Statement of Mayor James Garner, Village of Hempstead, Long
                                     Island

        Chairman Bond and Members of the Subcommittee, I am Mayor James
    Garner of the Village of Hempstead, Long Island.
        I appreciate your receiving this testimony from me regarding a
    special problem in the Village of Hempstead, Long Island. Senator
    D'Amato and Senator Moynihan are familiar with the problem and I have
    asked them to inform you of their interest in solving the problem.
        The Village is located in Nassau County which is in the center of
    Long Island and twenty-six miles east of Manhattan. Hempstead is the
    largest village in the state of New York and in many ways is much more
    like a medium size city than a village. The Village population
    according to the U.S. Census Bureau is 50,500, but I can tell you as a
    person who walks the streets of the Village and sees the records for
    the amount of residential water use and sewer flows that the population
    is closer to 70,000.
        Hempstead Village is the terminus for the central line of the Long
    Island Railroad and makes us the transportation center for the County.
    Because the Village is the center for many of Nassau County's social
    service agencies and public transportation, the Village has become home
    for many new immigrants who have come to the greater New York City
    area. Our population is very diverse: 65 percent African American, 10
    percent Caucasian, and 25 percent Latino.
        The growth of Long Island following the Civil War saw the Village
    become the center of retail shopping for the County. The construction
    of one of the largest shopping malls in the country north of the
    Village during the 1960's resulted in the loss of revenue and tax base
    in the 1970's and 1980's. Overnight the Village began to change. Major
    retail stores relocated to shopping centers and families began to
    relocate in other nearby towns. The traditional demands for social
    services increased at the same time that tax revenue decreased.
        During the past eight years, we have begun to turn the tide. The
    Village has attracted new development and begun to rid itself of the
    drug and crime activity which scared away citizens. Unfortunately while
    all of these other problems were mounting, the Village's infrastructure
    was also beginning to decay. One of the most important parts of our
    public works system, the water treatment plant, has deteriorated to the
    point where it needs emergency help to allow us to maintain a safe,
    reliable water supply for public health and fire protection.
        Our century old water supply system suffers from age and the threat
    of groundwater contamination. The risk of vandalism also adds to our
    concerns about the system because of the perverse nature of some
    individuals behavior these days and the proximity of the open water
    treatment facilities to a major thoroughfare running through the
    Village and other public areas near the plant.
        Nassau County Health Department data show that since 1994 Hempstead
    has the greatest concentration of residents in the County affected by
    the pathogens, ``Cryptosporidium'' and ``Giardia'' in the County. The
    Village's drinking water wells are also at risk from industrial
    hazardous waste in a groundwater plume moving toward the Village from
    Roosevelt Field. The sources of the pollution are suspected to be
    several industrial sites and Mitchell Field, a former federal airbase
    and Charles Lindbergh's departure point on his transatlantic flight to
    Paris. These sites are one mile from the Village limits. Hempstead has
    already been impacted by groundwater contamination and has been
    treating water from two of its wells for ten years. Last spring three
    of Hempstead's nine wells were impacted by the movement of the plume.
    At times last summer, the Village would not have been able to
    effectively fight a large building fire because of the low water
    supply. The lack of an adequate water supply also is having a negative
    impact on the Village's economic development program. Covering the
    basins will protect the drinking water supply and new aeration nozzles
    will provide more efficient removal of volatile organic compounds from
    the water and oxidization of iron in the water supply.
        Hempstead has not been successful obtaining assistance from New
    York's environmental bond issue because the high income levels of
    Nassau County were used in evaluating the Village's application. Even
    if the Village qualified for State loans, it does not have the bonding
    capacity for the project. The Village tax base is affected by the low
    income population and the amount of commercial office space occupied by
    County and State agencies which do not pay taxes. The concentration of
    lower income people in the Village is, in part, caused by the location
    of State and County social services agencies in Hempstead. The eroded
    tax base causes Hempstead to continually defer maintenance on critical
    infrastructure projects like the Clinton Street water treatment
    facility, new well construction and the water distribution system.
        Facility improvements require $10 million to cover the aeration
    basins, replace aeration nozzles, rebuild portions of the aeration
    basins, replace pipes, rehabilitate four existing wells and drill two
    new wells. Your help will enable the Village to overhaul its water
    supply plant and system. Hempstead needs an affordable, reliable and
    safe water supply to continue to rebuild its tax base and meet the
    needs of its predominately moderate and low income population.
        Thank you for your interest in this matter and to Congresswoman
    McCarthy for her interest in helping solve this critical problem. I
    will be pleased to provide whatever additional information is necessary
    to answer your questions and look forward to working with you to solve
    this problem.
                                     ______

    Prepared Statement of Don Ouchley, General Manager, Brownsville Public
                                Utilities Board

        Dear Mr. Chairman, my name is Don Ouchley, General Manager of the
    Public Utilities Board for Brownsville, Texas, a city of 130,000, the
    largest city in the south Texas area of the United States-Mexico
    border.
        Thank you for allowing me to testify before your Committee
    concerning the priority environmental problem faced by the Brownsville,
    Texas area--our lack of a long term water supply. The reason that we
    are here is to ask you to designate $3.0 million from the Border
    Environmental Infrastructure Fund (BEIF) for the use of Brownsville to
    initiate the implementation of the Brownsville Weir and Reservoir
    project.
        The Brownsville Weir and Reservoir project is the most important
    component of an integrated plan for meeting the projected water needs
    of the Lower Rio Grande Valley. It provides an opportunity to capture
    water that has passed all other uses and, without this project flows to
    the Gulf of Mexico unused. It is, in short, a major water conservation
    project.
        The structure creating the impoundment would release adequate water
    to satisfy both environmental and downstream uses. The project uses the
    existing river channel for storage and will be accessible to numerous
    users within the United States and Mexico, rather than constructing
    currently authorized off-channel reservoirs which are remote to
    existing water supply facilities, accessible to a limited number of
    municipal users and providing no benefit to Mexico or to meet in-stream
    flow needs.
        The Project encourages water conservation because under current
    water management conditions, a significant portion of the water that is
    saved by water conservation practices is not conserved in storage, but
    instead flows into the Gulf of Mexico. Absent the Project, the IBWC
    must continue to release water from Falcon Reservoir seven days in
    advance of the anticipated diversion. If the released water is not
    diverted due to reduced demand, or due to unanticipated inflows, the
    water flows into the Gulf of Mexico. The project is the ultimate
    conservation project for our region and can conserve more water than
    any other alternative available. The project conserves water for all
    users since every acre foot of water utilized by the project will
    result in an acre foot remaining in storage behind Falcon Dam for the
    benefit of all users, municipals, industrials and agriculture.
        The project has the strong support of the State of Texas, in fact,
    the Texas Water Development Board has incorporated it as one of its top
    priorities in the south Texas water plan. There is also written support
    from Mexico and from the Mexican State of Tamaulipas. Finally the
    project has the broad support of local governments, citizens, and,
    increasingly, local environmental organizations.
        We need the assistance because existing EPA and Border Environment
    Coordinating Committee (BECC) rules restrict the use of these funds to
    wastewater and drinking water facilities and do not cover water supply
    projects. The need to obtain a stable long term water supply for the
    entire Brownsville area is the overwhelming top border environmental
    priority for our area. If the BEIF is to help improve the quality of
    our public health and environment some funding needs to be spent on
    this Weir project.
        Our difficulty occurs because the BECC funding emphasizes funding
    for wastewater and water treatment plants for smaller communities. Yet
    Brownsville has spent over $40 million over the past five years to
    upgrade these same types of facilities in order to meet state and
    federal standards. As a result water and sewer rates have been
    significantly raised and the availability of funding for the
    Brownsville Weir water supply project is bleak unless our already high
    utility rates in south Texas are raised even higher. We, and our
    Congressional delegation, assumed in our support of NAFTA that Border
    Environmental funding would be available to reduce the financial impact
    on the lower income communities along the border. In meeting
    environmental and public health needs the City has paid more than $40
    million for its major wastewater and drinking water plant improvements
    so we strongly believe that we should be able to obtain the $3.0
    million out of the over $400 million BECC border funds already
    appropriated for border environmental protection for our top priority.
                          disclosure of federal funds
        The Brownsville Public Utilities Board did not receive any federal
    grant funds last year.
                                     ______

    Prepared Statement of Robert J. Davenport, Executive Director, Passaic
                         Valley Sewerage Commissioners

        Mr. Chairman and Honorable Members of the Committee: Thank you for
    the opportunity to testify today concerning the need for assistance in
    implementing the Passaic River/Newark Bay Restoration Program.
        New Jersey is distinguished as being the birthplace of industry in
    the United States. The industrial centers of Newark, Jersey City and
    Paterson developed and thrived from the early nineteenth to the mid-
    twentieth century, generating the goods and capital that contributed to
    the building of our state and nation. We are now faced with the task of
    undoing the destruction to the local environment caused by those early
    endeavors.
        The Passaic Valley Sewerage Commissioners (PVSC) serve 47
    municipalities in heavily industrialized Northern New Jersey, including
    the cities of Newark, Paterson, and Jersey City. Established in 1902 to
    alleviate pollution in the Passaic River, the Commission operates the
    sixth largest wastewater treatment plant in the United States which
    treats 330 million gallons per day of wastewater generated by 1.3
    million people and 350 major industrial customers. The Commission's
    infrastructure has a current replacement value of over $3.0 billion.
        The Passaic River/Newark Bay Restoration Program seeks to improve
    the area's waterways to allow unrestricted recreational and commercial
    uses. The program includes assisting volunteer groups with shoreline
    cleanups, the trackdown and clean-up of toxics leaching into the sewer
    systems, and efforts to reduce pollution from combined sewer overflows
    (CSO's).
        The sewer systems in seven member municipalities are combined, with
    domestic and industrial wastewater using the same pipes as stormwater
    runoff. During times of rain, these sewers cannot handle the huge
    volume of combined sewage, which then overflows in an untreated state
    into the Passaic River and Newark Bay. The overflows contain floating
    materials which are washed from the streets, toxic organic compounds,
    heavy metals, and disease causing microorganisms.
        EPA has promulgated a Long Term Combined Sewer Overflow plan which
    requires CSO owners to either reduce the quantity of overflows or
    provide treatment to meet water quality goals. These requirements are
    typically met through the total elimination of CSO's by constructing
    new wastewater sewers in every street or by a system to capture and
    store the CSO overflows for later treatment. These alternatives would
    take at least 15 years to implement and have a construction cost of $1
    to $2.4 billion.
        The cities of Newark, Paterson, and Jersey City are among the
    poorest in the nation, with 1989 median household incomes averaging
    less than $26,000. The unemployment rate in 1993 was 10.3 percent and
    14 percent of the population was living below the poverty line. The
    ocean dumping of sewage sludge was halted in 1991 by constructing
    massive sludge processing facilities which were paid for entirely with
    local funds. Debt service now consumes one out of every five dollars in
    PVSC's budget.
        A search was initiated to find a plan which could still meet the
    goals of EPA's Long Term Control Strategy but at a cost which the
    cities could afford. A comprehensive review of the treatment plant's
    capacity was undertaken utilizing the latest state-of-the-art three
    dimensional computer modeling techniques. The study, overseen by a
    panel of nationally recognized waste treatment experts, recommended a
    series of in-plant treatment improvements which will double the plant's
    ability to successfully treat wet weather flows. A doubling of wet
    weather treatment capacity will result in PVSC exceeding EPA's Long
    Term requirements for pollutant reductions for CSO's. The improvements
    involve modifications to existing treatment units and therefore can be
    on line only three years after the project funds become available.
        The cost for the first phase of the improvements will total $18.5
    million of which we are requesting a Federal Special Needs Grant of
    $14.8 million. The 20 percent match would be paid for with state and
    local funds.
        We believe that this innovative program meets the needs of
    environmental protection by utilizing state-of-the-art techniques to
    maximize the effectiveness of existing infrastructure. In an era of
    scarce public resources, this program will serve as a National
    Demonstration Project for other communities facing vast infrastructure
    needs with only limited fiscal resources.
                                     ______

      Prepared Statement of Ed Archuleta, General Manager, El Paso Water
                         Utilities Public Service Board

        Dear Chairman Bond: The purpose of this brief testimony is to thank
    you and the Members of this Committee for providing three million
    dollars in EPA Border Environmental Infrastructure Funding (BEIF) for
    our El Paso/Las Cruces Regional Sustainable Water Project. This money
    is the catalyst for assuring that the more than two million urban and
    rural residents of the El Paso/Juarez/Las Cruces region will have safe
    drinking water well into the 21st century.
        The funding was provided by your Committee because the EPA rules
    established for BEIF funding restricted their use for this type of
    multi-national, multi-state water supply program that is the region's
    top priority. The monies will now allow the New Mexico-Texas Water
    Commission to conclude the ongoing water supply and environmental
    studies that will, in turn, allow the local communities and irrigation
    districts in two states and the U.S. and Mexican governments to make
    long-term water quality and water supply decisions.
        As you may be aware, the United States recently filed a quiet title
    lawsuit over the ownership of the water in the Rio Grande.
    Historically, water litigation is lengthy and costly not only in terms
    of dollars, but also in terms of acrimony created between states and
    communities. We believe that because of the working relationships and
    cooperative data-based regional planning which have developed as a
    result of the El Paso/Las Cruces Regional Sustainable Water Project,
    parties as diverse as Texas, New Mexico, Colorado, and the cities of El
    Paso and Las Cruces, the Bureau of Reclamation, and the Department of
    Justice were able to work out a mediation plan. The plan is designed to
    efficiently address the critical issues over water--how much, who owns
    it, who uses it, its quality, etc. The one thing all parties can agree
    on is that responsible decisions cannot be made until everyone knows
    how much water is available and what the alternatives are for most
    efficiently managing it. This is what the $3 million will accomplish.
    The mediation should begin next month. The result is a new sense of
    possibility for a plan or program that will provide long-term
    sustainable water for the cities, the farmers, and the rural
    communities--based on the outcome of the sustainable water study funded
    by this committee.
        In conclusion, it is important for your Committee to realize that
    this sustainable water supply effort is the top priority for this
    heavily populated El Paso region of the border. You should also
    understand that existing EPA BEIF rules make the BEIF program an
    uncertain source of funding for future water supply projects without
    the direct guidance of this Committee. State and local monies are
    difficult to obtain because the scope is regional and multi-
    jurisdictional and if any participant decides to use its funding as
    leverage then the mediation suffers. With these BEIF funds it allows
    the process to proceed. We believe this is exactly what the Congress
    intended the BEIF program to be used for when NAFTA was passed.
        We thank you again very much for the direct appropriation of last
    year's funding for this project. We will continue to keep you informed
    of our progress.
                                     ______

       Prepared Statement of Mayor Kirk Humphreys, City of Oklahoma City

        Dear Mr. Chairman, my name is Kirk Humphreys and I am the newly
    elected Mayor of Oklahoma City replacing Ron Norick who has retired
    after eleven years as Mayor.
        Thank you for allowing me to testify before your Committee today on
    the need for additional funding to complete the difficult task of
    restoring the area devastated by the Murrah building bombing.
        Former Mayor Norick, the City Council and the City staff wanted me
    to express our special appreciation for your visit to the bombing site
    three years ago within the first week after the bombing. This visit and
    the kind support that you expressed at that time were a major boost to
    our local elected officials, our Congressional delegation and most
    important the bombing victims and the shocked citizens of Oklahoma
    City. We were hurting and you stepped forward to provide the most
    important long term assistance that our city received--the help we
    needed to rebuild.
        Oklahoma City is requesting $23 million in additional funding to
    complete the task of repairing the destruction caused by the bombing of
    the Murrah on April 19, 1995. The funds will be used to complete damage
    repairs and economic recovery through the loan program and therefore
    will be dedicated for exactly the same purpose and on exactly the same
    projects as described in the original request. The new request for
    funding is the difference between our initial damage estimate and the
    real cost of restoring buildings and economic activity in the north
    central area of the City's downtown.
        It was understood at the time of the first request that our damage
    estimate would not be accurate because (a) it was rushed due to there
    being other more urgent priorities associated with the rescue effort,
    (b) the estimators (public works officials) had no previous experience
    with an event of this nature, and (c) access within the area was
    substantially restricted by the FBI because this was a crime scene.
    This was why we indicated at that time that a further request was
    probable.
        Attached are two maps which identify (1) estimated structural
    damage right after the bombing and (2) buildings where structural
    damage has actually been repaired with program funds. These differences
    are similar to those found with earthquake estimates, emphasizing that
    it takes time to fully identify structural damage. However, earthquake
    damage, because it is caused by ground waves, is very different from
    bomb damage, which results from wind (blast) damage over pressure--two
    very different stresses. Because no precedent for bomb damage exists in
    the country, other than limited military tests, local architects and
    engineers have found it very difficult throughout the program to
    distinguish bomb damage.
        The bombing directed against the federal building devastated a
    large part of downtown Oklahoma City an area already under economic
    stress. Outside consultants have recommended major new efforts in
    housing and economic development to achieve recovery of the bombed
    area. But we need to be able to follow our original plan to provide a
    source of low interest loans to assist small businesses relocating to
    the area. If we don't, these businesses will not come and the area will
    not recover. The bomb was not directed at Oklahoma City--it was
    directed at the federal government. We simply need the help to restore
    this already depressed area of our city to a level that provides a
    chance for future economic stability.
        The plan to restore the north central part of Oklahoma City was two
    fold. Repair the buildings first and help reestablish businesses within
    the area second. The first objective is on the way to being completed.
    The second depends on the availability of low-interest loans that will
    be created through a low-interest loan pool administered by local
    banks.
        Without this type of incentive small business has no reason to
    return to the area because most either closed or relocated. If closed
    they need start-up help--if relocated they need a reason to come back.
    We must have them back--or some businesses to replace them or the
    Murrah bombing area will essentially remain a shell.
        Our goal is to get us back to square one, April 18, 1995. Beyond
    that, the City will use its own resources to bring about the
    revitalization of downtown Oklahoma City. That we intend to do so is
    attested to by the City's MAPS program which is funding approximately
    $300 million in downtown redevelopment projects, separate and distinct
    from the bomb affected area. The City is also investigating other
    avenues for supporting additional downtown improvements. Oklahoma City
    is committed to its downtown area, but doesn't want handouts to achieve
    this. The request for additional bomb funds is only to get us back to
    our pre-bombing starting point in north central Oklahoma City. Beyond
    that, we will take care of our needs using our own resources.
        The following illustrates our original request (based on estimates)
    relative to actual funding required (based on assessed construction
    costs).

                            [In millions of dollars]
    ------------------------------------------------------------------------
                                                                  Amended to
                                                                    reflect
                                           Original    Expended     actual
                                            request                 funding
                                                                   required
    ------------------------------------------------------------------------
    Damage Claims and Reconstruction            18.8        34.2        40.2
     Loans..............................
    Economic Recovery Loans ($40 million        12.0         1.3        16.0
     loan pool).........................
    Infrastructure Repairs..............         6.7         2.0         3.6
    Administration and Program                   1.5         1.5         2.2
     deliveries.........................
                                         -----------------------------------
          Totals........................        39.0        39.0        62.0
    ------------------------------------------------------------------------

        The City's recovery effort has the same structure and is targeted
    towards achieving the same purpose as originally proposed by the City
    and stipulated in the enabling legislation for the original $39 million
    grant. We presently fall short of achieving that purpose because we did
    not appreciate the scale of damage when we made our first request
    immediately after the bombing (the magnitude of which is graphically
    portrayed by the attached maps showing preliminary and actual bomb
    damage). As I stated earlier, the $23 million we are seeking is the
    difference between our immediate post bombing estimate and the cost of
    reconstruction.
        We greatly appreciate your help in securing the original $39
    million that started us on the road to recovery. We will be equally
    grateful if you can assist us in completing this difficult task.
        Thank you.
        [GRAPHIC] [TIFF OMITTED] TVA.005

        [GRAPHIC] [TIFF OMITTED] TVA.006

                                     ______

      Prepared Statement of Dave Waller, Missouri Rural Water Association

        Mr. Chairman and Members of the Committee, thank you for the
    opportunity to testify before the Committee on behalf of the Missouri
    State Rural Water Association and the other 45 state rural water
    associations. First I want to thank you and your Committee for
    increasing the Groundwater/Wellhead protection program and the Training
    and Technical Assistance program up to $8.2 million last year to allow
    for all state rural water associations to operate full programs.
        The purpose of our testimony is to urge your support for the
    continued funding of the Rural Water Training and Technical Assistance
    program and the Groundwater/Wellhead protection program which is
    authorized in the Safe Drinking Water Act and operates in forty-eight
    states. These programs provided for over 12,100 on-site visits, trained
    over 41,300 people in every rural county in the country and have
    completed over 2,300 small community groundwater protection programs.
    These are the primary programs that have direct on-site contact with
    the smallest community water systems where the impact of the federal
    Safe Drinking Water Act regulations is the most difficult.
        The vast majority of water systems (94 percent) are small, serving
    less than 10,000 people. The majority of noncompliance with the federal
    requirements (90 percent) is in the same category. According to EPA's
    Small Town Task Force Advisory Committee, which was created by Congress
    to provide policy recommendation to the EPA Administrator, ``small
    towns are different from large towns--not just smaller.'' The task
    force listed reasons for this observation including: ``small towns
    seldom have engineers or laboratories, there are few, if any training
    opportunities, local training usually does not exist, small towns, as a
    rule, have little or no professional staff, and small communities often
    lack political strength, both on the state and the national level.''
    The Task Force recommended that, ``EPA must provide, where ever
    possible, expanded technical assistance.''
        Of particular importance in our request for funding this program is
    that the primary problem in implementing the Federal Safe Drinking
    Water Act is the ability of small systems to comply with the law. If
    small system compliance is the major focus of the law then we urge the
    Committee to consider as a priority this funding for the one program
    that most effectively addresses that concern. There is overwhelming
    agreement that the only way to improve the compliance of small systems
    is to make direct on-site contact with operators, managers and local
    elected officials. The positive effect of these contacts is the heart
    of rural public health protection.
        While small system compliance with this SDWA is the main focus of
    the Rural Water Technical Assistance program, it is important to
    understand that the real long-term benefit of this program is the
    assurance of continuing local government control and responsibility for
    small and rural drinking water systems as opposed to more federal
    government intervention. Federal intervention and federal rules
    decrease the efficiency and increase the cost of small water system
    operations. If that is to be reversed there must be an alternative to
    federal regulations for protecting the public health. We believe that
    alternative is to consistently improve the capability of small systems
    through better management, improved equipment, expanded water sharing,
    reasonable consolidation and other efforts that make small systems more
    viable and less subject to national environmental regulatory
    intervention. This is exactly what on-site technical assistance carried
    out by each state rural water association accomplishes.
        The best illustration of how this grassroots approach works is the
    rural water groundwater protection program. In the past, some
    environmental organizations and some Members of Congress have pressed
    for a federally mandated groundwater protection regulations. A federal
    program would expand EPA's role in land use decisions in every county
    in the country. The rural water program was created as an alternative
    to that idea. The innovative rural water approach pursues a more
    workable program that assists small water systems to become the
    catalyst for implementing wellhead/groundwater protection ordinances in
    their own communities. Local folks want to protect their groundwater
    but they need a little help to get started. This program has worked
    beyond everyone's best expectations--over 2,000 communities have or are
    adopting ordinances and it is spreading rapidly to cover other rural
    communities in these states. It has become the one new approach
    replacing any discussion of federal groundwater protection mandates.
        This point is very important. Our belief that the only way to
    reduce federal environmental regulation is to develop an alternative
    approach for solving the environmental problems. In rural and small
    communities these alternatives can best be developed and implemented by
    the rural folks themselves. The primary mechanism for the rural
    communities is to identify and focus on how to solve these problems has
    been the rural water training and technical assistance program. That is
    why we are urging the Committee to look at this program as its top SDWA
    priority. This program provides the core effort for a return of
    environmental management to the local elected officials. In this
    Congress, particularly, the objectives and activity of this program
    reinforces other Congressional efforts to reduce federal mandates and
    federal regulations.
        The program is operated by the Rural Water Associations. We are a
    federation of state rural water associations--one such association
    exists in each state. The statewide membership of each association is
    comprised of small nonprofit water systems and small towns. All members
    have water supply operations as their primary daily activity. State
    membership averages about 300 systems from all geographic areas of each
    state. These are active members--who continuously participate in the
    training and technical assistance program in an effort to improve their
    drinking water. This program assists all small water systems whether
    they are members of the state association or not. With a significant
    turnover in water operators and board members, the need for training
    and technical assistance remains constant.
        One very positive aspect of the program has been the interest in
    states and even EPA regional offices to expand the program in
    individual states when additional funds are available. There are over
    20 additional full-time persons funded to do this same work from other
    funding sources. For example, four additional Florida Rural Water
    Association in-the-field staff are paid for with state funds. All these
    efforts are interrelated with the EPA program funded by this Committee.
    In addition, a growing number of states are creating new grant and loan
    programs to finance rural water systems to assist in upgrading them to
    meet SDWA requirements. Again, it is this EPA funded program that has
    become a catalyst in state after state for innovative and broad ranging
    efforts to improve drinking water facilities. To make this work the
    program provides the following framework for water system assistance:
      --frequent training sessions covering a variety of rural water
            subjects in all rural areas of a state
      --a minimum of 200 on-site technical assistance contacts each year
      --border-to-border contact with all rural water systems in each state
            through a state rural water association office
      --monthly or quarterly newsletters with simple advice for improvement
            of water system operations, as well as a very clear description
            of changing EPA standards for SDWA compliance
      --immediate on-site assistance for any small system in the state
            expressing operation or management difficulties by contacting
            the state rural water association office
      --coordinated rural water system efforts within a state to press for
            increased state and local funding which reduces demand on USDA
            grants and loans
      --cooperation from all small water systems with EPA and state
            regulatory personnel which allows them to deliver their message
            and monitor the level of effort for SDWA compliance among small
            water systems
        The number of participants in the training sessions continues to
    increase as do the number of rural water systems actively participating
    in the overall state association programs. For example, state
    associations annually conduct approximately 860 workshops and provide
    training for 41,000 rural water operators and other personnel
    representing 17,000 water systems nationwide. Over 11,500 technical
    assistance on-site hours, including visits for serious compliance
    problems with the Safe Drinking Water Act, were also carried out and
    were normally the only hands-on assistance provided to these systems to
    help them meet the requirements of the Safe Drinking Water Act.
        This is an important time in the evolution of federal environmental
    protection programs. The Congress is using existing programs to
    determine how to reduce federal mandates by turning over more
    responsibility to local governments. We urge the Committee to review
    the Rural Water Training and Technical Assistance program in this
    light. This program is national in coverage but local in operation and
    implementation. It provides clearly documentable accomplishments in the
    number of systems assisted and local groundwater ordinances adopted. In
    short, it is local, fully documented, and it addresses the number one
    priority in the SDWA--small community and rural water systems.
        Attached is a copy of a report done by the EPA Compliance Division
    evaluating the effectiveness of Circuit Riders for improving compliance
    with the Safe Drinking Water Act (SDWA) in Iowa and Colorado. The
    documented success of improved compliance will allow EPA to rely more
    extensively on this type of grassroots effort as opposed to increased
    regulatory enforcement. State rural water association in-the-field
    staff are a viable alternative to increased federal mandates.
        We are requesting $8.85 million this year to allow for the first
    cost-of-living increase for our in-the-field staff in six years. The
    other one half of the increase would allow us to start a program in
    Alaska and Hawaii.
        Thank you very much for your past support. We have tried to make
    this the best program this committee appropriates money for and we will
    do the same next year if you will continue our funding.

                   Partners in Healthy Drinking Water Grants

                  u.s. epa/office of compliance--january 1998
                                    overview
        EPA awarded grants totaling $150,000 to support three pilot
    projects that assisted small and very small public water systems to
    improve their compliance with the Safe Drinking Water Act: Colorado
    Department of Health and the Environment, Iowa Department of Natural
    Resources; and the Alaska Water Wastewater Management Association.
        Two of the projects, Colorado and Iowa, focused on the total
    coliform rule (TCR). The TCR rule was selected because of its
    importance in detecting the presence of potential microbiological
    contamination to drinking water. Historically, a large percentage of
    small and very small public water systems have problems complying with
    the monitoring and reporting requirements of the TCR.
        Due to the different needs of Native American villages in Alaska,
    the Alaska project focused on a variety of more site-specific technical
    assistance needs.
                             description of pilots
    Colorado Department of Health and the Environment
        The Colorado Department of Public Health and Environment identified
    153 public water systems which were chronic TCR noncompliers as mentees
    for the program. Approximately 30 mentoring systems were selected.
    These included: the Colorado Rural Water Association (CRWA), and public
    water systems that had excellent compliance records.
        The type of assistance provided included: (1) site visits and phone
    calls to identify problems and remind operators to take samples; (2)
    assistance with sampling and analysis; and (3) training.
        Results.--After assistance was provided, 62 percent of the non-
    compliant community systems came into compliance; and 59 percent of the
    non-community systems achieved compliance.
        Mentees who remained in compliance for one year and all mentors
    received free training opportunities. Twenty-six mentors attended the
    annual Colorado Rural Water Conference; and 103 mentees attended local
    training courses sponsored by the Rural Water Association or AWWA.
    Iowa Department of Natural Resources and Iowa Rural Water Association
        Iowa's project used two mentoring approaches: (1) created mentoring
    relationships between employees of Iowa's larger, regional rural water
    systems and very small systems operators; and (2) provided assistance
    to very small systems by using IRWA circuit riders as mentors. All
    mentees chosen had received failure to monitor notices in several of
    the preceding monitoring periods.
        Results.--280 systems received technical assistance; 89 percent of
    the systems who received assistance did not receive failure to monitor
    notices in the subsequent monitoring period.
                Other Non-mentoring Projects
        TCR Calendars (1996 and 1997).--Calendars were mailed to all small
    water systems in Iowa and to those who requested one (approximately
    2,500 systems). Feedback indicated that operators liked having one
    place to record their sampling information and stickers to mark the
    sampling days and lab results.
        TCR Brochure.--This brochure summarized the TCR monitoring
    requirements; approximately 2,500 were distributed. They were mailed to
    a targeted audience, private labs, related agencies, such as IDNR
    regional offices, as well as affiliated groups that agreed to promote
    the teleconference.
        TCR Teleconference.--The teleconference provided training on how to
    meet the requirements for bacteriological water testing. Iowa held two
    teleconferences with a total of 325 participants. Survey responses from
    97 participants returned following the first teleconference indicated a
    high level of satisfaction with the TCR teleconference.
        TCR Video.--This tool was used to provide training to small systems
    owner/operators on how to take TCR samples and was distributed to all
    mentees.
    Alaska Water Wastewater Management Association (AWWMA)
        Alaska Department of Environmental Conservation (ADEC) worked
    closely with AWWMA to choose systems with one or more of the following
    characteristics: (1) new operators; (2) non-compliers; (3) financially
    needy; (4) interested operators. Systems in noncompliance were matched
    with mentors who were in compliance, had more expertise in water
    treatment, and were located in the same geographical area.
        Four remote village operators participated. Mentors visited the
    villages to become familiar with their systems. Some of the mentees
    went to the mentor's communities to observe and participate in the
    operation of the larger, more complex systems.
        Results.--Strong mentor/mentee relationships were established and
    efforts to correct specific problems through one-on-one training of the
    mentee operator by the mentor were successful. For example, one mentor
    assisted a mentee with repairing a flow meter and now the mentee can
    perform the repair unassisted. Another mentor provided instruction on
    how to optimize filter performance and how to conduct proper TCR
    sampling
        Generally, it's hard to measure the benefits of these types of
    direct technical assistance on small communities. AWWA felt, however,
    that the participating communities would gladly offer their
    appreciation and enthusiasm for the improvements that resulted from
    receiving this assistance.
        Federal Funding Disclosure.--The Missouri Rural Water Association
    is a non-profit trade association. We received the following pass
    through federal grants and contracts last year:

    EPA Technical Assistance program..............................   $85,000
    EPA Ground Water Protection program...........................    85,000
    USDA Circuit Rider program....................................    85,000
    USDA Wastewater Technician program............................    85,000
                                     ______

      Prepared Statement of Dave Bolin, President, Groundwater Protection
                                    Council
        Mr. Chairman, thank you for the opportunity to testify today. My
    name is Dave Bolin, I am President of the Groundwater Protection
    Council and the Assistant Oil and Gas Supervisor for the State Oil and
    Gas Board of Alabama. I have two Masters' Degrees in Engineering and a
    Ph.D. in ground water hydrology.
        My agency is a typical member agency in the Ground Water Protection
    Council. We are responsible for the environmental safeguards related to
    oil and gas exploration and production. Many of us are also responsible
    for state ground water and surface water protection programs. Through
    the GWPC, my agency and the other states work together to protect
    ground water resources while reducing the cost of compliance to
    industry.
        We feel that GWPC's mission reflects the future of environmental
    protection: that we regulators must form partnerships, together with
    industry and local government, to protect the environment. This is the
    alternative to a command and control regulatory model which we feel
    often results in unintended consequences, like unnecessary cost to
    industry and local government. Neither of these consequences help to
    protect our environment nor effectively utilizes limited resources.
        In addition to expressing the state governmental agencies'
    appreciation for your assistance last year, Mr. Chairman, I would like
    to emphasis one main point today--that success in implementing the Safe
    Drinking Water Act's source water protection program, and the Act's oil
    and gas exploration programs depend primarily on state government
    agencies like mine. And because we are the keys to success and
    workability of these two EPA delegated programs, we urge the
    subcommittee to look at increasing funding to innovative state programs
    as an alternative to expanding the federal bureaucracy. In both the
    underground injection control program and the source water protection
    program, EPA has requested additional funding.
        An example of environmental innovation is GWPC's proposal to
    provide states with the data and information to allow them to comply
    with the 1996 Safe Drinking Water Act's requirement that states submit
    a source water plan to EPA next year. We are currently developing a
    data system that many states will use as the core of their source water
    program. There is no other data system being developed by EPA or anyone
    else to assist states. Mr. Chairman, states must start submitting plans
    for EPA approval next year and many states could use the assistance. We
    feel that additional source water resources should be utilized to get
    this information system to states so that they can comply with EPA's
    requirements. Without such a uniform system, many states will spend
    millions to develop dozens of different systems that may not be
    accepted by EPA; or worse, many will miss the compliance date opening
    them up to court actions and more bad press on environmental progress.
    I have enclosed with my testimony six letters from state governments
    supporting the GWPC data system. One state EPA said, ``this system
    could serve to standardize the electronic format for national reporting
    of source water assessments * * *.'' The other states: Ohio, Illinois,
    New Hampshire, Nebraska, and Mississippi are all very hopeful they will
    be able to use this system. This proposal would require $750,000 in
    fiscal year 1999.
        Our other priority is the EPA underground injection control
    program. It is our hope that you will consider increasing the program's
    funding in this EPA budget. Increasing the UIC grant to $17.0 million
    in this year will not only help protect the environment, but also
    reduce the environmental regulatory cost burden on the oil and gas
    industries and state agencies. Currently, as a result of overburdened
    state agencies, industry may face slower processing of oil and gas
    production permits which decreases production and makes foreign
    production more competitive. Limiting production because of a shortage
    in oversight resources is pushing producers overseas. Also, EPA is in
    the process of developing a new regulation for us to implement called
    the Class V rule. It will require our agencies to start regulating up
    to one million new wells and severely stressing state resources.
        In closing Mr. Chairman, we would like to thank the Committee for
    the previous support and ask for your support again on these two
    priorities.
    additional explanations and analysis submitted for the committee record
     reasons to increase the states' epa/uic funding grant in fiscal year
                                      1999
        Allow state environmental agencies to continue to protect
    underground water supplies and maintain efficient state oversight of
    the oil and gas industry practices throughout the country. Currently,
    as a result of overburdened state agencies, industry may face slower
    processing of oil and gas production permits which decreases production
    and makes foreign production more competitive. Limiting production
    because of a shortage in oversight resources is pushing producers
    overseas.
        EPA is in the process of developing a new regulation for us to
    implement called the Class V rule. It will require our agencies to
    start to regulate up to one million new wells. Most will be very small
    businesses (farms, service stations, repair shops, print shops, dry
    cleaners, etc.) and most will be in rural areas (because there are no
    centralized sanitary sewers). This will require tremendous state
    resources.
        The Budget Agreement provides EPA increased funding for federal
    environmental protection. We feel increased environmental funding
    should be used to increase programs such as the UIC to help relieve the
    burden on states and the oil and gas producers.
        Each of the signatures on this letter are members of the Ground
    Water Protection Council (GWPC). The GWPC is a national non-profit
    organization that promotes the safest methods, most cost-effective
    regulation, and comprehensive ground water protection procedures and
    underground injection techniques related to oil and gas activities. The
    GWPC provides a forum through which members, consisting of state and
    federal ground water and underground injection control regulators,
    industry representatives, environmental representatives, and concerned
    citizens work together to protect ground water resources. We feel
    strongly that the oil and gas industry supports our requests.
        In each of the last ten years, Congress has provided $10.5 million
    to state UIC agencies in the EPA budget for continued operation and
    enforcement of the national underground injection control programs and
    we'd like to thank you for that. However, in the last ten years, the
    funding match has shifted from [75 percent federal: 25 percent state]
    to [25 percent federal: 75 percent state]. At the same time, federal
    funding for our sister agency's program (the federal Safe Drinking
    Water Act State Public Water Systems Supervision program) has more than
    doubled. The UIC delegated program has not expanded as the overall EPA
    budget has continued to grow.
         current status of gwpc survey on assessment of class v impacts
        In 1999 the EPA will issue new Regulations governing very shallow
    wells, which are typically large industrial septic systems in non-
    sewered areas. EPA estimates that there could be over 300,000 of these
    ``wells'' in the U.S. all of which must be inspected, and perhaps shut
    in and/or remediated. This will take significant additional resources
    on the part of the states. The GWPC is nearing completion of a
    nationwide financial needs assessment to determine what the eventual
    cost of implementing these new regulations will be for the states.
    While I do not have the entire survey result yet, I do have the
    estimates for Alabama. Based on full compliance we have determined that
    it will cost over an additional $360,000 to implement the new
    regulations in Alabama, which has a small state program compared to
    perhaps California or Texas, where program costs could easily exceed
    $1,000,000. Yet all this still somehow is expected to be taken from the
    current $10.5 million which also funds the other UIC program
    implementation.
    summary of accomplishments of last year's wellhead technical assistance
                                    funding
    Assistance to state governments with implementation of UIC and ground
            water protection programs:
        Conduct a National Stakeholders Conference on Ground Water and UIC
    Issues.--The GWPC conducted the 1997 Annual Forum, a technical
    conference on Ground Water, Watershed, Source Water, Wellhead
    Protection and Underground Injection Control. The September 1997
    conference held in Cleveland, OH, strengthened partnerships and
    identified opportunities for flexibility in carrying out regulatory
    responsibilities. The attendees, totaling 321, included stakeholders
    from the public and private sector, state agencies, local governments,
    and effected industries. Each participant received a copy of the
    proceedings at the conference.
        Early Involvement in the National Ground Water and UIC Program
    Implementation.--GWPC participated in two informal State workgroup
    meetings regarding the development of policies, regulations, and other
    issues relating to ground water and UIC program implementation. The
    meetings were held in October 1997 and March 1998. GWPC selected State
    Class V agency representatives to participate in the meeting and
    provided transportation funding for these representatives.
        Communication and Training for States and Industry.--GWPC published
    and distributed, bimonthly, The Ground Water Communique to all state
    UIC and Ground Water Agencies and the Industry. The Communique tracks
    and summarizes both national and state legislation, rule making,
    guidance and technical information important to state program managers.
    Special purpose information on both the UIC and Ground Water programs
    was collected and/or distributed on an as needed basis by use of mail,
    e-mail, FAX, GWPC home page, or conference calls. Within this task GWPC
    also conducted training sessions addressing legislation, regulation and
    policy issues facing Class I, II, and III injection wells. This
    training was held at GWPC's Annual UIC Meeting in Houston, TX, January
    1998.
        Develop Model to Determine Cost to Administer a State UIC
    Program.--GWPC participated in an informal state workgroup meeting
    regarding the development of an assessment of costs to run an adequate
    state Class V UIC program. GWPC selected States Class V agency
    representatives to participate in the meeting and provided
    transportation funding for these representatives. Conclusions from the
    workgroup meeting spurred the development of the resource model. GWPC
    distributed the model to all fifty state ground water agencies and
    gathered specific State resource information.
        Development of a Wellhead and Source Water Protection Data
    Management System.--The GWPC has developed a pilot wellhead and source
    water protection data management system capable of tracking and
    querying national, state and local wellhead and source water protection
    information including the locations of public water supply intakes.
        Federal Funding Disclosure.--The Ground Water Protection Council is
    a non-profit trade association of primarily state environmental
    agencies. We received the following federal grants and/or contracts
    last year:

    EPA Wellhead Technical Assistance program.....................  $400,000
    DOE Risk Based Data Management System program.................   750,000
                                     ______

                         Letter From James L. Crawford

       Mississippi Department of Environmental Quality,
                                   Office of Pollution Control,
                                            Jackson, MS, April 8, 1998.
    Mr. Michael Paque,
    Executive Director, Ground Water Protection Council,
    Oklahoma City, OK.
        Dear Mr. Paque: I was most impressed with the demonstration in
    Maryland of the source water protection software package being
    developed by the Ground Water Protection Council (GWPC). Let me
    encourage GWPC to continue development of the Environmental Information
    Management Suite--Source Water Protection Module that combines data
    management and analysis, geographic information system (GIS) mapping,
    and interactive Internet publishing capabilities. I am convinced that
    this pilot project will be a major asset for states in implementing the
    1996 amendments to the Safe Drinking Water Act.
        When fully developed, this system will enhance the ability of
    states to protect source waters and make information available to the
    public using the World Wide Web and provide states with the ability to
    electronically report progress on their Source Water Protection
    Programs to Congress and the U.S. Environmental Protection Agency. This
    system will also enhance the efficiency of programs by allowing states
    to electronically exchange data with the National Rural Water
    Association technicians also involved in Wellhead and Source Water
    Protection Programs.
        The Safe Drinking Water Act was written to provide considerable
    flexibility in the implementation of source water protection while at
    the same time providing some overall national consistency. The system
    is attractive to states like Mississippi because it is being developed
    with direct input from the states and uses priorities established by
    the states. Unlike other national databases, GWPC's Source Water
    Protection data management system is a tool that meets our needs.
        The GWPC is providing an excellent service to the states in
    developing this computer application and the Mississippi DEQ looks
    forward to using this system to protect the source waters of our state.
                Sincerely,
                                             James L. Crawford,
                                                                 Chief.
                                     ______

                          Letter From Michael G. Baker

                          Ohio Environmental Protection Agency,
                                          Columbus, OH, April 10, 1998.
    Mr. Michael Paque,
    Ground Water Protection Council,
    Oklahoma City, OK.
        Mike: Another successful meeting in Annapolis. You and your staff
    did a great job. While there are still some issues to resolve with
    USEPA, we were able to lay some good ground work at the meeting.
        I also want to let you know my interest in learning more about the
    Environmental Information Management Suite (EIMS) GWPC has developed.
    As I have discussed with Paul Jehn, we have been working on development
    of our own data management and GIS application for the Division of
    Drinking and Ground Waters for several years. After seeing the
    demonstration of the Source Water Protection Module of the EIMS I'm
    wondering how I may be able to link these two efforts. The EIMS appears
    to provide some extremely useful, easy to use tools that would enhance
    our current development plans. I will be following up with Paul to see
    if we can arrange a demonstration for my GIS and data management
    experts.
        I also hope GWPC can continue to develop the program in light of
    some of the recommendations discussed at the Annapolis meeting. I think
    this system could serve to standardize the electronic format for
    national reporting of source water assessment and protection progress.
    It could also serve as a tremendous tool to States and public water
    suppliers in making results of assessments available to the public via
    the World Wide Web.
        Congratulations on another successful meeting.
                Sincerely,
                                              Michael G. Baker,
                                                       Program Manager.
                                     ______

                          Letter From Richard P. Cobb

                                                           ILL,
                                       Springfield, IL, April 10, 1998.
    Mr. Michael Paque,
    Executive Director, The Ground Water Protection Council,
    Oklahoma City, OK.
        Dear Mike: I am writing this letter to encourage The Ground Water
    Protection Council (GWPC) to continue the development of the
    Environmental Information Management Suite Source Water Protection
    Module. This pilot project which combines data management and analysis,
    geographic information system mapping, and interactive Internet
    publishing is a tool which will assist states in the implementation of
    the 1996 amendments to the Safe Drinking Water Act.
        When fully developed, this system will enhance our ability to
    protect source waters and make information available to the public
    using the World Wide Web. At the same time, we will be able to
    electronically report progress on source water protection to Congress
    and the United States Environmental Protection Agency. This system will
    also add to the efficiency of our programs by allowing us to
    electronically exchange data with the National Rural Water wellhead and
    source water protection programs.
        The Safe Drinking Water Act was written to provide considerable
    flexibility in the implementation of source water protection while at
    the same time providing some overall national consistency. The system
    is attractive to states like Illinois because it is being developed by
    states using state priorities. Unlike other national databases, GWPC's
    source water protection data management system is a tool that meets our
    needs.
        The GWPC is providing an excellent service to the states in
    developing this computer application and the Illinois Environmental
    Protection Agency looks forward to using this system to protect our
    source waters.
                Sincerely,
                                               Richard P. Cobb,
                                                               Manager.
                                     ______

                          Letter From Sarah Pillsbury

                          Department of Environmental Services,
                                            Concord, NH, April 9, 1998.
    Michael Paque,
    Executive Director, The Ground Water Protection Council,
    Oklahoma City, OK.
        Dear Mike: I am writing this letter to support the continued
    development at The Ground Water Protection Council (GWPC) Environmental
    Information Management Source Water Protection Module. I was very
    impressed at a recent demonstration of this pilot project. The project,
    when completed. will combine data management and analysis, geographic
    information system mapping, and interactive Internet publishing. I
    believe it will be a great tool to assist states in the implementation
    of Source Water Assessment Programs required by the 1996 amendments to
    the Safe Drinking Water Act. When fully developed, this system will
    enhance the ability to protect source waters and make information
    available to the public using the World Wide Web. As I understand it,
    it will also allow for electronic reporting on source water protection
    progress to Congress and the U.S. Environmental Protection Agency. It
    will also allow for the electronic exchange of data with local source
    water protection programs and other partners in production such as the
    Northeast Rural Water Association.
        The Safe Drinking Water Act provides considerable flexibility in
    the implementation of source water protection while at the same time
    providing some overall national consistency. The system is attractive
    to states like New Hampshire because it is being developed from the
    State's perspective. Therefore, it should both address New Hampshire's
    needs while at the same time providing necessary information to USEPA.
    The GWPC is providing an excellent service to the states in developing
    this computer application and New Hampshire DES looks forward to using
    this system to protect our source water.
                Sincerely,
                                               Sarah Pillsbury,
                                   Source Water Protection Coordinator.
                                     ______

                          Letter From Patrick W. Rice

                                     State of Nebraska,
                           Department of Environmental Quality,
                                            Lincoln, NE, April 8, 1998.
    Mike Paque,
    Executive Director, Ground Water Protection Council,
    Oklahoma City, OK.
        Dear Mike: I am writing this letter to encourage the Ground Water
    Protection Council (GWPC) to continue the development of the
    Environmental Information Management Suite, Source Water Protection
    Module. We recently learned about some of the features of this software
    tool and how useful it will be for data management and analysis,
    geographic information system (GIS) mapping, and possibly Internet
    publishing, especially in reference to the States' implementation of
    the Source Water Assessment Program. We are especially excited about
    this software's capability to be easily used on any Nebraska Department
    of Environmental Quality staff's desktop computer with our existing GIS
    coverages.
        When fully developed, this system will enhance our ability to make
    information available to the public to allow better decisions to be
    made to protect the state's drinking water. An added advantage will be
    if the software system is capable of assisting states with their
    reporting obligations to the USEPA and Congress. Our efficiency and
    progress in the implementation of the Source Water Assessment Program
    will be greatly augmented with the use of this tool.
        Please consider this letter as an indication of our whole hearted
    support for the further development of this computer application. The
    Nebraska DEQ looks forward to using this system to better serve the
    State's Public Water Supply Systems and implementation of the Source
    Water Assessment Program, as specified in the 1996 amendments to the
    Safe Drinking Water Act.
                Sincerely,
                                               Patrick W. Rice,
                                                    Assistant Director.
                                     ______

     Prepared Statement of Dr. William A. Burke, Chairman, South Coast Air
                          Quality Management District

        Mr. Chairman my name is Dr. William A. Burke. I am the Chairman of
    the South Coast Air Quality Management District. First, I want to thank
    you for the opportunity to testify before you today to express our
    appreciation for your past support of our air quality management
    efforts.
        My purpose for being here today is to request the support of this
    committee for providing some specific demonstration funding for the
    Southern California Air Quality Management program. Our primary reason
    for this request is that, as you know, our region has been designated
    by EPA as having the most severe air quality problem in the country. We
    are also widely recognized as the sole Air Quality program that has
    developed a number of innovative local air pollution control programs
    that have been widely replicated throughout the country. Presently we
    are in a major debate with EPA over their approval of our 1997 Air
    Quality Management Plan.
        Our major problem is that meeting EPA standards will require an
    even more accelerated effort to develop innovative programs to meet
    ending deadlines. Failure to meet these deadlines or to obtain EPA
    approval of our plan will result in increasingly severe federal
    restrictions which will negatively affect our regional economy. We must
    rely on new technology and innovative implementation of existing
    technology or we will not comply. We cannot accelerate this innovation
    without additional funding this year.
        Other Air Quality Management Programs across the country will be
    facing similar difficulties in the future. Many of these Districts are
    dependent on the continuing development of the innovative program
    development in our Los Angeles basin. As a result of this
    interrelationship between our programs and the compliance of other Air
    Quality Districts we believe that the demonstration funding will have
    both immediate and long term national air quality improvement impact.
        The thrust of our program has been to clean the air while
    mitigating the negative impact of Clean Air rules on our citizens and
    our economy, particularly on our small business owners. To do this we
    have initiated a number of innovative programs which have been imitated
    in other parts of the country. We have also significantly improved the
    air quality in our region despite our continuing population growth.
    However, in order to meet EPA criteria we will need to expand our
    already overextended program. To do this we will need additional
    federal help.
        Our financial problem from the beginning has been the limited level
    of federal funding allowed for the Los Angeles area under the Clean Air
    Act. With over 12 percent of the population and with the only severe
    air quality category in the country our state is provided no more than
    10 percent of the federal air quality funding. Even with these
    restrictions the federal grant program has been reduced at the same
    time that clean air standards have been increased.
        We are requesting that you increase the Administration Clean Air
    compliance program from $190 million to $240 million dollars. We are
    also requesting that you require the additional $50 million to be
    designated based on the existing air quality severity with at least 20
    percent going to California where the nation's major air quality
    problems exist. If there is a problem with the legislative restriction
    of not more than 10 percent of any funding going to one state we would
    urge you to provide $5.0 million in the EPA appropriations for the
    implementation of the South Coast Air Quality Management innovative
    program. Attached is a list of projects to be funded immediately.
        This increase in funding and the emphasis on directing monies
    toward the area under the most stress from poor air quality would be a
    major step in national public health improvement. We simply can't have
    the federal government increase standards, increase monitoring costs
    and increase enforcement without any increase in the federal share for
    meeting these requirements.
        Thank you for your assistance.
      south coast air quality management district--potential projects for
         consideration of additional epa grant funds (funding amount--
                                  $5,000,000)
    Enforcement/Compliance
        Identify and educate impacted industries and operators of large
    water heaters and small boilers (75,000-2,000,000 Btu/hr). Develop
    field enforcement procedures for these sources. SCAQMD Rule 1146.2
    imposes new emission and retrofit requirements on these previously
    unregulated sources starting in 2000. (Projected cost--$150,000)
        Establish, expand, and implement an area source compliance program
    for non-permitted sources that emit ozone precursors or particulate
    matter. Identified sources exempt from current AQMD rules will be
    required to provide limited emissions information and follow
    standardized operating parameters issued by the AQMD for a source
    category. An annual compliance checklist will include(s) verification
    of data like company name, owner and address, plus a few questions
    specific to the equipment category, such as fuel usage, operating
    times, etc.
        A new compliance program will be developed to provide efficient
    deployment of resources. Compliance will consist of mailing, along with
    the annual renewal, a compliance questionnaire requesting specific
    information on the operation of the source's equipment based upon the
    equipment category. This audit function will further determine the
    level of compliance effort which may need to be conducted. System
    automation of the filing submittals and annual renewals will be
    required (to minimize the amount of staff necessary to drive this
    program), as well as development of new forms and enforceable
    procedures for the source categories. Area source programs, such as
    this one, have national utility because it can reduce the
    administrative burden of permitting and decrease costs to industry
    while maintaining a robust compliance program. Other agencies will have
    similar needs to balance resources and permitting requirements while
    securing emission reductions from area sources. (Projected cost--
    $1,000,000)
    Good Science
        PM-2.5 Monitoring enhancement: besides the standard set of
    reference methods, collect additional data to break down concentration
    to 2-hour or hourly basis (currently collected on 24-hour basis). The
    current collection does not now provide data on diurnal patterns. The
    additional data would provide more accurate information as to how
    pollutants are dispersed through the basin; the data would also help
    evaluate the PM-2.5 modeling. (Projected cost=$75,000)
        Meteorological monitoring: supplement meteorological data by adding
    profilers (three at $200,000 each). The additional equipment would
    provide the ability to model any day of the year (instead of doing
    SCOS). (Projected cost--$645,000)
        Evaluate the consolidation of the toxics emission inventory and the
    criteria emissions inventory for the purpose of compiling a single
    inventory system. (Projected cost--$150,000)
        Evaluate and quantify emissions associated with non-permitted
    combustion source categories (e.g., small internal combustion engines,
    small boilers, ovens, dryers). Conduct source tests, if necessary, to
    develop updated emission factors. (Projected cost--$150,000)
        Continue research development of the PM-2.5 model (EPA's model has
    not yet been proven; there is a need to look at other models to
    determine most efficient and effective model). (Projected cost--
    $150,000)
        Develop an inventory for non-permitted fugitive emissions from
    refineries, oil and gas production facilities, and terminals.
    (Projected cost--$100,000)
        Modernize laboratory instruments to provide more accurate data for
    detection and investigation of pollution problems. (Projected cost--
    $250,000)
        Develop a new annual emission reporting software application to
    provide additional flexibility for incorporation of new requirements
    (i.e., rules, policies, and calculation methodologies) which allows the
    AQMD to compile and audit the annual emission reported data to provide
    more accurate emissions data for the inventory. (Projected cost--
    $100,000)
        Convert the AQMD's reported annual aggregated emissions into CARB's
    source code classification. (Projected cost--$100,000)
    Environmental Results
        Determine what additional reductions can occur to meet the PM-2.5
    standards through further research studies. (Projected cost--$125,000)
        Research and evaluate potential emission reductions for the new 8-
    hour ozone standards. (Projected cost--$100,000)
        Research and evaluate additional permit requirements needed as a
    result of the new federal standards. (Projected cost--$100,000)
    Partnerships
        Develop cooperatives with colleges and universities within the
    AQMD's jurisdiction to work with graduate students on Masters and
    Doctorate projects that research, analyze, and document potential
    solutions emission reduction scenarios. (Projected cost--$50,000)
    Pollution Prevention
        Research and report on latest technological breakthroughs to reduce
    emissions of stationary source pollutants, especially VOC and toxic
    pollutants. Develop and implement demonstration projects to determine
    feasibility, enforceability, and financial impacts. (Projected cost--
    $750,000)
        Disseminate information through concentrated outreach efforts on
    the latest technological breakthroughs and new technological methods.
    Demonstrate equipment that emits less pollutants in industry settings.
    (Projected cost--$250,000)
        Develop an emissions tracking program (computerized database) that
    would assist companies in tracking and calculating sales and emissions.
    Architectural Coating manufacturers produce and market their products
    under various brand names and distribute the products through a variety
    of different modes (i.e., direct sales, job shops, wholesale
    distributors, etc.). It will be important to develop an effective means
    of tracking product sales information. This database can be utilized
    for the averaging provisions found in AQMD's Rule 1113--Architectural
    Coatings, as well as for CARB's Consumer Products Rule and its
    averaging provisions. This database may also be used for compliance
    with the proposed National AIM Coatings Rule.
        This database will assist local, state, and national companies that
    use averaging provisions to comply with the rules, as well as provide a
    mechanism whereby industry can determine if use of averaging is the
    most cost-effective method of compliance. A consideration within the
    database may be to develop an excess emission fee calculation for
    companies that want to continue selling non-compliant coatings. The
    excess emission fees collected would fund additional research and
    development efforts to lower VOC content of coatings and/or consumer
    products. This concept also included the proposed National AIM Coatings
    Rule. (Projected cost--$110,000)
        Develop a mechanism to clearly identify the major area source
    inventory of coatings and solvents usage. A large portion of the
    solvents and coatings are categorized in the Category of Emission
    Sources as ``Other.'' The AQMD proposes to more accurately define the
    sources of emissions in this category, as needed, to identify more VOC
    reductions and develop control measures on sources where the AQMD has
    better information. (Projected cost--$100,000)
        Evaluate state of the art technology for low-VOC coatings.
    (Projected cost--$150,000)
        Update VOC/PM speciation profiles to reflect VOC product
    reformulation, toxics regulations, and the introduction of new species.
    (Projected cost--$150,000)
        Research and evaluate a seasonal usage approach for coatings.
    Determine the financial feasibility and the enforceability of allowing
    higher emission coatings to be used during non-peak smog seasons. Based
    on the latest modeling data, and taking into consideration the
    narrowing ozone season over the past five years, a seasonal coating
    usage-based rule can be developed to regulate architectural coatings
    during the peak smog season. Also included would be development of a
    protocol for determining SIP equivalency for this alternative control
    strategy. (Projected cost=$100,000)
    Environmental Justice
        Research, evaluate, and provide field testing equipment which will
    result in better detection for inspectors to investigate pollution
    problems in response to public complaints. (Projected cost--$80,000)
        Provide outreach to inform public and industry of EPA's newly
    recommended PSI scale. (Projected cost--$70,000)
                                     ______

                              Letter From Ken Kirk

                 Association of Metropolitan Sewerage Agencies,
                                        Washington, DC, April 30, 1998.
    Hon. Christopher Bond,
     Chair, Senate Appropriations Subcommittee on VA, HUD and Independent
            Agencies, Washington, DC.
        Dear Chairman Bond: This week your subcommittee is scheduled to
    begin consideration of the Environmental Protection Agency's (EPA) 1999
    funding request. I am writing, for the record, on behalf of the members
    of the Association of Metropolitan Sewerage Agencies (AMSA) to urge
    strong federal financial support for our national clean water program.
        Our national clean water program is at a crossroad. For 25 years,
    the Clean Water Act focused almost exclusively on controlling
    discharges from point sources of pollution and we've made enormous
    progress towards achieving our clean water goals. But we can no longer
    rely on the tools of yesterday to solve the water quality problems of
    today and tomorrow. In AMSA's view, we are not going to achieve our
    water quality goals unless point and nonpoint sources work together, on
    a watershed basis, to address the remaining sources of impairment.
    Congressional support of these efforts is essential. There are
    significant opportunities to make great progress today towards
    improving water quality.
        Specifically, AMSA urges Congress to fully fund the
    Administration's Clean Water Initiative to improve controls on nonpoint
    sources of pollution; reinforce the federal commitment to biosolids
    recycling by providing $1 million to develop a Code of Management
    Practices to encourage greater public acceptance of biosolids; and fund
    the Clean Water State Revolving Fund (SRF) at $2 billion annually to
    support both point and nonpoint source pollution control efforts.
                   in support of the clean water action plan
        As municipalities struggle to comply with the mandates of the Clean
    Water Act, their efforts are frustrated by the existence of relatively
    unregulated nonpoint sources of pollution. Nonpoint source pollution is
    the single largest remaining source of water pollution today. According
    to the Environmental Protection Agency, nonpoint sources of pollution
    are responsible for 60 percent of the country's remaining water quality
    problems. Rural runoff has been identified as the cause for public
    health scares, including the recent fish kills caused by ``Pfiesteria
    piscicida'' in the waterways of Maryland, Virginia and the Carolinas.
    As a nation, we can not make significant further progress in cleaning
    up and maintaining water quality without addressing the significant
    problems associated with nonpoint sources of water pollution.
        During his 1998 State of the Union Address, President Clinton
    announced the Clean Water Initiative, a planning and funding proposal
    to redirect the water program. At the heart of the initiative is the
    Clean Water Action Plan, which was released last February. The plan
    ``aims to achieve clean water by strengthening public health
    protection, targeting community based watershed protection efforts at
    high priority areas, and providing communities with new resources to
    control polluted runoff.'' The action plan includes new initiatives to
    reduce public health threats, improve the stewardship of natural
    resources, strengthen polluted runoff controls, and make water quality
    information more accessible to the public. Additionally, the plan
    coordinates the activities of several federal agencies on water quality
    issues. The Administration has requested $568 million to support this
    effort. Specifically, $148 million has been requested in the
    Environmental Protection Agency's (EPA) 1999 budget for the Clean Water
    and Watershed Restoration Initiative. Funding the Clean Water
    Initiative overall represents a significant opportunity to make real
    and substantial improvement to the water quality of rivers, lakes and
    streams nationwide. We urge you to fully fund the Clean Water and
    Watershed Restoration Initiative. Additionally, we urge you to support
    the overall funding request for the Clean Water Initiative and commit
    to moving the national clean water program forward.
                       in support of biosolids recycling
        An integral component of the national clean water program is the
    safe and reliable reuse of biosolids. Biosolids are the rich, organic
    by-product of wastewater treatment, which can be beneficially used as
    fertilizer on agricultural land, as landfill cover and in a variety of
    other applications. Five years ago, EPA released its final 40 CFR Part
    503 regulations encouraging the beneficial use of biosolids.
    Misinformation and unfounded fears have undermined progress towards
    public acceptance of beneficial use activities. An immediate, sustained
    and strategic effort is essential to ensure that the benefits of this
    valuable recycled resource are widely recognized and our goal of
    beneficial use is realized.
        In the fall of 1997, AMSA partnered with the Water Environment
    Federation (WEF), in collaboration with EPA, to form the National
    Biosolids Partnership to identify and coordinate activities at the
    local level to promote public acceptance of biosolids beneficial use
    programs. Beneficial use can be a tough sell in many areas of the
    country and misinformation often leads to the derailment of local
    recycling efforts. The ultimate decision for biosolids management rests
    at the local level with local wastewater management agencies in the
    best position to identify opportunities for enhancing public
    perception, encouraging reuse, and supporting the federal government's
    beneficial use goal. Essential to this process is the development and
    implementation of a Code of Management Practices to provide local
    agencies with the information needed to raise biosolids quality above
    the current conservative regulated levels. This Code will be developed
    with input from affected stakeholders, as well as include third party
    verification to strengthen its validity in the public arena. EPA has
    made $250,000 available to the Partnership in 1998 to develop the Code.
    Additional funds are necessary to complete the document along with a
    third party verification mechanism. To ensure essential support for
    sustainable biosolids activities, and to promote recycling
    opportunities of this valuable resource, we urge you to appropriate $1
    million for this critical National Biosolids Partnership effort.
               in support of the clean water state revolving fund
        As our water quality focus shifts to a more comprehensive approach,
    addressing the control of more complex, costly and diverse sources of
    pollution, continued federal funding of projects mandated by the Clean
    Water Act (CWA) is critical to the ultimate achievement of national
    water quality goals. Last fall, we celebrated the 25th Anniversary of
    the enactment of the CWA. The CWA is undoubtedly our nation's most
    successful environmental statute. Through a strong federal financial
    commitment of grants in the 1970's and early 1980's, and then later the
    establishment of the Clean Water SRF to provide low interest loans,
    plus an enormous local investment, municipalities have built and
    improved upon over 16,000 wastewater treatment plants.
        These facilities provide safe and reliable wastewater treatment
    services to over 70 percent of the nation's population and over 99
    percent of the urban population. Additionally, many publicly owned
    treatment works (POTW's) administer the national industrial wastewater
    pretreatment program as co-regulators with the Environmental Protection
    Agency. This program requires more than 200,000 factories nationwide to
    remove toxic and other harmful pollutants from the effluent prior to
    discharging to public sewers. Contributions of POTW's to municipalities
    go far beyond treatment of wastewater. Local economies rely on cleaner
    rivers, lakes and streams to promote tourism and business development,
    and preserve wildlife habitat.
        There is no doubt that investment in the national clean water
    program pays. However, we still have a long way to go before we fully
    realize the fishable/swimmable goals of the Clean Water Act.
        In its 1996 Clean Water Needs Survey, the U.S. Environmental
    Protection Agency (EPA) estimated a total of $139.5 billion in
    wastewater treatment needs. That total includes: $44 billion for
    wastewater treatment (includes secondary and advanced treatment); $10.3
    billion for upgrading existing wastewater collection systems; $21.6
    billion for new sewer construction; and $44.7 billion for controlling
    combined sewer overflows (CSO's). The survey modeled needs for
    controlling stormwater at $7.4 billion and for nonpoint source control
    projects at $9.4 billion.
        As high as they are, we believe that EPA's numbers are
    conservative. Other surveys have estimated much higher costs associated
    with addressing stormwater, combined sewer overflows and sanitary sewer
    overflows. To more accurately quantify the nation's wastewater price
    tag, AMSA and the Water Environment Federation have commissioned a
    study designed to identify outstanding needs associated with both point
    and nonpoint source pollution control. We look forward to sharing the
    results of the survey with you in the next few months when it is
    completed.
        Perhaps more importantly, AMSA's recent financial survey's clearly
    indicated a significant increase in per capita wastewater debt at the
    local level with an associated increase in user rates over the last
    several years. Local users currently fund more than 90 percent of
    capital improvement projects and 100 percent of operations and
    maintenance costs. For many communities, these costs are staggering.
        For the 1999 budget cycle and beyond, AMSA urges Congress to fund
    the Clean Water State Revolving Fund at least $2 billion annually to
    support both point and nonpoint pollution control efforts. In addition,
    considering the enormity of the price tag, we believe that the results
    of the AMSA/WEF project will warrant consideration of reestablishing a
    federal grants program to support further progress in water quality
    improvement at the local level.
        Our national clean water program is at a crossroad. To address the
    remaining threats to water quality--nonpoint source pollution, combined
    sewer overflows, sanitary sewer overflows and stormwater management--we
    need to think long term, invest wisely, and protect and expand on the
    improvements we've already realized. There are opportunities to realize
    significant improvements in the short term, and we look forward to
    working with you and your colleagues in Congress, the Administration,
    and state and local government to ensure safe, clean water for all
    Americans.
        Thank you for your support of the clean water program.
                Sincerely,
                                                      Ken Kirk,
                                                    Executive Director.
        Note: AMSA represents the interests of more than 180 of the
    country's publicly-owned wastewater treatment agencies, which
    collectively serve the majority of the sewered population in the United
    States, and treat and reclaim more than 18 billion gallons of
    wastewater each day. Over the past 28 years, AMSA has maintained a
    close working relationship with both Congress and the U.S.
    Environmental Protection Agency in the development of environmental
    legislation and policymaking. AMSA member agencies play a major role in
    their local communities, often leading watershed management efforts,
    promoting industrial/household pollution prevention and water
    conservation, and developing urban stormwater management programs.
                                     ______

    Prepared Statement of Lino DeAlmeida, Jr., President, National Utility
                            Contractors Association

        Mr. Chairman and members of the subcommittee, my name is Lino
    DeAlmeida, Jr. I am President and Chairman of Consolidated Construction
    Management Services, Inc., headquartered in Colts Neck, New Jersey. I
    am pleased to submit testimony on behalf of the National Utility
    Contractors Association (NUCA) and voice our industry's strong support
    for the U.S. EPA's two state revolving fund programs. NUCA is a family
    of 1,900 companies that build and repair water, sewer, gas, electric,
    and communications systems. Our members also supply the materials and
    services that are necessary for construction of these facilities.
        Infrastructure must be in my blood. My father was a heavy
    construction contractor, and I started with his company at 8 or 9 years
    old, working summers as a water boy. I gained experience in just about
    every position--laborer, mason's helper, equipment operator, estimator,
    job superintendent, project manager, and others. After launching a
    valuable and enjoyable sabbatical as a litigator, the construction
    industry (and my father) called me back 20 years ago to oversee the
    construction of a massive sanitary sewer project. I've been hooked ever
    since.
        I enjoy the competitive challenge of bidding a project. I enjoy the
    challenge of developing and completing a project, and I particularly
    enjoy working with and serving people--the people in my company, the
    people who employ my services, and the public that benefits from the
    projects we complete.
        Environmental infrastructure projects are essential public assets
    that generate enormous benefits. They strengthen communities and
    improve people's lives immediately. They are a lifeline that transcends
    local and state boundaries. We can and must build, improve, and
    maintain them. Let me assure you that the costs of poor environmental
    infrastructure are very high. I've seen raw sewage pour out of broken
    or inadequate pipelines and into natural waterways. I've seen failed
    leaching systems. I've seen broken water mains gush. I've seen sewer
    moratoriums shut down economic development. I've also seen communities
    with no facilities at all. It's never a pretty picture.
        My testimony consists of several observations. First, the EPA's
    Clean Water State Revolving Loan Fund Program (Clean Water SRF) is an
    infrastructure financing success story. Second, environmental
    infrastructure needs are massive. Third, additional federal
    capitalization of the Clean Water SRF and the fledgling Drinking Water
    SRF in fiscal 1999 and beyond will grow these funds so that
    environmental infrastructure needs can be fully addressed in
    perpetuity.
                   a report card on the state revolving fund
        A 10-year progress report on the Clean Water SRF was published in
    January by the Council of Infrastructure Financing Authorities and the
    Environmental Financial Advisory Board. The report demonstrates that
    the Clean Water SRF is an outstanding taxpayer investment. Here are
    some of the highlights.
      --The 51 SRF's constitute a loan pool of more than $24 billion. As of
            June 30, 1997, 82 percent of the available funds had been
            loaned (including 5,680 separate loans). This ratio of SRF
            assistance as a percent of available SRF funds has steadily
            improved since the program's inception in 1987. Growth in
            lending has also been steadily rising, soaring to nearly 1,000
            loans in both 1996 and 1997. The program is working effectively
            to build wastewater treatment systems, which, in turn,
            strengthen the tax base, protect public health, clean the
            environment, and provide a better overall quality of life.
      --Total federal capital grants of $13.2 billion have been nearly
            doubled by other SRF funding sources including state
            contributions ($2.7 billion), leveraged bonds ($8.8 billion),
            and principal and interest payments ($4.3 billion). Loan
            repayments and interest in 1997 alone were nearly $1.2 billion.
            The program operates like a community bank and represents a
            true national partnership with states and localities. The
            program pays.
      --Communities of every size participate in the program. While most of
            the cumulative assistance has gone to larger communities, most
            of the loans have gone to smaller communities.
        We are confident that the new Drinking Water SRF will replicate
    this success.
       a report card on the condition of our environmental infrastructure
        The SRF programs are effective, but they are not big enough to
    handle present and future financing needs. Water supply and wastewater
    facility needs are well documented and alarming in scope. Much of the
    need is created by population growth, economic growth and development,
    and the decay of facilities that have exceeded their life expectancies.
        Last September, the EPA released its latest clean water needs
    survey, a joint effort between the states and the EPA. The report
    concludes that total 20-year Clean Water SRF-eligible needs exceed $139
    billion. In a similar survey last year, the EPA reported 20-year
    drinking water infrastructure needs of $138 billion. In both cases, it
    is primarily pipelines that need to be built, repaired, or replaced.
    Also in both cases, the numbers are daunting. Furthermore, a 1998 U.S.
    Infrastructure Report Card was recently issued by the American Society
    of Civil Engineers. Drinking water and wastewater facilities received D
    and D+ grades respectively.
        We need to fix the cruddy pipes. There is no alternative. The
    average American uses 100 gallons of water daily just at home. The
    water has to be delivered. More than 100 virus types can occur in human
    feces. Proper collection and treatment is necessary to destroy the
    infectious particles. It takes 20 gallons of water to produce a pound
    of steel, and a typical office requires 14 gallons per employee per
    day. Again, all this water must be treated and transported before and
    after consumption.
                                   conclusion
        The SRF programs are effective environmental infrastructure
    financing tools that are becoming more attractive to potential
    borrowers every year. In light of the magnitude of the water and sewer
    infrastructure gap, we trust that the subcommittee will continue to
    provide seed money for years to come.
        NUCA is working with an infrastructure research and consulting firm
    to develop state-of-the-art economic models that can be used to
    evaluate the effects of various investment scenarios. We will provide
    this information to the subcommittee as it becomes available in the
    coming weeks. Until then, we are hesitant to recommend specific funding
    levels for the two SRF's for fiscal year 1999. We also wish to extend
    an invitation to the subcommittee to use these models when they are
    completed.
        Thank you.
                                     ______

                         Letter From Howard A. Roitman

             Association of State and Territorial Solid
                                    Waste Management Officials,
                                        Washington, DC, April 24, 1998.
    Hon. Christopher S. Bond,
    Chairman, Subcommittee on VA, HUD and Independent Agencies
            Appropriations, U.S. Senate, Washington, DC.
        Dear Senator Bond: It is the practice of the Association of State
    and Territorial Solid Waste Management Officials (ASTSWMO) to provide
    comment from the perspective of the State program managers of solid and
    hazardous waste concerning the annual environmental budget proposed by
    the U.S. Environmental Protection Agency (EPA). Your Appropriations
    Subcommittee will soon be conducting hearings and making funding
    decisions regarding the EPA's fiscal year 1999 environmental budget
    proposal, and we know that you will move swiftly to finalize your
    recommendations for the full Appropriations Committee.
        ASTSWMO is a nonprofit association whose members are the directors
    of the State solid and hazardous waste regulatory programs. We believe
    that our members, as practicing waste managers implementing State and
    certain delegated federal program activities, have gained practical
    insights into the operation of the statutes and regulations which make
    up national policy for solid waste management and remediation programs.
    Consequently, they are well positioned to advise the Subcommittee
    regarding budgetary implications for those programs. We believe that as
    State program implementers, we have a special responsibility to address
    the budget for the national waste programs, and to share that
    evaluation with your Subcommittee. We trust the Subcommittee will
    recognize that our views are entirely bipartisan, representing the
    professional opinions of State government managers who, like you, must
    balance resources with genuine environmental needs. We have no special
    interests other than to ensure that we can carry out effective,
    environmentally sound programs in the manner prescribed by federal and
    State statutes and regulations. We respectfully request that this
    letter be made a part of the record of your Subcommittee's
    consideration of EPA's fiscal year 1999 proposed program.
        Your Subcommittee has a strong track record in support of sound
    State waste management programs and I would like to express our
    continued appreciation for that support. In this letter, we would like
    to address several of the waste-related issues in the fiscal year 1999
    EPA budget:
        Hazardous waste program grants to states.--The current Presidential
    fiscal year 1999 EPA Budget proposal indicates no growth for the
    Hazardous Waste categorical grants. Unfortunately, this continues and
    worsens the steady erosion of these essential funds to support the
    execution of federally mandated rules for both the hazardous waste and
    underground storage tank (UST) regulatory and enforcement programs. As
    the Subcommittee knows, EPA does not implement these protective and
    preventative rules; States do. Yet, while EPA has increased its own
    budget proposals by substantial amounts in recent years, it has held
    State hazardous waste funds at minimum increases, and this year no
    increase at all. We appreciate that Congress has provided these grant
    funds at the proposed level without challenge during this same period,
    but we think it is time to identify this shortcoming in the
    Administration's budget for what it is, a growing, serious problem for
    State waste programs.
        While the EPA budget continues to propose some interesting
    initiatives, someone has to stay at home and implement the current
    statutes. That ``someone'' has been State waste programs and we are
    beginning to be stretched very thin by this allocation of funds to
    federal initiatives over regulatory compliance. For example, the fiscal
    year 1997 enacted funding for the hazardous waste financial assistance
    program was $98,298,200 (the requested amount) and the fiscal year 1998
    enacted funding was $98,598,200 (again, the requested amount). In
    fiscal year 1999 there is not even a minor increase, so States are
    actually losing ground as their program responsibilities continue to
    grow, and the rate of inflation in their costs is not balanced.
        The regressive impact will be even more apparent in the UST program
    where EPA has announced a major enforcement effort to press for
    compliance with the regulatory upgrades required of all UST owners
    before December 22, 1998. Our own estimates, based on the fiscal year
    1997 reports of 27 participating State programs, indicate we are at an
    overall rate of compliance of 41 percent with that goal. Moreover, our
    members believe that the bulk of those tanks not yet in compliance
    belong to small operators, historically among the most demanding
    customers to bring aboard through intense compliance assistance
    programs. Yet, under the EPA proposed budget, this categorical grant
    remains at $10,544,700, exactly where it has been frozen since fiscal
    year 1997. When you divide that equally among 50 States, you will see
    why we cannot gain much ground at this funding rate.
        Leaking underground storage tanks cleanups.--Keeping with the theme
    of supporting underground tank programs, we are also disappointed to
    see the Administration set such a low threshold for fiscal year 1999's
    Leaking Underground Storage Tank (LUST) Fund expenditures. Last year's
    appropriation of these already collected trust funds was $65,000,000,
    and the task ahead is enormous. For some reason, the Administration has
    set its goal at only $71,000,000 ($69,100,000 for actual cleanup work)
    for fiscal year 1999. We know the so-called ``pipeline'' of sites
    awaiting these cleanups is full, States make up the vast balance of
    this funding along with responsible parties, and of those thousands of
    UST's still out of compliance, many will simply walk away, leaving
    leaking tanks behind. We cannot explain why EPA has set this threshold
    so low, yet leaking tanks reportedly remain the major source of ground
    water contamination. If States are given more resources in this common
    area of site contamination, we can make great strides. For example, in
    fiscal year 1993 States received $83,610,000 in LUST funding, and
    managed to achieve 31,621 tank cleanups as a result. Consequently, we
    suggest the Subcommittee explore this budget element for a substantial
    increase if we are seeking significant results.
        Superfund.--Finally, we would like to address the federal Superfund
    program request for fiscal year 1999 funds. This is fundamentally a
    federal program in its current statutory configuration. State program
    managers have a critical interest in the way EPA conducts that program.
    Congress recognized this by providing a statutory provision requiring
    the meaningful participation of States in site decisions, and has
    provided some funding to make that State involvement possible. Also,
    States must shoulder 10 percent of fund financed site costs as their
    share of the cleanup. In addition to the NPL sites, programs such as
    Brownfields depend upon State site management under voluntary cleanup
    programs or State Superfund cleanup laws. The net result is that States
    care very much about progress in Superfund cleanups, and continue to do
    their share to move that program along.
        In fiscal year 1999 EPA plans to continue these programmed cleanups
    and perhaps accelerate them. Our members must be supportive of
    continued progress in this federal cleanup program as long as it
    involves a partnership in selecting and prioritizing new cleanups. We
    have discussed this with EPA and have their assurances that the Regions
    will work with States as new work is selected and scheduled so that
    State priorities are considered, and the work requiring State resources
    to achieve the meaningful involvement required considers the State's
    ability to work alongside their federal counterparts. It is especially
    important that any NPL starts which will begin under fund lead, and
    which require State matching funds, must have prior State concurrence
    to ensure that the money can be obtained from State legislatures in
    time to proceed. Consequently, we tend to look at this issue as one
    that will be resolved on a local basis, as Regions and State programs
    work through the difficult decisions of site-by-site costs and
    benefits. We understand that Congress must address this proposed
    increase on a national level, but until these site decisions can be
    worked out at the Region-State level, we are unable to put forward a
    collective view about the overall funding levels. We do believe that
    funding is important for those sites where EPA and States have agreed.
        On a national basis, we are much more troubled to see that the
    remaining balance of the Superfund trust fund is being spent down with
    little indication that CERCLA will be reformed and reauthorized in time
    to ensure funding at least at current levels by fiscal year 2000. We
    say this with no intent to be critical of any party engaged in the
    extremely difficult reauthorization efforts. We too have been very
    active in this debate, and so we are more aware than many of the very
    deep divisions of views and convictions that make agreement so
    difficult. We commend those members of Congress who have kept these
    negotiations moving long after many would have given up, and count
    ourselves among those still committed to reaching resolution in the
    105th Congress.
        However, our members recall the 1984-85 period of uncertainty when
    responsible parties began to have doubts about the future and federal
    offices were concerned with future contracting in periods where funds
    were not yet authorized or appropriated. This uncertainty had the
    effect of delaying a significant number of cleanups. As a matter of
    contingency, we urge Congress to begin to consider how we can avoid
    such a hiatus in the event CERCLA cannot be reauthorized in the current
    situation, and provide some degree of certainty to the program beyond
    fiscal year 1999. We have no specific recommendations, but we hope that
    if it is not possible to reauthorize the statute and reestablish some
    flow of income for the trust fund, the Appropriations Committees will
    find some way to assure the nation that the Congress can and will keep
    the cleanup constructions going into fiscal year 2000. We should not go
    into development of a fiscal year 2000 federal budget without some
    degree of certainty. The Subcommittee's goal to support these cleanups
    has always been clear, but we hope that you can establish that sense of
    continuity to those directly involved in planning future CERCLA
    cleanups.
        In closing we thank you for your consideration of our views and for
    your past support of State waste program efforts. Your Subcommittee has
    been key to adequate funding of that program in past budget years and
    we have great confidence that you will be central to a successful
    outcome for the fiscal year 1999 process as well. We are ready at any
    time to assist your staff in exploring our proposals in greater detail,
    and would welcome their inquiries. Should you consider it useful to the
    Subcommittee, we would volunteer to testify on any aspect of our
    program knowledge as you proceed with the difficult task of evaluating
    national needs and making the hard choices that lie ahead. Please
    contact ASTSWMO's Executive Director, Thomas Kennedy, at telephone
    number (202) 624-5828 or fax number (202) 624-7875 for any further
    information or assistance.
        We hope that our information will constructively assist you in that
    task. Thank you for your past support of waste program efforts, and for
    your consideration of these recommendations.
                Sincerely,
                                             Howard A. Roitman,
                                                             President.
                                     ______

                 Prepared Statement of the University of Miami

        Mr. Chairman and Members of the Subcommittee, I appreciate the
    opportunity to present testimony on behalf of the University of Miami.
    There are three very important projects which the University is working
    on and looking for your support: the first project, a joint
    collaboration between the University of Miami, Florida State
    University, the University of Florida and the University of South
    Florida concerning El Nino; the second, the formation of a National
    Center for Coral Reef Studies, which builds on the University's long
    history of leadership in U.S. coral reef research; and our third
    project, funding a demonstration project to handle medical waste
    treatment facility.
                               el nino consortium
        On behalf of the University of Miami and Florida State University
    jointly I commend you, Mr. Chairman, for your affirmative response to
    the Florida Delation's earlier requests 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 South Oscillation (ENSO) events as a
    major source of climate fluctuations, together with advances in ENSO
    predictability, suggest that forecasts have significant potential for
    benefitting agricultural productivity and economic decision-making. For
    fiscal year 1999, we seek $3 million for the Florida Regional
    Application Center.
        The geographic focus of the project will include the southeastern
    U.S., a large food producer 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 and 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 by successful
    applications of forecasts to agriculture and other sectors which would
    benefit best in the southeastern United States that began in 1996; and
    (3) assess the value of climate predictions to different agricultural
    sectors in these southeastern region.
                     national center for coral reef studies
        Local changes in water quality, broader scale environmental changes
    potentially related to global climate change such as global warming,
    and fisheries over-exploitation of coral reef ecosystems, are known to
    be contributing to deterioration of coral reefs world-wide. Scientists
    are hampered in helping government make critical and socially difficult
    management decisions by our rudimentary understanding of coral reef
    ecosystem processes. Coral reef environmental research has historically
    been piece-meal and underfunded, with few attempts at true
    interdisciplinary process-oriented research.
        We respectfully request that $2 million in funding by EPA be made
    available to establish a National Center for Atlantic and Caribbean
    Coral Reef Studies. These funds will be used by the Center to foster
    greater organization and collaboration within the U.S. scientific
    community, to develop a new level of understanding about the processes
    and environmental conditions necessary for the establishment, survival
    and sustainable use of coral reef ecosystems, and to assist in the
    transfer of this information to managers and the general public. The
    Center will establish visiting professorships and small
    interdisciplinary working groups, comprised of preeminent U.S. and
    international scientists. The tasks of these groups will be to
    synthesize and integrate existing information, and to develop new
    approaches to studying specific and significant gaps in our
    understanding of coral reef function. The Center will also assemble
    small groups of scientists to conduct pilot projects to demonstrate the
    feasibility of the proposed new approaches. The Center will involve
    young scientists from throughout the region, as post-doctoral fellows,
    and thus contribute to the training of the next generation of coral
    reef scientists. This thoughtful approach to coral reef science would
    be unique in the United States.
              electron beam technology for treating medical waste
        Recent EPA regulations limiting emissions from medical waste
    incinerators have forced all hospitals to reconsider their medical
    waste treatment approaches. Considering the fact that most hospitals
    utilized incineration processes in the past, it is clear that these new
    regulations have forced huge numbers of medical facilities to explore
    alternative technologies to incinerate. The first technology to be
    explored in replacement of incineration is autoclaving. However, this
    has always been a particularly troublesome technology for hospitals,
    due to odors, maintenance of the equipment and the requirement to
    subsequently dispose of a very unmanageable residue.
        While several new technologies have evolved over the past few
    years, in an attempt to replace incineration, none have been
    demonstrated to efficiently deal with the problem of infectious medical
    waste. Technologies that totally destroy the waste for example are
    extremely expensive, and equipment that is included in these designs,
    remains untested and therefore, will require an inordinate amount of
    maintenance over the life of the equipment.
        One technology that shows promise for handling infectious medical
    waste is high energy electron beam treatment of the waste. This
    technology renders waste disinfected and therefore capable of being co-
    mingled with non-medical solid waste. Once the medical waste has been
    disinfected, it can be further processed for instance, by shredding to
    reduce volume, if that is an issue in selected communities. Usually,
    the volume of medical waste is not a consideration, only its infectious
    nature.
        Funding from the Department of Energy, Florida Power & Light
    Company (a utility in South Florida), the Electric Power Research
    Institute and the University of Miami have supported development of
    electron beam technology for treatment of hazardous medical waste.
    Utilizing close to $2 million in funds, the world's first prototype
    facility, capable of treating up to 500 lbs per hour, was constructed
    at the Jackson Memorial Hospital/University of Miami Medical School
    Complex in Miami, Florida. This new and unique facility includes an 8
    million volt linear accelerator, coupled with a conveyor system and
    commercial shredding facilities. The facility was inaugurated in 1997,
    and since that time has undergone some modifications to the equipment,
    as well as testing in order to obtain permits for operations from State
    regulatory agencies. In early 1998, a license to operate as a medical
    waste treatment facility was issued by the State of Florida, therefore,
    making this facility the first licensed medical waste treatment
    facility utilizing electron beam technology in the world. This facility
    now is poised to demonstrate its treatment efficacy and cost
    effectiveness on real medical waste generated within the hospital
    complex at Jackson Memorial Hospital in Miami, Florida.
        It is respectfully requested that the EPA provide $1.5 million to
    support the demonstration of electron beam technology for treating
    infectious medical waste in Miami, Florida, utilizing the unique
    facilities recently constructed there. In order for the technology to
    become commercially acceptable, demonstrations on actual medical waste
    generated in hospitals must be undertaken. The facility is located on
    the Jackson Memorial Hospital/UM Medical School Complex in Miami, and
    therefore, there is ready access to all types of medical waste
    generated in this complex. The complex comprises approximately five
    hospitals with a total bed capacity of close to 2,700. Therefore, all
    types of medical wastes are generated in this facility and can be
    tested through the electron beam process. EPA support of this
    technology would help in the agency's efforts to identify new
    technologies to offset the phasing out of medical waste incinerator
    capacity due to the recent USEPA regulations.
        Studies supported by the above request would focus on the ability
    of waste from designated sections of the hospital to be treated by the
    electron beam system. Experiments would monitor the treatment
    efficiency, as well as power requirements, to achieve selected degrees
    of treatment. Dosimetry experiments would also need to be run in order
    to verify total waste treatment, when exposed to the electron beam
    field. Other studies will include an evaluation of volume reduction
    capacities, due to shredding, utilizing commercial equipment already
    available at the facility. In addition to the above fundamental work,
    selected sections of the hospital will be re-instrumented with
    collection facilities to make the actual handling of medical waste more
    safe, and simple for hospital staff. The E-beam system will be coupled
    with a shredding system, therefore, the product leaving the treatment
    plant will be a disinfected material with a volume reduction of
    approximately 80 per cent. Landfills in the South Florida area
    receiving these residuals will be monitored both for acceptance by the
    municipalities as well as the behavior of the shredded medical waste.
        This full scale demonstration will allow for a determination of the
    overall treatment efficiency of the electron beam process. In addition,
    true costs can be generated, because of the scale of the facilities,
    which will then be utilizable by agencies and municipalities interested
    in this technology. Once this demonstration has been concluded, this
    technology then can be readily commercialized as the full scale data
    will be available to the public.
        Mr. Chairman and Members of the Subcommittee, thank you again for
    your time and allowing me to provide information on these three very
    significant projects.
                                     ______

         Prepared Statement of the American Society of Civil Engineers

        Mr. Chairman and Members of the Subcommittee: The American Society
    of Civil Engineers (ASCE) is pleased to have this opportunity to
    comment on the administration's fiscal 1999 budget request for the
    Federal Emergency Management Agency's (FEMA) National Dam Safety
    Program.
        ASCE was founded in 1852 and is the country's oldest national civil
    engineering organization. It represents more than 120,000 civil
    engineers in private practice, government, industry and academia who
    are dedicated to the advancement of the science and profession of civil
    engineering.
        ASCE has a long standing interest in FEMA's mitigation program.
    This program provides for the development, coordination and
    implementation of policies, plans and programs to eliminate or reduce
    the long-term risk to life and property from natural hazards such as
    floods, earthquakes and dam failures.
                                fiscal year 1999
        First, we would like to begin by thanking the members of this
    subcommittee for their support last year in providing the full funding
    of $2.9 million for the National Dam Safety Program--the first national
    program of this type aimed toward preventing dam failures. ASCE
    commends Chairman Bond, in particular, for his continued support and
    leadership on this important issue.
        ASCE believes the $2.9 million is a solid starting point for states
    to begin improving their dam safety programs. However, dam safety is
    not a one-year program and much more work needs to be done to ensure
    that the nation's 93,000 dams continue to work effectively and safely.
    The inspection and maintenance of our nation's dams is an on-going
    problem, and requires continued attention to avert potentially
    catastrophic consequences.
        Notwithstanding the immense benefits to be gained, the
    administration's fiscal 1999 budget request of $1.5 million falls
    woefully short of the $3.9 million authorized in the Act; and more
    importantly, it is inadequate to implement the National Dam Safety
    program in even a minimally acceptable manner. This request is an
    alarming step backwards for public safety at a time when states--which
    are struggling with minimal budgets and staff--are just beginning to
    make their first real progress toward the establishment of truly
    meaningful safety programs.
        Annual budgets in some states average less than $10 per dam; and in
    some cases, one employee has the responsibility to inspect and evaluate
    more than 2,500 dams. A handful of states do not even have adequate
    programs in place to regulate the safety of their dams. The National
    Inventory of Dams revealed that a majority of high or significant
    hazard dams do not have Emergency Action Plans in place which would
    mean the difference between timely downstream evacuation and disaster.
        For these reasons, ASCE respectfully requests this subcommittee's
    support for additional funding of $2.4 million in fiscal year 1999 for
    FEMA to implement the program in accordance with the intent of the Act.
    This modest, yet vital, funding will enable the states to improve their
    fledgling dam safety programs, which in turn, will translate into
    reduced risks to life and property. Dam failures are extremely
    expensive from all points of view, and we should give special attention
    to the old adage that ``An ounce of prevention is worth a pound of
    cure.''
        The following activities will be funded through this appropriation:
      --$2 million for incentive grants to states to upgrade their dam
            safety programs;
      --$500,000 for training State Dam Safety Staff;
      --$1 million for research to improve the techniques and equipment for
            rapid and effective dam inspections; and
      --$400,000 for salaries and expenses for FEMA to administer the
            program.
                                dam repair costs
        Dam failures affect thousands of lives and cost millions of
    dollars. The 1976 failure of the Teton Dam resulted in damages of $900
    million and 11 fatalities. The failure in July 1982 of Lawn Lake Dam, a
    small earth embankment, produced $35 million in damages and three
    fatalities. In 1996, the failure of a small dam in New Hampshire
    resulted in one death and $5.5 million in damages.
                                 dam conditions
        Reports show that an alarming number of dams across the country are
    showing signs of age and lack proper maintenance. The American Society
    of Civil Engineers, in its recently released 1998 report card on the
    nation's infrastructure, estimates that it will take over $1 billion to
    rehabilitate the 1,800 dams that have been identified as unsafe in the
    United States.
        Downstream development is increasing. Most older dams were built
    without adequate spillways to release water in heavy rains, which
    causes water to run over the top. Inadequate spillway capacities are
    the most common deficiency and a major cause of dam failures. Dam
    safety officials estimate that thousands of dams are at risk of failing
    or are disasters waiting to happen. One-fourth of all U.S. dams are
    more than 50 years old, and by the year 2020 that figure is expected to
    increase to 85 percent.
        Approximately 9,280 regulated dams nationwide are considered to be
    high-hazard (category I), meaning that their failure will likely cause
    loss of life and significant property damage. Even more significant are
    the roughly 1,800 regulated dams that are considered to be unsafe. Many
    of these are also in high-hazard locations. This means they have
    deficiencies which leave them more susceptible to failure. Thirty-five
    percent of the high-hazard dams have last inspection dates prior to
    1990. Thousands of other dams are in need of rehabilitation to keep
    them from becoming unsafe. These repair projects are on hold because of
    a lack of funding.
        Equally alarming is the fact that many dams built more than 50 to
    100 years ago have been abandoned and the owners are unknown. These
    dams are not inventoried, inspected or regulated, and no one is
    volunteering to pay for their repair.
        Many civil engineers involved in the operation, maintenance and
    inspection of the nation's dams know all too well the risks associated
    with unsafe dams in high-hazard locations. In North Carolina alone
    there are 874 dams in ``high-hazard'' locations with 40 classified as
    unsafe.
        A complete chart of states' dam inventory data is included at the
    end of this written testimony.
                                   conclusion
        In closing, ASCE strongly urges this subcommittee to recognize the
    benefits of this modest investment in public safety by providing
    additional funding of $2.4 million to enable FEMA to implement the
    National Dam Safety Program.
        ASCE looks forward to working with the subcommittee and its staff
    on this critical public safety issue.

                                              1998 STATE DAM INVENTORY DATA
    ----------------------------------------------------------------------------------------------------------------
                                                     Total
                       State                        national     Total State   State high- State reg.    Government
                                                 inventory \1\  regulated \2\  hazard \3\  unsafe \4\  ownership \5\
    ----------------------------------------------------------------------------------------------------------------
    Alabama....................................        1,570          1,704           184         150           25
    Alaska.....................................           99             87            18  ..........           55
    Arizona....................................          315            214            73          23          173
    Arkansas...................................          927            427            98          25          363
    California.................................          523          1,232           394  ..........          536
    Colorado...................................        1,648          1,808           292         189          428
    Connecticut................................          707          3,230           236          NR          251
    Delaware...................................           73             98             9          NR           75
    Florida....................................          572             NR            NR          NR           15
    Georgia....................................        4,853          3,311           366          57          634
    Hawaii.....................................          129            129            56  ..........           29
    Idaho......................................          343            431           100          13           80
    Illinois...................................        1,226          1,226           156          NR          387
    Indiana....................................        1,001          1,506           245          NR          316
    Iowa.......................................        2,465          2,514            66           2        1,437
    Kansas.....................................        6,077          9,899           200          51        1,363
    Kentucky...................................          955            924           147  ..........           NR
    Louisiana..................................          381            311            12  ..........           90
    Maine......................................          617            694            23          59           57
    Maryland...................................          273            361            56           6          162
    Massachusetts..............................        1,528          2,921           333          21          685
    Michigan...................................          909          1,191            83          NR          378
    Minnesota..................................          932            852            40          NR          532
    Mississippi................................        3,191          3,328           238          10          121
    Missouri...................................        4,032            614           195          20          206
    Montana....................................        3,517          3,219           153          13          795
    Nebraska...................................        2,029          2,029            92  ..........        1,027
    Nevada.....................................          323            577           106           8           74
    New Hampshire..............................          613          3,106            87  ..........          364
    New Jersey.................................          806          1,580           183          32          350
    New Mexico.................................          501            522           160           3          152
    New York...................................        1,633          5,645           372          57          676
    North Carolina.............................        2,699          4,646           874          40          199
    North Dakota...............................          770          1,308            26           5          191
    Ohio.......................................        1,766          2,703           502         450          505
    Oklahoma...................................        4,510          4,380           145           5          150
    Oregon.....................................          833          3,733           122  ..........          186
    Pennsylvania...............................        1,315          2,886           735           7          501
    Puerto Rico................................           36             36            33  ..........           31
    Rhode Island...............................          185            506            17  ..........           80
    South Carolina.............................        2,252          2,242           149           3          283
    South Dakota...............................        2,392          2,252            48           4          140
    Tennessee..................................        1,044            593           136          28          382
    Texas......................................        6,838          7,247           818         403        2,734
    Utah.......................................          654          1,948           214          41          198
    Vermont....................................          343          1,001            51          NR          141
    Virginia...................................        1,581            482           103          50          360
    Washington.................................          653            865            94          13          238
    West Virginia..............................          537            354           248          49          233
    Wisconsin..................................        1,291          1,080           192          NR          618
    Wyoming....................................        1,216          1,332            64           3          221
                                                --------------------------------------------------------------------
          Total................................       74,467         93,952         9,280       1,837       19,006
    ----------------------------------------------------------------------------------------------------------------
    \1\ Includes federal and non-federal dams over 25 ft. in height or 50 acre-feet in volume; or anything above 6
      ft. in height with downstream damage potential should it fail.
    \2\ Includes all dams under state regulatory control.
    \3\ High-Hazard by state definition derived from state inventory in column 2.
    \4\ Dams with identified deficiencies by state definition (varies state to state) derived from state inventory
      in column 2.
    \5\ Derived from national inventory in column 1.

    Note: Inventory sizes vary from state-to-state because of number of dams, but also because state laws vary on
      which dams are included under their jurisdiction.
    NR--Not Reporting. Some states do not keep data on ``high-hazard'' and/or ``unsafe'' categories.

    [GRAPHIC] [TIFF OMITTED] TVA.007

     American Society of Civil/Engineers' ``1998 Report Card for America's
                                  Infrasture''

    Roads.............................................................    D-
    Bridges...........................................................    C-
    Mass Transit......................................................   C
    Aviation..........................................................    C-
    Schools...........................................................   F
    Drinking Water....................................................   D
    Wastewater........................................................    D+
    Dams..............................................................   D
    Solid Waste.......................................................    C-
    Hazardous Waste...................................................   D
                            -----------------------------------------------------------------
                            ________________________________________________
          Average grade...............................................   D

     National Council on Public Works Improvement's 1988 ``Report Card on
                          the Nation's Public Works''

    Highways..........................................................    C+
    Mass Transit......................................................    C-
    Aviation..........................................................    B-
    Water Supply......................................................    B-
    Wastewater........................................................   C
    Water Resources...................................................   B
    Solid Waste.......................................................    C-
    Hazardous Waste...................................................   D
                            -----------------------------------------------------------------
                            ________________________________________________
          Average grade...............................................   C

        ASCE cautions against directly comparing its grades with the
    Council's grades. Although ASCE examined largely the same categories as
    the Council did in 1988, there are differences worth noting. ASCE added
    a category on school buildings and divided the Council's ``highways''
    category into two categories: ``roads'' and ``bridges,'' to more
    specifically reflect their conditions. The Council also focused on
    ports, inland waterways and flood-control dams in its ``water
    resources'' category. ASCE chose to focus on the nation's dams.
        ASCE experts based their evaluations on existing reports (see
    corresponding Issue Briefs for each category). ASCE determined its
    grades by evaluating the infrastructure's condition, performance,
    capacity and funding.
        ASCE's 1998 Report Card for America's Infrastructure Advisory
    Panel:
      --Charles A. Parthum.--He is chair of ASCE's Committee on Government
            Affairs, and is a past-president of the Society. He is a
            consultant for the environmental engineering firm Camp Dresser
            & McKee in Cambridge, Mass.
      --Dr. C. Michael Walton.--He is chair of ASCE's National
            Transportation Policy Committee, and chair of the Department of
            Civil Engineering at the University of Texas at Austin. He has
            served on a number of government-appointed national study
            panels, and review committees for the Transportation Research
            Board and the National Research Council.
      --Virginia Valentine.--She is chair of ASCE's National Infrastructure
            Policy Committee, and serves on ASCE's Board of Direction. She
            is a senior vice president for the water resources engineering
            firm Post, Buckley, Schuh & Jernigan, Inc., in Las Vegas.
      --Robert T. Chuck.--He is chair of ASCE's National Water Policy
            Committee, and is the Pacific Islands Water Resources Manager
            in the Honolulu office of the environmental engineering firm
            CH2M Hill.
      --Conrad G. Keyes, Jr..--He is chair of ASCE's National Environmental
            Systems Policy Committee, and is the principal planning
            engineer for the U.S. Section of the International Boundary &
            Water Commission of the U.S. and Mexico.
                                     ______

      Prepared Statement of the Association of State Dam Safety Officials

        Mr. Chairman and members of the Subcommittee: The Association of
    State Dam Safety Officials (ASDSO) is pleased to have the opportunity
    to comment on the Clinton Administration's fiscal year 1999 budget
    request for the dam safety program in the Federal Emergency Management
    Agency's (FEMA) budget.
        ASDSO is a national organization of more than 1,500 state, federal
    and local dam safety officials and private sector individuals dedicated
    to improving dam safety through research, education, and communication.
    Our goal is to save lives, prevent damage to property and maintain the
    benefits of dams by preventing failures. Several devastating dam
    failures occurring in the late 1970's focused attention on the need for
    stronger coordination of dam safety programs at state and federal
    levels and led to the establishment of ASDSO in 1984.
        I would like to begin by thanking the members of this subcommittee
    for their support last year in providing the full funding of $2.9
    million for the National Dam Safety Program. In particular, ASDSO
    wishes to recognize and thank Senator Bond for his leadership and
    commitment to ensuring that this program was fully funded in last
    year's spending bill. This money has provided the states with the
    opportunity to fund research activities to improve the techniques and
    equipment for inspections and monitoring of dams and to set up training
    programs for state dam safety inspectors.
        We believe the $2.9 million offers a solid starting point for
    states to begin improving their dam safety programs. However, dam
    safety is an ongoing effort and much more work needs to be done to
    ensure that the nation's 93,000 dams continue to work effectively and
    safely. Reports show that an alarming number of dams across the country
    are showing signs of age and lack proper maintenance. By 2020, more
    than 85 percent of our dams will be more than 50 years old, which is
    the typical design life of a dam.
        The Administration's fiscal 1999 budget request of $1.5 million
    falls short of the funds needed to successfully administer the program.
    It is also well below the $3.9 million authorized in the Act. States
    are just beginning to use the $2.9 million to upgrade their dam safety
    programs, and to reduce these funds in fiscal 1999 would be extremely
    short-sighted.
        ASDSO, therefore, respectfully requests this Subcommittee's support
    for an additional increase of $2.4 million to fully fund the National
    Dam Safety Program at the $3.9 million authorized level. In doing so,
    we would also request that the $400,000 authorization for additional
    staff to administer the Program in FEMA be specifically earmarked for
    that purpose, including 4 work-years.
        The following activities will be funded through this appropriation:
      --$2 million for incentive grants to states to upgrade their dam
            safety programs;
      --$500,000 for training State Dam Safety Staff;
      --$1 million for research to improve the techniques and equipment for
            rapid and effective dam inspections; and
      --$400,000 for salaries and expenses for FEMA to administer the
            program.
        This modest, yet vital funding would help reduce the risks to life
    and property due to dam failures by providing states with resources to
    improve their dam safety programs. It is an investment in public safety
    that will reduce loss of life, property damage and much larger federal
    expenditures which come out of the National Flood Insurance Program and
    the President's Disaster Relief Fund as a result of dam failures.
                             safety and regulation
        Regulation is essential for the reduction of the hazards involved
    with dams. That responsibility rests almost entirely with the states.
    More than 95 percent of the dams in the U.S. are privately owned and
    regulated by state dam safety agencies. While the majority of states
    have been working to improve their programs in the last 20 years, most
    are still struggling with minimal budgets and staff. A handful of
    states do not even have adequate programs in place to regulate the
    safety of their dams. The 1995-96 National Inventory of Dams revealed
    that a majority of high or significant hazard dams do not have
    Emergency Action Plans in place which would mean the difference between
    timely downstream evacuation and disaster.
        Safety is essential to all regulated dams, but most importantly to
    the 9,281 dams determined by regulators to be high-hazard (category I),
    meaning that their failure will likely cause loss of life and
    significant property damage. Even more significant are the
    approximately 1,800 dams which are considered to be unsafe. Many of
    these are also in high-hazard locations. This means they have
    deficiencies which leave them more susceptible to failure. Thirty-five
    percent of the high-hazard dams have a last inspection date prior to
    1990. A recent survey conducted by ASDSO showed thousands of other dams
    are in need of rehabilitation to keep them from becoming unsafe.
        Every member of this subcommittee has high-hazard dams impounding
    water within their state. Nearly every member of the subcommittee has
    at least one unsafe, high-hazard dam operating in their home state.
    North Carolina, Pennsylvania, and Texas have over 500 high hazard dams
    each in their states. North Carolina has the most high hazard dams for
    a total of 874.
        Other states with ``high hazard'' and ``unsafe'' dams include:
            High hazard                                               Unsafe
    502 in Ohio.......................................................   450
    394 in California.......................................................
    372 in New York...................................................    57
    366 in Georgia....................................................    57
    292 in Colorado...................................................   189
    248 in West Virginia..............................................    49
    238 in Mississippi................................................    10
    184 in Alabama....................................................   150
    183 in New Jersey.................................................    32

        A complete chart of states' dam inventory data is included at the
    end of this written testimony.
                              cost of dam failures
        I would like to give you a brief overview of the extent of dam
    hazards. Millions of Americans rely on dams for water supply, power
    generation, flood control, irrigation and recreation. High safety
    standards for these dams can keep them from failing. But high dam
    safety standards have not been the norm in the United States until the
    past 20 years, and these standards have only been put in place in
    response to several devastating failures.
        It has been said that few man-made structures have the potential
    for causing catastrophic devastation as dams do should they fail. When
    we think of devastating dam failures and flooding, the highly-
    publicized and significant events of the past come to mind such as the
    South Fork Dam failure of 1889 which killed 2,209 people in Johnstown,
    Pennsylvania. This infamous disaster has always been attributed to the
    lack of dam safety technology and awareness.
        In general, the costs of dam failures are overlooked. Several other
    factors need to be considered when calculating the total costs
    including fatalities and injuries, property damage, emergency
    operations and clean up costs, loss of dam infrastructure and the
    revenue it generates, and environmental and economic impacts on nearby
    communities.
        Dam failures affect thousands of lives and cost millions of
    dollars. The 1976 failure of the Teton Dam resulted in damages of $900
    million and 11 fatalities. The failure in July 1982 of the Lawn Lake
    Dam, a small earth embankment, produced $35 million in damages and
    three fatalities. More recently, the failure in 1996 of a small dam in
    New Hampshire resulted in one death and $5.5 million in damages.
        In 1997, the Ohio Cecil Hollow Dam failed and caused high velocity
    flood waters to completely surround and devastate homes. Items
    including family cars and household possessions were washed downstream.
    The heavy rainfall and runoff overwhelmed the capacity of the dam and
    caused it to overtop and breach, releasing the flood waters into the
    steep and narrow valley below.
        A dam at Camp Inawediwin owned by the Girl Scouts in Tabernacle
    Township, New Jersey had a downstream slope failure which resulted in a
    12-year old boy being critically injured. The boy was playing in the
    area of the dam and was buried in the earth failure. In the past two
    years, there have been 59 failures and 56 emergency incidents in about
    30 states. Information on these and other dam failures is collected by
    the National Performance of Dams Program which is located at Stanford
    University.
                             cause of dam failures
        Approximately two-thirds of all dam failures are caused by floods.
    The second leading cause of dam failure is excessive leakage and
    internal erosion, which accounts for 19 percent of all failures.
    Additional causes include animal burrows, concrete deterioration,
    deterioration and failure of structures and equipment items required to
    provide outlet capability during flood emergencies, earthquakes,
    embankment instability, foundation problems, ice pressure, settlement,
    and structural failure.
                                   conclusion
        Dams are a critical part of our national infrastructure. They
    provide benefits upon which our communities and industries depend.
    However, along with the benefits is the need to maintain safe, reliable
    structures.
        The total economic and social damage of one dam failure, not to
    mention the incalculable loss of life, easily exceeds the cost of the
    dam safety program. In one incident alone, the cost of the damage from
    the dam failure was $5.5 million which is nearly twice the cost of the
    program.
        Full funding of the National Dam Safety Program would provide the
    needed tools to help state dam safety programs and would encourage
    states to advance their safety programs, thereby enabling them to
    prepare for disasters before they strike.
        In closing, we strongly urge this subcommittee to recognize the
    benefits of this modest investment in public safety by providing
    additional funding of $2.4 million in order for FEMA to implement the
    National Dam Safety Program.
        ASDSO looks forward to working with the subcommittee and its staff
    on this critical public safety issue.

                                              1998 STATE DAM INVENTORY DATA
    ----------------------------------------------------------------------------------------------------------------
                                                     Total
                       State                        national     Total State   State high- State reg.    Government
                                                 inventory \1\  regulated \2\  hazard \3\  unsafe \4\  ownership \5\
    ----------------------------------------------------------------------------------------------------------------
    Alabama....................................        1,570          1,704           184         150           25
    Alaska.....................................           99             87            18  ..........           55
    Arizona....................................          315            214            73          23          173
    Arkansas...................................          927            427            98          25          363
    California.................................          523          1,232           394  ..........          536
    Colorado...................................        1,648          1,808           292         189          428
    Connecticut................................          707          3,230           236          NR          251
    Delaware...................................           73             98             9          NR           75
    Florida....................................          572             NR            NR          NR           15
    Georgia....................................        4,853          3,311           366          57          634
    Hawaii.....................................          129            129            56  ..........           29
    Idaho......................................          343            431           100          13           80
    Illinois...................................        1,226          1,226           156          NR          387
    Indiana....................................        1,001          1,506           245          NR          316
    Iowa.......................................        2,465          2,514            66           2        1,437
    Kansas.....................................        6,077          9,899           200          51        1,363
    Kentucky...................................          955            924           147  ..........           NR
    Louisiana..................................          381            311            12  ..........           90
    Maine......................................          617            694            23          59           57
    Maryland...................................          273            361            56           6          162
    Massachusetts..............................        1,528          2,921           333          21          685
    Michigan...................................          909          1,191            83          NR          378
    Minnesota..................................          932            852            40          NR          532
    Mississippi................................        3,191          3,328           238          10          121
    Missouri...................................        4,032            614           195          20          206
    Montana....................................        3,517          3,219           153          13          795
    Nebraska...................................        2,029          2,029            92  ..........        1,027
    Nevada.....................................          323            577           106           8           74
    New Hampshire..............................          613          3,106            87  ..........          364
    New Jersey.................................          806          1,580           183          32          350
    New Mexico.................................          501            522           160           3          152
    New York...................................        1,633          5,645           372          57          676
    North Carolina.............................        2,699          4,646           874          40          199
    North Dakota...............................          770          1,308            26           5          191
    Ohio.......................................        1,766          2,703           502         450          505
    Oklahoma...................................        4,510          4,380           145           5          150
    Oregon.....................................          833          3,733           122  ..........          186
    Pennsylvania...............................        1,315          2,886           735           7          501
    Puerto Rico................................           36             36            33  ..........           31
    Rhode Island...............................          185            506            17  ..........           80
    South Carolina.............................        2,252          2,242           149           3          283
    South Dakota...............................        2,392          2,252            48           4          140
    Tennessee..................................        1,044            593           136          28          382
    Texas......................................        6,838          7,247           818         403        2,734
    Utah.......................................          654          1,948           214          41          198
    Vermont....................................          343          1,001            51          NR          141
    Virginia...................................        1,581            482           103          50          360
    Washington.................................          653            865            94          13          238
    West Virginia..............................          537            354           248          49          233
    Wisconsin..................................        1,291          1,080           192          NR          618
    Wyoming....................................        1,216          1,332            64           3          221
                                                --------------------------------------------------------------------
          Total................................       74,467         93,952         9,280       1,837       19,006
    ----------------------------------------------------------------------------------------------------------------
    \1\ Includes federal and non-federal dams over 25 ft. in height or 50 acre-feet in volume; or anything above 6
      ft. in height with downstream damage potential should it fail.
    \2\ Includes all dams under state regulatory control.
    \3\ High-Hazard by state definition derived from state inventory in column 2.
    \4\ Dams with identified deficiencies by state definition (varies state to state) derived from state inventory
      in column 2.
    \5\ Derived from national inventory in column 1.

    Note: Inventory sizes vary from state-to-state because of number of dams, but also because state laws vary on
      which dams are included under their jurisdiction.
    NR--Not Reporting. Some states do not keep data on ``high-hazard'' and/or ``unsafe'' categories.

                                     ______

                  DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

       Prepared Statement of Mayor Bruce Delaney, City of Gainesville, FL

        Mr. Chairman: On behalf of the City of Gainesville, Florida, I
    appreciate the opportunity to present this written testimony to you
    today. The City of Gainesville is seeking $900,000 in federal funds in
    the fiscal year 1999 VA/HUD Appropriations bill for a business
    incubator project to promote economic development in East Gainesville
    and to move people off of welfare into the workforce. Key components of
    the Gainesville Enterprise Assistance Center are:
      --Real Estate Acquisition.--The City of Gainesville expects to
            receive the donation of a 75,000 square foot office warehouse
            facility with a market value of about $1.2 million.
      --The City requires $900,000 to renovate the facility as a business
            incubator.
        The City of Gainesville's Economic Development Department is
    working in collaboration with the University of Florida, the North
    Florida Technology Innovation Corporation, Santa Fe Community College,
    the Small Business Development Center, the Gainesville Area Chamber of
    Commerce, the Council for Economic Outreach, the Southern Technology
    Application Center and other local organizations on this project.
    Together, these organizations possess the staff and expertise to
    provide services and administer, implement and market the project. If
    the property and funding are obtained, project implementation will
    begin on or before October 1, 1998. Gainesville needs to create greater
    opportunities to support small business startups that can fuel job
    creation and expand the tax base in our local area.
      --It has been documented that the majority of new jobs in America are
            generated by small companies.
      --A survey has been done of local start up companies which indicates
            that 60 percent of the respondents would have used and
            benefited from a business incubator had one been available.
      --Gainesville is a community rich in intellectual capital due to the
            diversity of colleges and programs at the University of
            Florida. Research at UF has resulted in an abundance of
            technology that can be licensed by private entrepreneurs. In
            addition, new business startups unrelated to the university are
            emerging continuously in the north central Florida region.
      --Much of UF's available technology leaves the community and is
            developed in cities where programs exist to help new business
            owners succeed. Many of the non-UF business ventures that start
            in the area fail due to a lack of business assistance.
        There will be direct and indirect economic development impacts from
    this project.
      --The incubator will be located in the City of Gainesville Enterprise
            Zone. The area's residents live in some of the census tracts
            with the City's highest unemployment and poverty rates.
            According to the 1990 Census, census tract four where the
            project is located has a 20.4 percent poverty rate and a 10
            percent unemployment rate. Surrounding tracts (five, six and
            seven) range from 36.6 percent to 46.82 percent poverty rate
            and 4.1 percent to 15.8 percent unemployment rate. The building
            targeted for use as the incubator is a former hardware and
            lumber store which once employed 100 workers but closed two
            years ago and is still vacant.
      --One of the main goals of the City is the creation of jobs for the
            unemployed and the welfare recipients that will be forced off
            welfare as part of the President's welfare reform initiative.
      --The proposed incubator will function to help grow companies that
            can create needed jobs in the enterprise zone, add to the
            city's tax revenue stream, and help diversify the employment
            base. The incubator will provide valuable business development
            services to client companies so as to maximize their chance for
            survival. In addition, the City, in collaboration with other
            organizations, will seek to identify entrepreneurs and small
            business start-ups within the target area to create more
            business and employment opportunities for residents.
      --A recent study published in August 1997 entitled ``Business
            Incubation Works'', funded by a grant from the U.S. Economic
            Development Administration, gave the following findings on the
            impacts of business incubators: (1) In 1996 incubator firms
            created 468 direct and 702 total jobs, (2) Estimated public
            subsidy: $1,109 per job, (3) 97 percent of graduating firms are
            still in business, (4) 84 percent of graduating firms stay in
            their community, (5) Incubation programs contribute to their
            client companies' success, and (6) EDA funded incubators
            performed better than or equal to non-EDA funded incubators.
        In closing, Federal support is critical for the success of the
    Gainesville Enterprise Assistance Center and it is our hope that the
    Subcommittee will give our request every consideration throughout the
    fiscal year 1999 appropriations process.
                                     ______

     Prepared Statement of the University of Medicine and Dentistry of New
                                 Jersey (UMDNJ)

        We respectfully present testimony of the University of Medicine and
    Dentistry of New Jersey (UMDNJ), the largest public health sciences
    university in the nation. The UMDNJ statewide system is located on five
    academic campuses and consists of 3 medical schools and schools of
    dentistry, nursing, health related professions and biomedical sciences.
    It also comprises a University-owned acute care hospital designated as
    the State's Level One Trauma Center, three core teaching hospitals, an
    integrated behavioral health care delivery system, a University-owned
    managed care network, and affiliations with more than 100 health care
    and educational institutions statewide. No other institution in the
    nation possesses resources which match our scope in higher education,
    health care delivery, research and community service initiatives with
    state, federal and local entities.
        We appreciate this opportunity to bring to your attention three of
    the University's priority projects, which we believe are consistent
    with the mission of this committee:
        The first is an initiative to establish an International Center for
    Public Health in Newark; the second is the development of the Dean and
    Betty Gallo Prostate Cancer Center in New Brunswick; and the third is
    the creation of a Child Health Institute of New Jersey, also located in
    New Brunswick, New Jersey.
        Following is an outline of each of these initiatives for your
    consideration.
     university heights science park and the creation of the international
                            center for public health
        The International Center for Public Health is a strategic
    development initiative that will create a world class, infectious
    disease research and treatment complex in University Heights Science
    Park, Newark, New Jersey. Science Park is located in a Federal
    Enterprise Community neighborhood. The International Center will have
    substantial local, regional, national and international impacts as it
    addresses many critical social, economic, political and health related
    issues. The International Center is a $78 million anchor project that
    launches the second phase of a fifty-acre, $350 million mixed-use urban
    redevelopment initiative, University Heights Science Park. The facility
    will total 161,000 square feet and house three tenants: the Public
    Health Research Institute (PHRI), the University of Medicine and
    Dentistry of New Jersey's (UMDNJ) National Tuberculosis Center, one of
    three Federally funded TB centers, and the UMDNJ-New Jersey Medical
    School Department of Microbiology & Molecular Genetics. The
    International Center for Public Health is a priority project for UMDNJ,
    Rutgers University, the New Jersey Institute of Technology, Essex
    County College and the City of Newark.
        The core private tenant for the International Center is PHRI. PHRI
    is an internationally prestigious, 57-year-old biomedical research
    institute that conducts a broad range of infectious disease and public
    health research. A major PHRI research focus is the study of antibiotic
    resistance to life threatening bacterial organisms, and the development
    of new antibiotics.
        Among its many accomplishments over the years, PHRI has contributed
    to the development of smallpox vaccine, developed a new diagnostic
    assay for influenza, conducted early experiments on oncogenes, cloned
    the gene responsible for toxic shock syndrome, and identified the
    multi-drug resistant TB strain ``W''. PHRI's current research centers
    on molecular pathogenicity, drug discovery, drug resistance, diagnostic
    and vaccine development, and gene expression. Scientific disciplines
    include virology, immunology, biochemistry, genetics, cell and
    structural biology, and regulation of cell development. Presently, PHRI
    supports a staff of 110, including 20 Principal Investigators. These
    numbers will double in the move to the International Center.
        UMDNJ will be the primary medical center linkage and academic
    affiliation for the Public Health Research Institute. The New Jersey
    Medical School National Tuberculosis Center at UMDNJ, one of only three
    model Tuberculosis Prevention and Control Centers in the United States
    funded by the Centers for Disease Control (CDC), will add an important
    clinical component to the International Center, since many TB patients
    also manifest other infectious diseases. The TB Center was founded in
    1993 as a response to the national resurgence of antibiotic resistant
    tuberculosis strains. At the time, Newark had the nation's second
    highest rate of TB cases for a major city.
        Rounding out the International Center's initial tenants will be the
    UMDNJ-New Jersey Medical School's Department of Microbiology &
    Molecular Genetics. The Department's relocation will add a staff of 100
    to the Center's critical mass of microbiology research. Currently the
    seventeen-member faculty conducts research in control of cell
    proliferation; cellular aging; transcriptional, post-transcriptional,
    and transcriptional regulation; mutagenis; DNA replication and
    recombination; chromosome structure and segregation; human molecular
    genetics; and molecular pathogenesis of viruses, bacteria and
    parasites.
        The fusion of PHRI, the National TB Center and the Department of
    Microbiology & Molecular Genetics will create a world class research
    and treatment complex having substantial local, regional, national and
    international impacts.
        Other collaborators in the development of the International Center
    include the New Jersey Department of Health & Senior Services (NJDHSS)
    and the pharmaceutical industry. Responsible for overseeing all
    statewide public health initiatives, NJDHSS will contract with the
    International Center to have cutting edge molecular epidemiology
    services provided to the State of New Jersey. Expanding the strategic
    use of molecular epidemiology to direct public health activities will
    facilitate prompt identification and containment of emerging and re-
    emerging pathogens. New Jersey's major biomedical companies will also
    participate in the International Center. An infectious disease
    consortium will be developed to serve as a forum for disseminating
    fundamental research on the underlying molecular processes of
    infectious disease organisms. This research will contribute to
    pharmaceutical industry development of new drug therapies for
    antibiotic resistant microorganisms. Private industry R&D facilities
    contiguous to the International Center are also being explored.
             the anchor project for university heights science park
        University Heights Science Park (UHSP) is a collaborative venture
    of Newark's four higher education institutions, the City and Community
    of Newark and private industry, designed to harness university science
    and technology research as a force for urban and regional economic and
    community development. The university sponsors, the New Jersey
    Institute of Technology (NJIT), the University of Medicine & Dentistry
    of New Jersey (UMDNJ) and Rutgers University at Newark, annually
    conduct nearly $100 million of research in Newark, much of it federally
    funded. Essex County College trains technicians in eleven science and
    technology fields and prepares Newark residents for employment with
    Science Park technology companies. The private industry Park sponsors
    include the following Newark-based companies: Public Service Electric &
    Gas, The Prudential Insurance Company, First Union National Bank and
    Bell Atlantic of New Jersey.
        UHSP is designed as a 50-acre, mixed-use, science and technology
    park in Newark's Central Ward, adjacent to the Park's four higher
    education sponsors. It is located in a Federal Enterprise Community
    neighborhood. At buildout UHSP will include one (1) million square feet
    of technology commercial space, 75,000 square feet of technology
    incubator space, up to 20,000 square feet of retail support business
    opportunities, an 800 student technology high school, two blocks of new
    and rehabilitated housing and a community day care center. The $10
    Million Science Park has been completed, and includes the NJIT
    Enterprise Development Center 2 (a technology business incubator), a
    100 child day care center and the CHEN Building (housing the industrial
    liaison laboratories for the Center for Biomaterials and Medical
    Devices). CHEN is the acronym for the Council for Higher Education in
    Newark, the coalition of the four institutions of higher education who
    founded University Heights Science Park. For almost two decades CHEN
    has jointly sponsored educational, housing, and retail/commercial
    projects in Newark's public schools and the neighborhoods of University
    Heights. The NJIT technology incubator building was completed in Fall
    1996 and is 100 percent leased. Nearly half of the 17 incubator tenants
    are MBE/WBE companies. In addition, over half of the children in the
    Science Park day care center are from the surrounding community, and
    the majority of day care center staff are from Newark. The construction
    of the International Center will anchor the second phase of Science
    Park, and serve as a magnet to attract pharmaceutical, diagnostic and
    other biomedical companies to Science Park. The Center will have the
    same impact on the Park as an anchor store does in a retail shopping
    mall.
        how the international center for public health addresses va-hud
                                   objectives
        Department of Veterans Affairs (VA).--VA sponsored research
    includes investigation of drug-resistant HIV, aspects of Gulf War
    Syndrome, and Sigma Factors in M.Tb. The International Center will
    contribute to the achievement of these objectives in the following way:
        PHRI is presently in discussions with the VA to explore the
    epidemiology of tuberculosis in the VA system. No studies have yet been
    performed to look at tuberculosis transmission on a national level with
    molecular epidemiological techniques. Studies of tuberculosis
    transmission have a particular value for the VA system, whose
    collection represents the only geographically representative source of
    TB strains in the nation. The project will type strains submitted and
    alert VA medical centers to the presence of related strains, thus
    providing warning of nosocomial or other local outbreaks.
        PHRI and the UMDNJ-New Jersey Medical School are currently working
    with an associated VA hospital in a pilot program to identify the
    extent of methicillin resistant staph infections, and to develop
    strategies to eliminate these from the hospital. If successful, this
    program will provide a model for implementation at other VA hospitals
    and additional hospitals outside the VA system.
        The Department of Housing and Urban Development (HUD).--A major HUD
    objective is to effectively implement welfare reform as required by the
    Personal Responsibility and Work Opportunity Reconciliation Act of
    1996. In addition, HUD is seeking to expand the economic and community
    development roles of universities to assist in the revitalization of
    distressed urban neighborhoods. The International Center will
    contribute to the achievement of these objectives in the following
    ways:
      --Newark is a federally designated Enterprise Community (EC), and as
            such is already part of a Federal strategy to attract and
            support economic development activity that will create jobs in
            the urban core. The 50-acre Science Park is located within the
            boundaries of one of the EC neighborhoods. The development of
            the $78 million International Center for Public Health will
            generate 1,500 direct and indirect construction and permanent
            jobs. The permanent jobs include custodial and clerical
            positions, lab technicians, medical personnel, researchers and
            administrators. Science Park will work directly with the Essex
            County College (one of its sponsoring educational institutions)
            and their Technology Training Project (TTP) to train Newark
            residents as lab technicians for the International Center. TTP
            is privately sponsored by New Jersey's biomedical industry and
            has been in existence for nearly 30 years. TTP trains 50
            technicians annually, all of whom are high school graduates or
            adults looking for a new career.
          It is one challenge to acquire necessary job skills, but it is
            another for urban residents to have the means to travel to
            where the jobs are. In the last 20 years Newark has lost 35,000
            private sector jobs, a number of which have moved to New
            Jersey's western suburbs. This project redevelops urban land,
            preserves open green space, and utilizes existing public
            transportation to the doorstep of the Park. The development of
            Science Park is Newark's chance to reverse that job exodus by
            utilizing existing university resources and providing City
            residents with access to the technology jobs of the 21st
            century. The International Center for Public Health serves as
            the cornerstone to launch the 50-acre urban redevelopment
            initiative. At buildout the Science Park will have generated
            $350M of construction, 5,000 direct and indirect construction
            jobs, and 6,600 direct and indirect permanent jobs with an
            annual payroll of $275M. The International Center will serve as
            a magnet to attract other biomedical and pharmaceutical
            research and development companies into the Park. The
            development costs for the International Center include the site
            preparation of three additional adjacent building pads. These
            sites will be simultaneously marketed to private biomedical
            companies, and will generate $60M of additional construction,
            and another 1,500 direct and indirect construction and
            permanent jobs.
      --The development of the International Center for Public Health in
            University Heights Science Park accomplishes the objective of
            HUD's Office of University Partnerships: the university
            expansion of economic and community development roles to
            revitalize distressed neighborhoods. Science Park is sponsored
            by four institutions of higher education.
                             request for assistance
        The University Heights Science Park Is requesting $5 Million from
    the Senate Appropriations Subcommittee for VA-HUD & Independent
    Agencies for Fiscal Year 1999 to support the Phase II development of
    Science Park: the construction of the International Center for Public
    Health. Such support will leverage Phase II development that totals
    $130 Million and creates nearly 3,000 direct and indirect construction
    and permanent technology jobs. These requested funds will be used
    specifically for site acquisition, demolition and infrastructure in a
    Federal Enterprise Community neighborhood in Newark, New Jersey.
        On behalf of University Heights Science Park, the University of
    Medicine and Dentistry of New Jersey and the Public Health Research
    Institute, we want to thank the Committee for the opportunity to
    present this request.
                  dean and betty gallo prostate cancer center
    Objective
        Prostate cancer is a particularly devastating problem in New
    Jersey. With the highest population density in the country, at 1,000
    people per square mile, we are ranked 10th of all the states in
    mortality prostate cancer. African Americans diagnosed with prostate
    cancer are twice as likely to die from it, and New Jersey is ranked 8th
    in the nation for this disease in this ethnic group. There is no
    available curable treatment for prostate cancer once it recurs, and
    when it does, it is uniformly fatal. The objectives of the Dean and
    Betty Gallo Prostate Cancer Center are:
      --Regionally, to provide the highest standard of care, including NCI-
            approved trial therapies, to all residents of the area who
            suffer from prostate cancer. In addition, we will provide
            outreach and education in the community to generate early
            detection of the disease.
      --Nationally, to make significant contributions to the nation's war
            on this disease through basic science discoveries on how
            prostate cells become malignant, ways to prevent transformation
            to cancer, how prostate cancer cells evade therapies, and the
            development of novel treatments for advanced stages of the
            disease.
    Background
        The Cancer Institute of New Jersey (CINJ) is the only NCI-
    designated Clinical Cancer Center in the state. It is affiliated with
    the University of Medicine and Dentistry of New Jersey (UMDNJ), and is
    located at that institution's Robert Wood Johnson Medical School in New
    Brunswick, New Jersey. CINJ has over 200 members including 35 staff
    physicians, physician/scientists, and basic science researchers.
    Because of the devastating problem of prostate cancer in the state and
    in the nation, CINJ has determined to make the development of a cure
    for this disease one of its major goals. To accomplish this we have
    initiated the development of the Dean and Betty Gallo Prostate Cancer
    Center.
        The center is named after Congressman Dean Gallo, who was a
    tireless supporter of the people of New Jersey. He believed in making
    our state stronger by collaborating with his colleagues to secure
    federal funding for initiatives that improve the quality of life for
    all citizens. One such initiative was the creation of the CINJ.
    Tragically, he died of prostate cancer in 1994 after being diagnosed in
    an advanced stage of the disease. Our efforts to cure prostate cancer
    are motivated in large part by our memory of his excellent service.
        CINJ is physically located in New Brunswick but has statewide
    presence through its hospital partners and affiliates. CINJ has grown
    rapidly through the cooperative efforts of these partners and
    affiliates, generous grant support from the Robert Wood Johnson
    Foundation, Johnson & Johnson, as well as many other New Jersey based
    foundations and corporations.
     cinj is uniquely poised to fulfill the two objectives of the dean and
                       betty gallo prostate cancer center
        Treatment.--The Cancer Institute of New Jersey is the center of
    excellence for cancer treatment in the state of New Jersey. It
    currently sees approximately 6,000 prostate cancer patient visits per
    year in all stages of the disease, and this number is increasing by
    about 8 percent per month. Prostate cancer patients who are diagnosed
    early in the progression of their disease have different treatment
    options than those who are diagnosed with metastatic disease, and are
    therefore treated by physicians with different specialties. At many
    cancer centers, these patients are seen at different places and even at
    different hospitals. At the Cancer Institute of New Jersey we have
    developed an integrated approach, where all prostate cancer patients
    are seen in the same clinical setting, and where all physicians who are
    experts in prostate cancer review the cases together. Thus, each
    patient is followed regardless of the stage of their disease by various
    specialists, and each patient has the benefit of medical and surgical
    experts continuously reviewing their progress. The central location of
    CINJ and its network of affiliated hospitals make CINJ care accessible
    to virtually all New Jersey residents. In addition to treatment, CINJ
    offers patient support groups to assist patients and their families to
    cope with this dreaded disease.
        The team of physicians, researchers, and directors at CINJ have
    long recognized the particular problem faced by Congressman Dean Gallo.
    There is no curable treatment currently available for prostate cancer
    when it recurs or when it is metastatic. We have, therefore,
    concentrated our efforts on developing new ways to treat this
    devastating disease. Virtually all of our patients for whom we
    recognize there is currently no cure are enrolled into clinical trials
    with the hope of possible success if they consent to enrollment. The
    CINJ currently has five different clinical trials for advanced prostate
    cancer. In addition, we are establishing an integrated working group of
    nationally recognized leaders in basic science at The Cancer Institute
    of New Jersey whose work can be applied to prostate cancer. Through a
    series of focus groups, we are bringing together the basic scientists
    and physician/researchers to educate each other, to work in
    collaboration, and to develop new treatments.
        To address the specific portion of our objective to make treatment
    available to all area residents, the Dean and Betty Gallo Prostate
    Cancer Center will be incorporated into the statewide network of
    affiliated hospitals and providers. This network allows CINJ to
    facilitate treatments and research for prostate cancer. Patients with
    advanced, incurable, prostate cancer may therefore be enrolled into
    clinical trials at several locations throughout the state. This not
    only allows us to treat more patients with novel therapies but also
    increases our ability to rapidly evaluate these therapies. CINJ is also
    working with local clinics and agencies to develop treatment plans for
    uninsured sufferers of prostate cancer.
        Research.--A requirement for the designation of ``Clinical Cancer
    Center'' by the NCI is that the center establish a strong research
    component that integrates the best available medical treatment of
    cancer with nationally recognized basic researchers to find new cures.
    The CINJ is the only center in New Jersey that has fulfilled this
    requirement. CINJ is located in the heart of biomedical science and
    technology in New Jersey, enjoying the affiliation with several
    nationally recognized centers of research excellence. CINJ is
    physically located on the New Brunswick campus of UMDNJ-Robert Wood
    Johnson Medical School (RWJMS). The medical school's nearby Piscataway
    campus is adjacent to Rutgers University, another globally recognized
    center of research. Two other nationally acclaimed research centers are
    administered jointly by UMDNJ and Rutgers University and will play
    critical roles in addressing this dreaded disease. The Center for
    Advanced Biotechnology and Medicine (CABM) has leaders in molecular
    biology, including several Howard Hughes investigators. The
    Environmental and Occupation Health Sciences Institute (EOHSI) includes
    a National Institute of Environmental Health Sciences (NIEHS) center of
    excellence for the study of environmental toxicology.
        CINJ has successfully recruited investigators from the CABM and
    EOHSI specifically to study prostate cancer. Dr. Cory Abate at the
    CABM/RWJMS has isolated a novel gene that is likely to be involved in
    the development of prostate cancer. Dr. George Rhodes at the EOHSI/
    RWJMS has initiated a prospective epidemiological study to determine
    the efficacy of PSA screening in African Americans. Drs. Chung S. Yang
    and Robert E. Weiss at Rutgers University and RWJMS, respectively, have
    initiated a study to determine whether compounds known to prevent the
    development of other tumors are also preventive against prostate
    cancer. Drs. Robert DiPaola and William N. Hait at CINJ have initiated
    clinical trials for prostate cancer based on laboratory experiments
    performed in collaboration with Dr. Eileen White at CABM/Rutgers
    University. These experiments address how cancer cells develop
    resistance and ways to make the cells sensitive to therapy.
    Action Needed
        With the establishment of the Dean and Betty Gallo Prostate Cancer
    Center, collaborative research like the projects just described will be
    tremendously expanded. The Center will allow us to focus the strengths
    of the CINJ on the devastating problem of prostate cancer in New
    Jersey, its surrounding region, and in the nation through treatment and
    research. Such a Center is imperative to provide the resources to
    effectively recruit additional nationally recognized leaders in
    research into the study of prostate cancer. In order to bring together
    scientists of this caliber, all focused on prostate cancer, it is
    imperative to have a strong focused center.
        Since there is currently no effective curable treatment for
    prostate cancer once it progresses beyond the prostate, a concerted
    effort must be made to develop new treatments. This effort requires two
    approaches. The first is a comprehensive study of the biological
    characteristics of the disease at the basic science level. CINJ is
    committed to joining national efforts on this front. We have obtained
    the technology, for example, to examine the expression patterns of over
    10,000 genes from a single tumor sample, using multigene arrays. This
    will greatly facilitate collaborations between the basic scientists at
    the various New Jersey academic institutions with the clinical
    scientists at CINJ.
        CINJ is uniquely suited to scientifically examine the difference in
    mortality between African Americans and white Americans with the
    disease, which is a major question in prostate cancer. New Jersey has a
    large population of African Americans at all levels of income. We can
    thus investigate how much of the disparity between the mortality of
    both groups is due to genetic predisposition versus economic status or
    other undetermined factors. Scientists at CINJ are more than capable of
    answering this question, particularly with the additional
    infrastructure support which will be available once the resources for
    the Gallo Prostate Center are acquired.
        To establish the Dean and Betty Gallo Prostate Cancer Center, a
    Director must be recruited. Although the exact description of the
    qualifications of this individual will be defined by the board, we
    envision that he/she will be a medical oncologist who has a strong
    research program in prostate cancer. He or she must have a national
    reputation. The Director must also be given the resources to hire two
    additional researchers to firmly establish a productive research group.
    The Dean and Betty Gallo Prostate Cancer Center will also need support
    staff to facilitate treatment and research coordination.
    The Request
        The proposed budget for the Dean and Betty Gallo Prostate Cancer
    Center is $9.4 million to be spent over a 5 year period. We expect to
    raise substantial funds through private, corporate, and other
    resources. We therefore seek an allocation of $5 million to facilitate
    the establishment of this important resource. These funds will not be
    used for bricks and mortar, but to secure the resources necessary to
    conquer this disease.
        We are requesting this allocation from the Veterans Administration
    (VA) and the Department of Housing and Urban Development (HUD) jointly
    because prostate cancer is of particular interest to both organizations
    for different reasons. A large percentage of the patients who are
    treated by the VA are older, African American males, and this is the
    population with the highest incidence of mortality due to prostate
    cancer in the nation. The Dean and Betty Gallo Prostate Cancer Center
    will focus its research and treatment on this population in the New
    Jersey tri-state area. HUD is concerned largely with issues that deal
    with urbanization and the differences between urban, suburban and rural
    communities. New Jersey is the most populated state in the nation, with
    its population divided among all three types of communities. Moreover,
    New Jersey has a particularly difficult pollution problem, and the
    impact of environmental toxins on the development of prostate cancer
    will be a focus of research efforts. We will also seek to understand
    how much of an impact economic status plays in the mortality of
    prostate cancer among African Americans. Finally, the major research
    goal will be to cure this disease even once it has spread beyond the
    prostate.
        We wish to thank the Members of this Subcommittee for your long-
    term leadership in supporting nationally and internationally
    critically-needed research and development initiatives. This
    Subcommittee is to be commended for its staunch support of the
    universities and research institutions of this country. Your particular
    role in the support of many biomedical research initiatives must be
    especially recognized.
                      child health institute of new jersey
    The Problem
        Disorders of health affecting infants and children exact a terrible
    toll, in both human suffering and economic impact, on the child, family
    and the community. Consequently, State and Federal public policy
    prioritizes efforts to prevent or treat disorders of infancy and
    childhood. The prevention of conditions such as mental retardation,
    muscular dystrophy, sickle cell disease or cystic fibrosis has nearly
    incalculable benefits to society. Neither New Jersey nor New York hosts
    a research center designed and developed specifically to address issues
    of child health.
        The University of Medicine and Dentistry of New Jersey--Robert Wood
    Johnson Medical School (UMDNJ-RWJMS) proposes to develop the Child
    Health Institute of New Jersey (CHINJ), a comprehensive biomedical
    research center focused on the health and wellness of children. In this
    program, medical researchers will direct efforts towards the prevention
    and cure of environmental, genetic and cellular diseases of infants and
    children.
    Overview
        The Institute will be located in New Brunswick and linked
    physically and programmatically with both UMDNJ-RWJMS and the
    Children's Hospital at Robert Wood Johnson University Hospital (RWJUH).
    This organization reinforces the relationship between essential
    biomolecular research and the treatment, prevention and cure of
    disorders of infancy and childhood. Locating the Child Health Institute
    in New Brunswick promotes the development of new partnerships among the
    Institute, the Medical School, the teaching hospitals affiliated with
    UMDNJ-RWJMS, and with the multinational pharmaceutical, biotechnology
    and chemical interests throughout New Jersey.
        The CHINJ will act as a magnet for additional growth in research
    and healthcare program development in New Brunswick and New Jersey. New
    Brunswick provides a central location in the state that offers ease of
    access and proximity to major highway systems and mass transit; this is
    essential, as no similar program exists in either New York or New
    Jersey. The state of New Jersey, which has significant concerns in the
    areas of infant mortality, neonatal HIV infection and pediatric cancer,
    will benefit directly and enormously from the unique presence and
    impact of the Child Health Institute of New Jersey.
    Program
        The Institute will encompass some 83,000 gross square feet and will
    house more than 40 research laboratories and associated support
    facilities. Fourteen senior faculty will direct teams of M.D. and Ph.D.
    researchers, visiting scientists, postdoctoral fellows, graduate
    students and technicians for a full complement of some 130 employees.
        The Institute will focus research on the molecular and genetic
    mechanisms which direct growth, wellness, and disease. Examples of the
    Institute's research foci include: the identification and functional
    analysis of genes contributing to developmental disabilities and
    abnormal development; developmental pharmacology relating growth and
    maturation to the processes that regulate drug metabolism,
    developmental toxicity, and resistance or susceptibility to toxic
    agents; genetic and environmental influences on developmental
    immunology; the molecular mechanisms underlying brain growth and
    development; and tissue degeneration and regeneration.
        The Child Health Institute of New Jersey builds on existing
    significant strengths in genetic, environmental, and neurosciences
    research within the UMDNJ-Robert Wood Johnson Medical School and
    associated joint UMDNJ-Robert Wood Johnson Medical School-Rutgers
    University research institutes. For example, the Environmental and
    Occupational Health Sciences Institute (EOHSI) is a National Institute
    of Environmental Health Sciences (NIEHS) recognized center of
    excellence which investigates environmental influences on normal and
    disordered functions; The Cancer Institute of New Jersey (CINJ), a
    National Cancer Institute-designated Clinical Cancer Center, studies
    disordered cell growth; The Center for Advanced Biotechnology and
    Medicine (CABM) characterizes gene structure and function.
        The proposed Child Health Institute of New Jersey, which is
    formally chartered with defining developmental mechanisms, will
    complement and focus developmental programs within these Institutes and
    other areas of the University of Medicine and Dentistry of New Jersey.
    Economic Impact
        At maturity, the Institute is expected to attract $7 to $9 million
    of new research funding annually. The Institute's total annual
    operating budget is projected to be $10 to $12 million: applying a
    standard economic multiplier of 5, the total impact on the New
    Brunswick area is estimated to be $50 to $60 million per year.
    Construction costs for the Institute are estimated to be approximately
    $27 million; approximately half of this figure is generally associated
    with local employment. Therefore, during the 2\1/2\-year period of
    construction, the Institute will have an immediate economic impact of
    at least $52 million on the local economy.
    Partners
        This effort is driven by several major partners who are committed
    to the development of the CHINJ. The University of Medicine and
    Dentistry of New Jersey is the largest public health sciences
    university in the nation and the only one designated as a statewide
    system for health care. UMDNJ comprises seven schools on five academic
    campuses, including the Robert Wood Johnson Medical School with
    campuses in New Brunswick, Piscataway and Camden.
        The UMDNJ-RWJMS is one of the most dynamic schools of medicine in
    the country, hosting centers of excellence in environmental health,
    biotechnology and medicine (both joint programs with Rutgers
    University) and more recently, cancer treatment and prevention.
    Research funding has grown nearly 30 percent in the past four years, to
    over $70 million in 1997.
        Johnson and Johnson is the world's largest and most comprehensive
    manufacturer of healthcare products serving consumer, pharmaceutical,
    and professional markets.
        The Robert Wood Johnson Foundation is one of the largest
    philanthropic foundations in the world, targeting issues of public
    health and wellness, particularly as directed at maternal and child
    health concerns.
        The Robert Wood Johnson University Hospital is one of New Jersey's
    premier academic medical centers and the core teaching hospital of
    Robert Wood Johnson Medical School. It includes the region's only
    Pediatric Intensive Care Unit and Level 1 Trauma Center and has earned
    state designation as a Specialty Acute Care Children's Hospital. A $42
    million program is presently under way to consolidate all pediatric
    services in a new, state-of-the-art facility designed expressly for
    children and families.
        As part of an initial planning grant, Johnson and Johnson and the
    Robert Wood Johnson Foundation have already provided $850,000 to the
    operational costs of the Institute. The UMDNJ-Robert Wood Johnson
    Medical School will provide an additional $350,000 per year in direct
    funding for the Institute. Robert Wood Johnson University Hospital will
    provide support, real estate for the Institute and will construct a
    bridge from the new Children's Hospital to the Institute.
    Request for Assistance
        The University of Medicine and Dentistry of New Jersey seeks a $5
    Million planning and capital grant for the Child Health Institute of
    New Jersey. As indicated above, the program has already received
    initial funding support from Johnson & Johnson and the Robert Wood
    Johnson Foundation in the amount of $850,000. Efforts to obtain
    additional private support are underway and will be ongoing.
                                     ______

        Prepared Statement of Richard A. Anthes, President, University
                      Corporation for Atmospheric Research

        On behalf of the University Corporation for Atmospheric Research
    (UCAR) and the university community involved in weather and climate
    research and related support activities, I would like to submit this
    letter for the record of the Senate Committee on Appropriations,
    Subcommittee on VA, HUD and Independent Agencies.
        The University Corporation for Atmospheric Research is a not-for-
    profit Colorado corporation established in 1959 to support, enhance,
    and extend the capabilities of the university community, nationally and
    internationally; to understand the behavior of the atmosphere and
    related systems and the global environment; and to foster the transfer
    of knowledge and technology for the betterment of life on earth. UCAR
    is a consortium composed of 63 U.S. and Canadian universities that
    grant the Ph.D. in atmospheric, oceanic, and related sciences. It is
    best known for managing and operating the National Center for
    Atmospheric Research (NCAR), one of the premier atmospheric science
    research institutions in the world. NCAR's research activities focus on
    better understanding climate (including global climate change), the
    coupling of climate with other earth environmental systems, atmospheric
    chemistry, mesoscale meteorology, aviation weather hazards, societal
    impacts of weather and climate phenomena, and solar and solar-
    terrestrial physics. UCAR is supported primarily by the National
    Science Foundation (NSF) in addition to other federal agencies
    including National Aeronautics and Space Administration (NASA), the
    National Oceanic and Atmospheric Administration (NOAA), the Department
    of Energy (DOE), the Environmental Protection Agency (EPA), the
    Department of Defense (DOD), and the Federal Aviation Administration
    (FAA).
        The following observations are offered in regard to the President's
    proposed fiscal year 1999 budget.
                          national science foundation
        Overall NSF Budget.--NSF is a critical source of funding for the
    activities of our community. We are extremely pleased with the $3.8
    billion proposed for NSF (a ten percent increase) and believe that this
    increase acknowledges the importance of scientific research and
    education to the security and well-being of this country. Strengthening
    NSF's advancement of scientific, mathematical and engineering research
    and education in this country cannot help but provide the U.S. with a
    better trained workforce, an increasingly effective research
    enterprise, and a better educated general populace. If fully funded,
    NSF's 1999 activities will involve more than 42,000 researchers, nearly
    50,000 graduate and undergraduate students, and over 124,000 K-12
    students and teachers. Our country's history in research and
    development has demonstrated that this type of investment pays
    taxpayers dividends well into the future in increased employment
    opportunities, expanded intellectual capital, and applied technologies
    that benefit society in many ways including significant contributions
    to our economy, protecting our environment, and maintaining peace. We
    urge the Committee to support the overall budget of $3.8 billion
    proposed for NSF in fiscal year 1999.
        Research and Related Account (RRA).--Within the overall proposed
    NSF total, we support the proposed funding level for the RRA of $2,847
    million (a 12 percent increase). The RRA increase will allow NSF to
    address serious issues of grant size and duration that have placed
    significant constraints on proposed multi-disciplinary and
    collaborative activities. We urge the Committee to support the budget
    of more than $2.8 billion proposed for the NSF RRA account.
        Education and Human Resources (EHR) Directorate.--We support
    proposed funding levels for EHR of $683 million (an eight percent
    increase). This proposed increase includes training and professional
    development activities for 22,000 additional teachers. Given
    disappointing U.S. scores on recent international student tests in
    science and mathematics, this increased activity will be most timely
    and is critical to the future R&D competitiveness of our country. We
    urge the Committee to support the proposed budget of $683 million for
    the NSF EHR Directorate.
        U.S. Global Change Research Program (USGCRP).--The USGCRP involves
    several of the NSF's Directorates and is proposed to increase by 12
    percent to $187 million. This will allow the community to maintain and
    enhance critical research focusing in particular on climate modeling.
    As we deal with increasing climate change forces and the increasing
    societal impacts of weather and climate phenomena such as El Nino, this
    proposed increase is extremely timely. We have made tremendous research
    advances in the climate arena, but we must do more as we deal with the
    prospects of international climate treaties, growing coastal
    populations, and mounting insurance losses due to severe weather
    events. We urge the Committee to support the budget of $187 million for
    the USGCRP proposed within the NSF budget.
        Geosciences Directorate.--The budget proposes $507 million for the
    Geoscience Directorate (11.5 percent increase). We strongly support
    this proposed increase which could lead to a broad range of exciting
    research opportunities, including the bulk of the funding mentioned
    above for the USGCRP and that mentioned below for the U.S. Weather
    Research Program. This budget also includes an increment of $1.76
    million for the relatively new Knowledge and Distributed Intelligence
    (KDI) initiative. We believe that this program has the potential to
    advance linkages for multi-disciplinary communities, allowing the
    sharing of observations, tools, and methods for analysis and
    prediction. We support these efforts as well as those being undertaken
    to create the Next Generation Internet (NGI) which could increase the
    productivity of the atmospheric sciences and other communities
    exponentially. We urge the Committee to support the proposed budget of
    $507 million for NSF's Geosciences Directorate.
        Atmospheric Science Research and the National Center for
    Atmospheric Research.--The Geosciences budget also includes $102
    million for Atmospheric Sciences Research Support (10.2 percent
    increase), including $67.8 million (11.4 percent increase) for NCAR. If
    realized, the NCAR increase would allow maintenance of extensive
    support facilities and activities for the entire atmospheric sciences
    university community, and increasingly sophisticated work in the areas
    of climate system modeling, the understanding of weather phenomena
    including extreme weather events, and the application of our scientific
    research data to new technologies such as those serving the aviation
    community. The proposed budget allows for ``at least'' $2 million for
    the refurbishment of the Mesa Laboratory which is absolutely necessary
    to maintain its function as one of the world's preeminent atmospheric
    sciences laboratories. This request represents the first-year increment
    of full refurbishment costs which we understand NSF plans to request
    over the next several years. We urge the Committee to support the
    proposed budget of $102 million for Atmospheric Research within NSF's
    Geosciences Directorate as well as the proposed budget of $67.8 million
    for the National Center for Atmospheric Research.
        U.S. Weather Research Program (USWRP).--NSF is one of four agency
    programs that have supported the USWRP and that have plans to enhance
    significantly the research activities of the program in future years.
    The community is ready to pursue an aggressive research agenda,
    particularly in the area of hurricane landfall, that could save lives
    and millions of dollars. Study plans include improved prediction of
    hurricane track, wind force, improved intensity changes, precipitation
    amounts, and societal impacts. The information would be of obvious use
    to emergency managers. We urge the Committee to support the 18 percent
    increase for fiscal year 1999 reflected in NSF's budget: $15.79 million
    in the Natural Hazards category and $1.75 million in Urban Disaster
    Reduction.
              national aeronautics and space administration (nasa)
        Solar Research.--In NASA's budget, we are particularly interested
    in Solar B, part of NASA's Solar-Terrestrial Probe (STP) program. This
    is a collaboration with Japan to carry out a highly focused satellite
    mission to study the Sun's magnetic field as the source of space
    weather events around the Earth and other planets. The data gathered
    should help us understand events such as solar coronal mass ejections
    which can hit Earth's atmosphere with enough force to cause expensive
    and dangerous communications disruptions as well as the destruction of
    satellites. We urge the Committee to support the proposed $5.3 million
    funding for Solar B in fiscal year 1999 which we believe is appropriate
    at this phase of the project.
        Solid Earth and Natural Hazards (SENH).--The U.S. military has
    invested more than $10 billion in the Global Positioning System (GPS).
    Twenty-four high-earth orbit GPS satellite beacons now orbit the earth.
    GPS provides powerful tools for atmospheric research and operational
    weather forecasting. These GPS applications have been demonstrated
    through funding from NSF and NASA. The Solid Earth and Natural Hazards
    (SENH) program in NASA's Office of Earth Science (under Research and
    Analysis account) has been a leader in funding the basic and applied
    research that has realized GPS applications in science.
        Funding through SENH for GPS applications in science are highly
    leveraged because of the existing GPS infrastructure. For example, $3
    million in government funding, including SENH funds, led to the
    demonstration of GPS/Meteorology (GPS/MET), a revolutionary new global
    sensing system for weather, space weather, and climate prediction and
    research. It appears likely that the successful demonstration will now
    result in an internationally-supported operational phase. However, the
    valuable SENH funded research that makes phenomenally successful
    programs such as GPS/MET possibly is grossly under-funded and many
    similar opportunities may be lost. Of nearly 200 proposals submitted to
    SENH, a majority of which are likely to spawn further highly-leveraged
    science applications for GPS, less than 10 percent will be funded. The
    President's budget requests a total of $23.2 million for SENH; we urge
    that this be increased to $25 million to accommodate additional highly-
    leveraged, peer-reviewed scientific research.
        Chemistry and Climate Change Research.--The new measurement
    capabilities of the High Resolution Dynamics Limb Sounder (HIRDLS)
    instrument, scheduled for flight on the Chemistry Platform of the Earth
    Observing System (EOS), will add greatly to our understanding of the
    upper atmosphere dynamics of global climate change. HIRDLS is being
    jointly developed with the United Kingdom and with extensive
    participation by the U.S. academic community. It will return
    observations with unprecedented detail, notably on the transition
    region between the troposphere and stratosphere. These data will enable
    detailed studies of chemical and dynamical processes that are
    fundamental to improved understanding of global change.
        The current HIRDLS request within the President's proposed budget
    is $16.4 million for instrumentation funded through the Earth Observing
    System's Chemistry Mission of NASA's Office of Earth Science. This is
    $1.6 million short of the $18 million needed for U.S. collaboration in
    this program. The current HIRDLS request for scientific research and
    computing (as distinguished from instrumentation) is $1.1 million
    within NASA's Research and Analysis Account. This is $1.4 million short
    of the $2.5 million ($2.25 million for scientific research and $250,000
    for scientific computing) needed to continue development of the data
    reduction software, and provide scientific oversight to the instrument
    testing and calibration. In order to maintain our international
    partnership commitments, stay aligned with British project progress,
    and realize the extraordinary promise which this program holds, we urge
    the Committee to increase the fiscal year 1999 proposed total budget
    for HIRDLS by $3 million from the currently proposed $17.5 million
    total to $20.5 million.
        Overall Research Funding.--It is very likely that NASA's scarce
    resources will be taxed during the Space Station assembly and early
    operations. While the importance of the Space Station is obvious, it is
    critical that the research budgets for earth and space sciences be
    preserved during this period. We urge the Committee to ensure that
    proper protections for NASA research funding are put in place.
        On behalf of the atmospheric sciences community, I want to thank
    you for the important work you do for U.S. scientific research,
    training and education. We appreciate your attention to the
    recommendations of our community concerning the fiscal year 1999
    budget. In particular, I want to acknowledge in advance support you may
    provide for proposed NSF funding levels. If passed, this fiscal year
    1999 budget will send the message that the U.S. will continue to extend
    the frontiers of science and engineering and stay at the leading edge
    of research and technological development as we enter the next century
    and a new millennium.
                                     ______

    Prepared Statement of Kathye Gorosh, Project Director, The Core Center,
                                  Chicago, IL

        Mr. Chairman, thank you for the opportunity to present this
    testimony for the record on behalf of the ``Enhanced Provider and
    Patient Education Initiative'' proposed at the CORE Center in Chicago,
    Illinois. To address the national need for a model of ``real time''
    education and training for HIV care providers at all levels and for
    patients, the CORE Center is proposing the establishment of the
    ``Enhanced Provider and Patient Education Initiative.''
        This initiative will create a model technology-based system for the
    education of specialty and community-based providers and the education
    and treatment of patients. It will address an existing national need
    for the effective integration of educational programs to enhance
    provider performance and, importantly, to incorporate patients into the
    decision making process. It will create a system of education and care
    which takes advantage of the new scientific landscape and is centered
    around an information system. It will demonstrate the ability of
    computerized networks, with real time performance feedback, to improve
    the quality of and access to care, to increase compliance and to
    control cost.
        As you know, the development of new and more effective drugs has
    allowed people to remain healthier longer and to delay the progression
    from HIV to AIDS. Nevertheless, it remains critical that we stop the
    spread of HIV as well as provide early and comprehensive care to those
    already infected. Effective education and compliance management
    programs are the only way to prevent the behaviors that lead to the
    spread of resistant strains of HIV. As a result, quality care will be
    provided in a cost-effective manner providing thousands of HIV infected
    individuals with an improved quality of life and enabling them to
    remain productive members of society.
        While there have been dramatic new developments in HIV care due to
    new and more powerful medications, including a 13 percent decrease in
    the death rate from AIDS reported by the Centers for Disease Control
    and Prevention (CDC), these therapies have not been as effective in the
    indigent inner-city urban population. For example, according to the
    Department of Medicine at Long Island Jewish Medical Center in New Hyde
    Park, New York, in 1996 increased cases of AIDS related opportunistic
    illnesses were reported for heterosexual African American and Hispanic
    men and women. This disparity in opportunistic infection trends between
    population groups most likely reflects differences in access to the
    full range of new therapies now available and a lack of targeted
    outreach, education and compliance enforcement efforts aimed at high
    risk populations and at those lifestyles which contribute significantly
    to the transmission of HIV.
        In contrast to the general decline in the number of AIDS related
    illnesses and deaths, the CDC has reported a continuing increase in new
    cases of HIV/AIDS among people of color.
        In November 1997, medical experts at the United Nations reported
    that new infections are occurring worldwide twice as fast as just one
    year ago at 16,000 per day, up from 8,200 per day, with 30.6 million
    living with HIV throughout the world. For children under age 15, the UN
    estimates that 1,600 children are infected each day, up from last
    year's estimate of 1,000 per day. In addition, it is estimated that
    1,200 children die of AIDS each year, up from the prior estimate of
    1,000.
        In the United States, the numbers are equally as chilling. Research
    is showing that the epidemic continues to shift to people of color,
    women and children. Since 1993, there has been a 3 percent increase
    annually in the national prevalence of AIDS. Recent data have shown
    that:
      --One in 250 people in the United States is infected with HIV;
      --One in four of all new HIV infections in the U.S. are estimated to
            occur in young people between the ages of 13 and 20;
      --Every hour 2 to 4 Americans under the age of 20 become infected
            with HIV;
      --27 to 54 adolescents are infected with HIV every day;
      --2,354 adolescents ages 13-19 have been diagnosed with AIDS as of
            December, 1995;
      --Among adolescent women with AIDS, 80 percent are African American
            or Hispanic; and,
      --AIDS is the leading cause of death of people between the ages of 25
            and 44 in African Americans and Hispanics.
        In addition to the growing numbers of individuals being infected
    with HIV, continuing trends show that the rate of increase is greatest
    among injection drug users and through heterosexual transmission.
        Recent research has shown that the disproportionate incidence of
    HIV/AIDS among inner-city, minority populations is due in large part to
    low rates of compliance and lack of effective community-based,
    comprehensive, health education systems and programs for providers and
    patients.
        Low rates of compliance can most often be attributed to the
    following:
        Cost.--The costs for HAART therapy is enormous, as much as $10,000-
    $15,000 per patient per year. This figure does not include other costs
    for care or daily medications. There is great concern among people
    living with AIDS that access to care for all people be assured.
        Although the federal program, AIDS Drug Assistance Program (ADAP),
    is designed to provide financial assistance for uninsured or
    underinsured HIV/AIDS patients in purchasing required medications, it
    has been unable to keep up with the increasing demands;
        Testing.--Many individuals are hesitant to be tested for HIV and go
    undetected. As a result, patients go without care until the symptoms
    become evident and they are in need of immediate services;
        Compliance.--Many HIV infected patients are unwilling or unable to
    get timely clinical care or to adhere to complex and difficult drug
    regimens. Often patients have little or no understanding of newer
    therapies and their potential benefit, resulting in low levels of
    compliance.
        While many piecemeal health education systems for HIV/AIDS exist
    throughout the United States, there are none that are taking full
    advantage of today's cutting-edge scientific landscape. It is well
    known that the adoption of computerized clinical information systems in
    health care lags behind the use of computers in most other sectors of
    the economy. There is no HIV educational system that provides care,
    clinical assistance and interactive education, while integrating the
    patients and community-based providers into the care giving and
    decision-making process. Especially given today's technological
    advances, this is a striking deficiency in health education systems for
    HIV/AIDS.
        At this critical time in the evolution of the long-term treatment
    of HIV/AIDS, it is important that we focus on the creation and
    implementation of comprehensive educational systems of care for
    individuals affected by HIV/AIDS. This focus will improve treatment and
    prevention efforts, increase the rate of the early detection of HIV,
    increase the rate of treatment compliance and ultimately decrease the
    spread of HIV.
        It is critical that the federal government focuses its resources on
    creating comprehensive HIV education systems that fully integrate
    specialists, community-based providers and patients and evaluate the
    outcomes of those systems.
        The CORE Center believes that the most effective educational system
    is one which uses today's state-of-the-art technology and creates
    interactive systems of education that provide real-time feedback and
    enables providers to optimize care for HIV/AIDS patients. That is why
    the Center is proposing to establish the ``Enhanced Provider and
    Patient Education Initiative'' a model technology-based system for the
    education of specialty and community-based providers and the education
    and treatment of patients.
        We are at a critical point in the care of patients with HIV/AIDS.
    We have achieved major goals in our basic science understanding of the
    course of HIV disease and have applied this understanding to the care
    of patients.
        Successes in the treatment and care of HIV/AIDS have led to
    increased numbers of AIDS patients surviving longer and once again
    becoming productive members of society. Hospital admissions for AIDS
    care are down, and clinics are experiencing dramatic increases in the
    demand for out-patient services. Although science has taken big steps
    toward making AIDS a long-term manageable disease, by no means do we
    have a cure for the largest public health crisis of the century.
        Additionally, given the frequently changing scientific landscape
    and related improvements to available therapies and care protocols, it
    is difficult for specialty-care providers, and more so for community-
    based care providers, to keep abreast of the most recent advances in
    care and medication usage. Lack of access to up-to-date information
    also hinders compliance of patients in their therapy and clinic
    schedules.
        There is no successful system in place that provides caregivers and
    patients the education and scientific tools needed to ensure that they
    make the most of the advances in care.
        Patients need to be educated regarding their drug therapies and
    other care options available to them. Because many inner-city patients
    are unable or unwilling to routinely access the local primary health
    care system, this education and compliance is very difficult.
        Moreover, the treatment of patients with HIV/AIDS in Chicago and
    other urban areas is made more difficult by the large number of
    patients receiving care and the large number of potential patients
    whose infections have not been recognized who will ultimately need
    care.
        Compliance for patients in lower socioeconomic populations has been
    more difficult to achieve. Unfortunately, incomplete compliance with
    medication regimens greatly increases the risk of the emergence of
    strains that are resistant to the newest therapies thus increasing the
    likelihood of the spread of HIV/AIDS.
        Specialists alone are not able to provide primary care for all
    affected patients, especially those in underserved communities. This
    means that other providers need to be trained in the complicated care
    of patients with HIV/AIDS to insure that the new HIV medications are
    used appropriately and to the greatest benefit for all patients.
        To be effective, these community providers must have current
    medical data and protocols at their fingertips. They must be able to
    access immediate expertise to ensure the most accurate interventions
    and care for patients. Today, due to weaknesses in the HIV/AIDS care
    infrastructure, they are often unable to access this type of critical
    information or feedback in a timely and effective fashion.
        The Enhanced Provider and Patient Education Initiative will focus
    primarily on methods of optimizing the delivery of care through the
    real time education of specialists, nurse practitioners, physician's
    assistants, and community-based providers caring for people with HIV/
    AIDS. The secondary goal is to screen patients with other sexually
    transmitted diseases for infection with HIV and to initiate therapy at
    an early stage of HIV disease.
        The CORE Center's proposed initiative will be composed of four
    elements:
                                   education
        There is growing evidence that use of practice guidelines and
    disease management systems can help direct and improve care given to
    patients. In the complicated arena of HIV care, where multiple
    antiretroviral regimens are available and where interactions with other
    medications are common, the use of such protocols is particularly
    important.
        The CORE Center's Enhanced Provider and Patient Education
    Initiative will disseminate expert consensus-derived protocols for the
    care of patients in the CORE Center and in the community. It will use a
    comprehensive technology-based education system to implement a program
    for health care providers, including specialists, generalists, nurse
    practitioners, and physicians assistants, to optimize care of HIV/AIDS.
    This system will provide education services both in the CORE Center and
    to the community clinics associated with the Cook County Bureau of
    Health Services.
        Through the use of current state-of-the-art, interactive computer
    technology, this initiative will allow providers to order medications
    and laboratory tests through an interactive computer system which will
    direct therapy by computerized educational screens that appear
    sequentially during the ordering process. These educational screens
    will assist providers in prescribing the most effective, economical and
    comfortable therapies for patients.
        Computer facilitated review of patient care will be performed daily
    by using computer flagging systems to ensure that care conforms to
    guidelines and by expert review of computerized records that will be
    transmitted to the CORE Center from affiliated clinics on a daily
    basis.
        Feedback will be provided for caregivers based on the reviews
    described above. This will create a continuous improvement loop.
    Guidelines and additional education efforts will be redesigned on a
    continual basis using the results of computer facilitated reviews of
    patient care. The process will be used for educating patients at each
    visit, teaching patients about HIV disease and related issues and
    integrating patients into the decision making process. It will improve
    compliance with the use of social service interventions for the CORE
    Center's indigent population.
        Computer kiosks stationed throughout the CORE Center will allow
    patients to review information on AIDS treatment, to formulate
    questions, and to interact with other patients.
                               early intervention
        The CORE Center will evaluate early intervention programs in terms
    of their effectiveness and successful coordination with the full
    continuum of care. This program element will target HIV screening of
    inner-city populations with sexually transmitted diseases so that
    advances in HIV care can be made available as early as possible in the
    course of HIV infection and help to stop the increase in the numbers of
    HIV cases reported daily.
        The CORE Center will include a screening clinic for patients with
    sexually transmitted diseases. Currently, only 10 percent of the more
    than 10,000 patients seen yearly at Cook County Hospital with STD's
    undergo screening for HIV infection. The CORE Center will provide HIV
    testing and counseling of all patients who are seen for treatment of
    STD's.
        The CORE Center will assess the impact of early intervention
    programs on the stage of illness at which patients enter into care in
    the CORE Center. Specifically, patients will be seen earlier in the
    course of HIV infection which will improve their chance of responding
    to therapy. In addition, the CORE Center will provide HIV testing and
    counseling for all patients who are seen for treatment of STD's.
                                   compliance
        The Center will implement an aggressive compliance program to
    insure application of sound treatment principles and protocols,
    medication compliance and clinical follow-up.
        Provider compliance with treatment guidelines will be measured,
    corrected, and reinforced through innovative use of provider order
    entry systems, as noted above in the education program. Patient
    compliance will be reinforced through participation in the development
    of treatment plans, through clinical pharmacy teaching sessions, and
    through the use of medication reminder devices. The CORE Center is
    currently developing a variety of compliance programs and believes that
    patient will be an important source of patient empowerment and ``buy-
    in'' to care.
                              outcomes measurement
        The Center will implement an aggressive and comprehensive outcomes
    measurement program that will measure patient outcomes and cost of care
    by different community provider groups in the CORE Center and the
    community. This HIV/AIDS cost and outcomes data, which does not
    currently exist for any AIDS treatment program, will be extremely
    useful. Importantly, this initiative will also measure improvement
    rates in provider compliance with recommended guidelines and measure
    the cost for achieving improved compliance with treatment protocols.
        In closing, Mr. Chairman, the CORE Center believes that this
    technology-based education initiative is a prototype for national
    efforts to meet the educational challenges presented by infectious
    diseases, especially, HIV/AIDS. As such, the CORE Center is seeking
    $6.9 million over five years for the establishment of the Enhanced
    Provider and Patient Education Initiative.
        Again, I appreciate the opportunity to submit testimony for the
    record and to share with you and the other members of the subcommittee
    the details of this unique initiative. We look forward to continuing to
    work with you and your subcommittee as well as the Administration in
    support of this initiative.
                                     ______

    Prepared Statement of Glen A. Grant, Esq., Business Administrator, City
                                 of Newark, NJ

        Thank you for the opportunity to present information to you about
    economic development opportunities in Newark, New Jersey, which are
    designed to involve all of our residents in the City's renaissance.
    Newark is at the heart of the vast metropolis that extends from Boston
    to the Washington, D.C. metropolitan area. Fully one-quarter of the
    population of the country either lives within, or is easily accessible
    to, this area. We are only 8 miles west of New York City, within 100
    miles of Philadelphia, and only a 4-hour drive or 1 hour flight away
    from Boston and Washington, D.C. Our location is enhanced by ready
    access to transportation connections, via rail, sea, air, and nine
    major interstates and state highways. Port Newark/Port Elizabeth has
    become the largest container port on the east coast because of the
    ability to move goods quickly and economically to and from the area.
    Newark International Airport, the ninth largest airport in the U.S., is
    one of the fastest growing in the country.
        Despite our active port and airport facilities, fully-occupied new
    office buildings, success New Jersey Performing Arts Center, and
    complex of institutions of higher education and hospitals, our
    unemployment rate continues to hover around a staggering 15 percent. We
    are the fifth most densely populated city in the nation, where the mean
    family income is only barely above the poverty line. Our population is
    poor: the 1990 census showed an aggregate poverty rate of 26 percent,
    and an incredible 37 percent of our children live below the poverty
    line. A full 50 percent of the children in our public schools are from
    families receiving AFDC. Jobs for the parents of these children will
    positively affect this population more than any other factor.
        We have lost many of the jobs that match the skills and work
    experience of a large segment of our population. We know, however, that
    the jobs created through the transportation industry cross the whole
    spectrum of employment opportunities. With the decline of our
    manufacturing base, shipping, warehousing and related blue-collar
    employment are essentially the only good paying jobs left in the area
    which do not require higher education. Further, the thousands of white-
    collar jobs in such varied industries as insurance, law, customs
    brokerage, and related transportation and hospitality industries fuel
    the economy of the City, both directly and through the secondary
    support industries they, in turn, sustain. The growth of the hotel and
    hospitality industry is another key segment in the production of job
    opportunities for Newark residents.
        It is a goal of the administration of Mayor Sharpe James to create
    jobs to meet the range of needs of Newark's residents, and we ask for
    the Federal government's partnership in continuing to expand the number
    of these vital employment and investment opportunities. Newark has been
    designated a Federal Enterprise Community, and the projects which
    Newark is presenting to you for funding consideration all lie within
    this zone, and are designed to provide employment for its residents.
        The City of Newark is proposing projects at important sites in
    close proximity to Newark International Airport. Directly across U.S.
    Route 1 from the airport, is an underutilized abandoned rail yard of
    slightly over 100 acres known as Waverly Yards. The Port Authority of
    New York and New Jersey operates the first phase of an airport
    monorail, and has begun construction of the second phase, which will
    cross U.S. Route 1 and connect to a new stop on the Northeast Corridor
    rail line within Waverly Yards. The completion of the monorail will
    provide a direct, fast rail linkage with downtown Newark, and all of
    its rail and bus connections. The City of Newark now owns much of this
    property, and wishes to promote development of it to its full
    potential. To do so, several critical infrastructure improvements must
    be accomplished.
        First, there is currently only one road leading into the site.
    Right-of-way acquisition through property owned by existing businesses
    and roadway construction are necessary for appropriate accessibility.
    Second, some of the area will require environmental remediation before
    facility construction can take place. In addition, basic site services,
    such as power, water, and communication lines, need to be brought into
    the location. Site clearance and acquisition of several parcels from
    private owners will complete a building site of unparalleled
    attractiveness.
        The City proposes to make the site available for the development of
    facilities that would make the best use of the proximity to the airport
    and the direct rail link, such as a hotel, conference center, and
    office park. Private developers will have the opportunity to purchase
    or lease a portion of the property for construction of primary or
    complementary facilities. It has been estimated that activity on this
    site will ultimately generate hundreds of jobs in the trade,
    hospitality, convention and transportation industries. Further, the
    City of Newark is pursuing the establishment of an International Trade
    Center, which is currently in a study and preliminary design phase. The
    site for this facility has not yet been determined, but it is projected
    to be in a location which will also take advantage of the
    transportation links described. We are requesting that this committee
    make an appropriation of $6,000,000 to help us reach our long range
    goals for the Waverly Yards; to enable the generation of job and
    economic development opportunities for Newark's residents, and create
    needed enhancements to a regional transportation center.
        In close proximity to Waverly Yards and the airport/seaport
    complex, there are other areas in need of redevelopment which could
    have a tremendous impact on the economic well-being of our City.
    Thousands of manufacturing and shipping jobs have been lost in the
    nearby Frelinghuysen Avenue industrial corridor and other nearby
    locations. Yet Port Newark and the airport generate millions of dollars
    in the businesses of processing, packing and distribution. Conversely,
    Newark is home to a large exporting community, which make use of our
    key position on the transportation network.
        There is an inventory of dozens of factory, warehouse buildings,
    and vacant properties which have been underutilized, even abandoned.
    Some of them are city-owned as a result of tax foreclosures, many
    others have simply been closed by their owners. Many of these sites
    have been determined to be contaminated, and remediation of them would
    enable the City to sell them for development or put them back on the
    tax rolls. As a designated Brownfields pilot project, Newark is
    utilizing this funding to develop new technologies for site
    remediation, work with the State and Federal agencies to improve
    interagency cooperation and streamline the permitting process, and
    implement innovative financing systems, such as our Environmental
    Opportunity Zone tax abatement process. In addition to the $200,000
    federal pilot grant, the State of New Jersey has been providing funding
    for preliminary assessments and site evaluation. However, in order to
    reclaim these properties for productive use, the City of Newark is
    seeking funds to implement remediation on City-owned properties.
        An appropriation of $3 million to launch a pilot remediation
    program of City-owned brownfields sites so they can be sold and
    converted back to productive uses would allow us to begin a process of
    returning these facilities to the tax rolls, and returning our
    population to work. The additional jobs that would be generated in the
    distribution industry and other transportation-related industries will
    serve to create family incomes, which will in turn create retail and
    housing demand in Newark. The plentiful and competitively priced labor
    force within the City in general, and our Enterprise Community in
    particular, will provide a ready supply of employees for operations in
    the types of industries we need to keep and expand.
        Newark is also home to five institutions of higher learning,
    ranging from a fine community college to two law schools and a medical
    school. This complex also is a part of our Enterprise Community. Along
    with a public/private partnership of government and business, they are
    developing University Heights Science Park, with a high-tech business
    incubator, day care center, and lab space already operational. A
    federal allocation of $9 million would be utilized to leverage
    approximately $130 million in private and non-federal public sector
    funds to begin and complete the next project phase; an International
    Center for Public Health. This Center would be a world-class infectious
    disease research and treatment complex comprised of the Public Health
    Research Institute and the University of Medicine and Dentistry of New
    Jersey's National Tuberculosis Center. Funding allocated by this
    committee would be applied toward construction-related costs, which
    will create approximately 300 direct and indirect construction and
    technology jobs, and ultimately several hundred permanent employment
    opportunities for office workers, technicians, computer operators and
    scientists.
        We are asking for your help in changing the situation in Newark.
    Through the allocation of funding for the projects I have described,
    you will create long-term economic opportunity for people who currently
    have none. Through these economic development initiatives, you will
    help some of Newark's currently unemployed population to earn a decent
    salary and support their families.
                                     ______

    Prepared Statement of Dr. Raymond E. Bye, Jr., Associate Vice President
                     for Research, Florida State University

        Mr. Chairman, thank you and the Members of the Subcommittee for
    this opportunity to present testimony. I would like to take a moment to
    acquaint you with Florida State University. Located in the state
    capital of Tallahassee, we have been a university since 1947; prior to
    that, we had a long and proud history as a seminary, a college, and a
    women's college. While widely-known for our athletics teams, we have a
    rapidly-emerging reputation as one of the Nation's top public
    universities. Having been designated as a Carnegie Research I
    University several years ago, Florida State University currently
    exceeds $100 million per year in research expenditures. With no
    agricultural or medical school, few institutions can boast of that kind
    of success. We are strong in both the sciences and the arts. We have
    high quality students; we rank in the top 25 among U.S. colleges and
    universities in attracting National Merit Scholars. Our scientists and
    engineers do excellent research, and they work closely with industry to
    commercialize those results. Florida State ranks seventh this year
    among all U.S. universities in royalties collected from its patents and
    licenses. In short, Florida State University is an exciting and
    rapidly-changing institution.
        Mr. Chairman, let me describe three projects that Florida State
    University is pursuing this year. The first is a joint economic
    development project with the City of Tallahassee. The project, entitled
    the Frenchtown Arts and Cultural Entertainment District Economic
    Development Initiative, will link the development of a new performing
    arts facility on the FSU campus with an urban redevelopment project to
    revitalize a blighted area and create employment opportunities for
    community residents.
        The project, located on the FSU campus but adjacent to the City's
    Frenchtown area, seeks to use the development of a new performing arts
    center as the catalyst for development of an arts and culture complex
    which would house hotel, retail, entertainment and residential uses.
    Frenchtown was once a thriving area and center of the African-American
    community. However, years of neglect and lack of private sector
    investment have reduced Frenchtown to a distressed area with
    deteriorated buildings, vacant properties and with an overall image of
    crime and decay. The Center will create a ``destination'' which will
    attract sufficient patrons to support collateral retail and
    entertainment development. The proximity of the University site to the
    downtown area will provide the market demand to support residential and
    hotel development. The proposed arts and culture complex would also
    house a museum of African-American Arts and Science that would also
    help support the site as a destination and link the project to the
    greater Frenchtown community. The City and University are requesting $3
    million in fiscal year 1999 from the U.S. Department of Housing and
    Urban Development under its Economic Development Initiative for this
    economic development project. Funds for the total project will be
    leveraged at a ratio of about 20 to 1 from other funding. The project
    is located in a low-income census tract, will remove blight, will
    create employment opportunities for low-income persons, and satisfies
    the requirements associated with the Community Development Block Grant
    Program.
        The next project is a new Institute for Upper Ocean Predictive
    Studies (IUOPS). Housed at Florida State University, it will include
    scientists from half a dozen institutions around the United States.
    There is a critical need to better understand the upper ocean carbon
    cycle both for global change studies and for fisheries. This could
    result in major improvements in our understanding and anticipating
    climate changes that affect many facets of our daily lives. New NASA
    satellites measuring winds, ocean currents, and sea level provide
    excellent remote sensing data to be assimilated into ocean models. This
    new Institute will serve a major analytical role in analyzing and
    interpreting these new data. FSU has the computing capabilities
    available to handle the large data sets flowing from these satellites.
    We will seek $4 million for fiscal year 1999 from the National
    Aeronautics and Space Administration for establishing this Institute.
        Finally, FSU is establishing an FSU Institute for Molecular
    Environmental Science and Ecology. This Institute has the objective of
    developing predictive understanding of the behavior and cycling of
    elements and compounds in aquatic ecosystems (wetlands, estuaries,
    lakes, rivers, etc.) at the molecular level. The Institute will develop
    chemical indicators of the biological functioning and the health of
    aquatic ecosystems; develop species-specific sensors that monitor
    chemical changes in the environment; and develop new aquatic
    environmental models based on the results of the work. The results of
    this work will contribute substantially to the restoration and
    rehabilitation of the damaged Kissimmee River ecosystem, and have a
    major positive effect on understanding and predicting environmental
    changes. This Institute, working closely with the National High
    Magnetic Field Laboratory on the FSU campus, will employ state-of-the-
    art equipment from that facility to do much of the monitoring of these
    environmental changes. Many of these instruments are one-of-a-kind and
    provide this Institute with unparalleled capabilities to assess various
    impacts on these aquatic ecosystems. We are seeking $2 million from the
    U.S. Environmental Protection Agency in fiscal year 1999 for this
    effort. State resources will be sought to complement the EPA funding.
        Mr. Chairman, these activities discussed will make important
    contributions to solving some key problem and concerns we face today.
    Your support would be appreciated. Thank you again for this opportunity
    to present these views for your consideration.
                                     ______

        Prepared Statement of Henry Cagey, Chairman, Lummi Indian Nation

        My name is Henry Cagey, Chairman of the Lummi Indian Nation. The
    Lummi Indian Nation, located on the northwest coastline of Washington
    State, is the third largest tribe in Washington State serving a
    population of over 5,200. On behalf of the Lummi Indian Nation I want
    to thank you and the members of the Committee for the opportunity to
    express our concerns and requests regarding the fiscal year 1999 Office
    of Public and Indian Housing, Indian Housing appropriations. The
    following document presents the Lummi Indian Nation's funding
    priorities, as well as regional and national concerns and
    recommendations for your consideration.
        I had the honor of being the Tribal Co-Chair for the Negotiated
    Rule Making Committee which worked with HUD officials to develop the
    regulations for The Native American Housing Assistance and Self-
    Determination Act (NAHASDA). While these regulations need further
    attention in some areas, I believe that they present a reasonable
    regulatory framework in which Tribes can continue the development of
    their Housing programs, services, functions and activities.
                         1999 appropriation priorities
      --+$800 million Indian Housing Assistance under NAHSDA Funding.--
            While the Lummi Indian Nation supports the Administration's
            request of $600 million, the housing need among American
            Indians and Alaskan Natives demand a more vigorous financial
            response than the amount proposed by the Administration. We
            request that at least $800 million be provided annually to
            address the current backlog of housing needs, a backlog that
            continues to increase at an alarming rate.
      --+$80 million To Support Community Development Block Grants.--The
            Lummi Indian Nation supports the Administration's request of
            $60 million. However, in view of the extreme development needs
            among American Indians and Alaskan Natives, additional funding
            is justified.
      --Support for the Technical Amendments Proposed by the National
            Indian Housing Council.
           appropriation summaries, justification and recommendations
    +$800 million Indian Housing Assistance under NAHASDA Funding
        The need for significant increases in the amount of funds available
    to Tribal Housing Programs is the basis for Indian Country's support
    for the NAHASDA Program. The amount proposed by the Administration for
    1999 already represents an important increase over the funding for past
    years, yet, it does not address the cost of the substantial backlog of
    housing and development need in Indian and Native Alaskan Nations,
    Tribes and Communities.
        The following discussion of Lummi Indian Nation Housing needs
    indicate that the cost of addressing the housing shortage for the Lummi
    Indian Nation would be in excess of $100 million. Therefore, the amount
    requested by the Administration is not sufficient. If this amount is
    not increased, the Lummi Indian Nation will not be able to address is
    substantial backlog of Housing Needs and its deficit will continue to
    grow, however at a substantially slower rate.
        At the $600 million level, the Lummi Indian Nation Housing backlog
    will continue to grow at the rate of $1.5 million annually. This is a
    significant improvement over previous years during which the deficit
    grew at the rate of $4 million annually.
        However with a National appropriation of $800 million, the Lummi
    Indian Nation Housing needs deficit would stop growing. This level of
    appropriations would enable the Lummi Indian Nation to fully fund its
    annual increase in housing needs and slowly address its substantial
    backlog. This level of funding would provide the basis for hope while
    lesser funding levels offer only a reduction of despair.
                       lummi indian nation housing needs
    Rental and Homeownership Waiting List
        Currently, the Lummi Indian Nation Housing Waiting List contains
    the names of 859 families eligible to participate in HUD Housing
    Programs. The Housing Waiting List includes the most needy members of
    the Lummi Indian Nation. Almost half of the families on this list have
    incomes which would enable them to enter a subsidized home ownership
    program. The total costs of meeting the housing needs of moderate and
    low income members of the Lummi Indian Nation is estimated to be $77
    million.
    Specialized Support Housing Needs
        In anticipation of NAHASDA, the Lummi Indian Nation has completed
    the planning, development and will soon start construction of an
    Seniors Assisted Living Facility on the Reservation. The Lummi Indian
    Nation still needs to address the specialized supported housing needs
    of its disabled membership and its ``out of family'' youth through a
    group home setting. The programmatic flexibility and the financial
    support provided through NAHASDA will enable the Lummi Indian Nation to
    meet this continuing need. The estimated total costs for meeting the
    specialized and supported housing needs of the Lummi Indian Nation is
    $25 million.
    Water and Sewer Infrastructure
        Based on the foregoing estimates of current total housing needs,
    the Lummi Indian Nation must finance a significant increase in its
    water and sewer infrastructure. The extensions of sewer and water lines
    needed to accommodate housing needs is $13 million. Another $1.8
    million is needed to overhaul the existing sewage line pump stations.
    An additional $10 million is needed to expand the existing sewage
    treatment facilities to meet the demands of development.
    Access to Private Mortgage Financing Markets
        Those Lummi Indian Nation members who are financially capable of
    securing financing from private mortgage resources have not been able
    to access this funding due the trust status of reservation lands, the
    lack of foreclosure procedures in Tribal Legal Systems and the lack of
    knowledge of the financing assistance program from HUD on the part of
    Tribal members and local bankers. Our Housing Program staff will work
    with our Tribal members and local bankers to ensure access to this
    assistance. The ability to access private financing is key to our
    overall effort to address the housing needs of all Tribal members.
                        lummi indian nation housing plan
    Priority of Need Rental Housing and Homeownership Programs
        We anticipate the Lummi Indian Nation Housing Plan and the majority
    of Tribal Housing Plans developed under NAHASDA, will continue to place
    the highest priority on the need of the applicant family for both
    rental and homeownership housing assistance. Most if not all of the
    current indicators of need required by HUD will remain. Additional
    criteria will be developed and used to assist the tribes to tailor
    housing service to the housing needs and the traditional values and
    customs of their people. One example of additional criteria would be
    the priority for extended family groups both in cluster sites and in
    scattered site plans. Family proximity increases the value of family
    pride in the long term maintenance of houses and neighborhoods.
    Range of Services and Range of Incomes
        The Lummi Indian Nation Housing Plan under NAHASDA includes housing
    services appropriate for all levels of income, beginning with the most
    destitute to those whose income would have precluded them from
    participating. This does not mean the same services, e.g., subsidized
    and rental housing for low and moderate income families versus private
    financing for members who have higher income levels, allowing for a
    broad range of housing assistance enjoyed by non-Indians in all other
    non-reservation communities as commented on further in the foregoing
    item.
    Accessing Private Mortgage Financing Resources
        Those who are financially capable of participating in private
    mortgage financing markets will be provided with assistance to secure
    the credit they need to meet their own housing needs through the loan
    guarantee programs, similar to the services now provided by HUD to
    millions of Americans who are able to access the private mortgage
    finance markets.
    Emergency Shelter Housing Services
        The members of the Lummi Indian Nation do not have access to an
    Emergency Housing Shelter. Incredibly, those members who have no income
    and no shelter are not currently served by Housing Programs develop by
    the Lummi Indian Nation under the guidance of HUD. Under NAHASDA, the
    Tribe will be able to finally address these very basic needs.
    Supported and Specialized Housing Needs
        The Lummi Indian Nation plans complete construction of the Seniors
    Assisted Living Facility this year and will begin plans for phase II of
    this facility. Plans are under development for a total of 58 units.
    Planning will also begin for youth group home facilities.
    Water and Sewer Infrastructure
        The Lummi Indian Nation NAHASDA Plan will include extensive funding
    for water and sewer infrastructure development.
                                   conclusion
        In conclusion, Mr. Chairman, I want to state to the Committee that
    they are a part of an historic process of restoring to Tribes the
    ability to control the present and shape the future in a manner that
    has not been possible for at least a century. NAHASDA is a critical
    part of the process of the restoration of Tribal governments which
    started under the Self-Governance Initiative, an initiative that began
    over ten (10) years ago in the Department of the Interior.
        Tribal governments, not HUD bureaucrats are the elected
    representative of Indian people. These duly elected representatives
    have taken a back seat to the bureaucrats for far too long. This
    resulted in housing programs which failed to fully meet the need of the
    people, because the needs of the federal government have come first in
    the minds of the bureaucrats. For far too long, HUD has been able to
    bypass elected officials who had authority and responsibility over the
    reservation based development process, except where the HUD Housing
    Programs were involved. Under NAHASDA, the Tribe for the first time is
    empowered to create comprehensive reservation based plans for housing
    management and development.
        During your deliberations on these funding matters, please remember
    the overwhelming majority of Tribal members have not always been
    included in the American dream of safe, sanitary and affordable home
    ownership. Their poverty, the trust status of their lands and the lack
    of credit programs designed to meet the unique legal and social
    environment of the Reservation have combined to create third world
    housing conditions on many Indian reservations. Under NAHASDA, we have
    a combination of financial, regulatory and social tools to address
    these problems. Through the coordinated efforts of Tribes and HUD, we
    will see a reduction and with the provision of adequate resources, we
    will see the elimination of these problems. In order to fully fund
    annual housing needs of the Lummi Indian Nation, it needs annual
    funding of $6.550 million. Under the Administration's proposed funding
    level, it would receive $4.3 million. The administration's proposed
    funding level is a significant step forward but does not go far enough.

                                                   LUMMI INDIAN NATION
    ----------------------------------------------------------------------------------------------------------------
                                                             Current estimated              Current
                                                 ----------------------------------------   annual       Estimated
                    Housing needs                  Total                                    growth        annual
                                                   units     Cost/unit     Total current  percentage   increase cost
                                                  needed                       costs      factor \1\
    ----------------------------------------------------------------------------------------------------------------
    Rental and Homeownership Waiting List.......     859         $90,000     $77,000,000           5      $3,800,000
    Total Need..................................  ......  ..............      77,000,000  ..........      80,800,000
    Specialized Support Housing Needs...........     598  ..............  ..............           5       1,150,000
        Seniors.................................     200          80,000      16,000,000  ..........  ..............
        Disabled................................     120         150,000       5,400,000  ..........  ..............
        Youth Group Home........................  ( \2\          150,000       2,100,000  ..........  ..............
                                                       )
    Total Need..................................  ......  ..............      23,000,000           5      24,150,000
    Water and Sewer Infrastructure..............  ......  ..............  ..............           5       1,580,000
        Water and Sewer Lines Extensions........  ( \3\      100,000,000      18,000,000  ..........  ..............
                                                       )
        Sewer Line Pump Stations Upgrade........      18     \4\ 200,000       3,600,000  ..........  ..............
        Sewer Treatment Facility Upgrade........       2       5,000,000      10,000,000  ..........  ..............
    Total Infrastructure Development Needs......  ......  ..............      31,600,000  ..........      33,180,000
    Total Housing and Development...............  ......  ..............     131,000,000           5       6,550,000
    ----------------------------------------------------------------------------------------------------------------
    \1\ Based on Annual Live Birth Rate of 112 for the years 1990 through 1997, 30 percent births first birth to
      teen mother, 30 percent of births, first birth to non-teens. First live birth signals household formation.
      Estimated Annual Rate of Household formation 50.
    \2\ 78 persons per 14 units.
    \3\ 1 million per 5 million of development.
    \4\ Per pump station.

                                     ______

                 Prepared Statement of the New York University

          a center for cognition, learning, emotion and memory (clem)
        New York University respectfully seeks the Subcommittee's support
    for a project of scientific research which is not only an important
    priority for the University, but which we believe will advance national
    interests through enhanced scientific understanding of normal brain
    development as well as the many disabilities, disorders and diseases
    that erode our ability to think and learn.
        The University proposes to establish a Center for Cognition,
    Learning, Emotion and Memory. This Center will draw on the University's
    strengths in the fields of neural science, biology, chemistry,
    psychology, computer science, and linguistics to push the frontiers of
    our understanding of how the brain develops, function malfunctions,
    matures, and ages. In addition, as a major training institute, the
    Center will help prepare the next generation of interdisciplinary brain
    scientists.
        Our project addresses the research and programmatic priorities of
    this subcommittee and the Congress. We thank the Congress for taking
    the time to consider and give its support to the important research
    being conducted in this area. We at New York University firmly believe
    that in the coming decades, a federal investment in mind and brain
    studies will repay itself many times over.
        To establish this Center, New York University is seeking $10.5
    million over five years to support and expand the research programs of
    existing faculty, attract additional faculty and graduate and
    postgraduate trainees, and provide the technical resources and
    personnel support that will allow us to create a premier, world class
    scientific enterprise. Individual researchers in the science programs
    at NYU compete for investigational support through traditional routes,
    quite effectively. However, these traditional funding sources do not
    address the specific need for establishment of a new cross-disciplinary
    area of scientific study, particularly one that transcends biomedicine,
    psychology, education, computer science, cognitive science, and
    linguistics. Nor do they provide the extensive funding necessary for
    faculty and student support and personnel and technical resources.
        Exploration into the fundamental neurobiological mechanisms of the
    nervous system can help educators, scientists, health care providers,
    policy makers, work force managers, and the general public by enhancing
    our understanding of normal brain development and function in both
    children and adults, thereby helping us to detect and correct
    impediments that affect our ability to learn, to think, and remember,
    and to mature as productive members of family and society. Research in
    this area will ultimately contribute to a better understanding of how
    children learn at different stages; how childhood and adult learning is
    shaped by different cognitive styles; how aging affects memory; and how
    diseases alter memory.
        New York University is well poised to make important contributions
    in this area. Founded in 1831, the University today is the largest
    private university in the United States, with over 49,000 students
    representing a broad range of backgrounds and coming from every state
    and over 120 foreign countries. NYU comprises thirteen schools,
    colleges, and divisions and is known for the excellence of its schools
    of law, medicine, film, and business; the Institute of Fine Arts; the
    Courant Institute of Mathematical Sciences; and departments in the
    Faculty of Arts and Science, notably neural science, chemistry,
    biology, psychology, French, English, philosophy, anthropology and
    economics. Located in the heart of the world's most cosmopolitan and
    diverse city, New York University is a leading national--and in many
    fields, international--center of scholarship, teaching and research. It
    is one of twenty-nine private institutions constituting the
    distinguished Association of American Universities, and is consistently
    among the top U.S. universities in funds received from federal sources
    and from private foundations.
        The Center for Cognition, Learning, Emotion, and Memory will be an
    interschool, interdisciplinary unit linking faculty, students, programs
    and resources from several schools of New York University. These are
    the Faculty of Arts and Science, Courant Institute of Mathematical
    Sciences, School of Medicine, School of Education, and Center for
    Digital Multimedia. CLEM, to be housed at the University's Washington
    Square campus within the Faculty of Arts and Science, will be the locus
    for laboratory research and training in fundamental neurobiological,
    psychological and computational studies of the nervous system. In
    addition, CLEM will be a point of convergence for faculty and students
    seeking to incorporate these research perspectives into their own work
    in education, medicine, and technology, and seeking as well to enrich
    laboratory research with interdisciplinary collaboration and conceptual
    bridges.
        The new Center will be administratively housed within the NYU
    Department of Neural Science. This department includes affiliated
    investigators from biology, chemistry, psychology, physics, computer
    science, medicine, and mathematics. It is a national center of research
    and teaching, encompassing a pre-eminent faculty, and generating
    substantial external funding from federal and state agencies as well as
    the private sector. The department holds world-class stature in the
    study of the nervous system as a sensory communications system, as a
    controller of motor activity and as a neural network that generates the
    emotional foundation of voluntary behavior. The neural sciences at NYU
    have attracted millions of dollars in generous support from, for
    example, the NIH, NSF, and EPA, the Howard Hughes Medical Institute,
    the W.M. Keck Foundation, and the Alfred M. Sloan Foundation. Its
    faculty have won prestigious awards, being named National Institutes of
    Health (NIH) Merit Awardee, Howard Hughes Medical Institute
    Investigator, National Science Foundation (NSF) Presidential Faculty
    Fellow, McKnight Foundation Scholar in Neuroscience, and MacArthur
    ``Genius'' Fellow. The department cultivates productive linkages with
    investigators from other disciplines, educational institutions, and
    research sectors. Thus, linkages between neural scientists, and
    educators in the NYU School of Education, clinicians in the NYU School
    of Medicine, and software designers, computer scientists, and graphic
    artists in the NYU Center for Digital Multimedia facilitate the
    application of scientific discoveries in the classroom, in the clinic,
    and in new technologies.
        The new Center for Cognition, Learning, Emotion, and Memory Studies
    will bring the University's many strengths in these areas more fully to
    bear on the challenges and opportunities that multi disciplinary
    studies present. The Center will provide an organizational identity,
    core resources, and common focus for the university's efforts. For
    students, it will provide an educational forum to apply knowledge
    gained in one discipline to problems in other disciplines. For
    researchers, the Center's synergistic linkages between basic science
    departments, biomedical departments, and mathematical and computational
    units will encourage intellectual cross fertilization and will permit
    the consolidation of individual efforts in multi disciplinary but in
    conceptually coordinated efforts. For colleagues in the fields of
    education, medicine, and technology, the Center will facilitate
    connections with laboratory scientists and enhance the translation of
    research knowledge into health care, educational, and commercial
    applications. The enhanced research and training that will be possible
    at the Center will attract public and private funding above and beyond
    the substantial funds, honors and recognition already awarded to the
    University's researchers, and will support the Center's continued
    growth and development.
               the case for the new center at new york university
        New York University has the resources necessary for the successful
    creation and operation of a major multi disciplinary research and
    training center. There is top-level administrative leadership, a
    commitment to science, intellectual and administrative resources,
    established frameworks for interdisciplinary and interschool
    collaboration, strengths in neuro-biological, psychological and
    computational sciences, and standing in the international scientific
    community. The Faculty of Arts and Science, which encompasses the
    College and the Graduate School, has a preeminent faculty of 560, an
    annual operating budget of $197 million, a student population of
    approximately 9,200, and over 450,000 square feet of dedicated space
    apart from shared University facilities, making it a vital center of
    teaching and research. The science enterprise is especially vigorous,
    the result of a decade-long multi-million dollar development plan to
    renovate research and teaching laboratories and recruit distinguished
    junior and senior faculty, a pioneering science curriculum for
    undergraduate non-science majors, extensive research experiences for
    undergraduate science students, and an enhanced graduate student
    training program of supervised research and teaching assistantships.
    New York University has, as part of its multi-year science development
    plan, created a world-class and widely recognized neuroscience program.
    Neural science at NYU is particularly well known for research in visual
    processing and perception, theoretical neurobiology, molecular and
    developmental neurobiology, and cognitive neuroscience. It has
    outstanding researchers and well-established strengths in visual
    neuroscience, auditory neuroscience, cognitive science, neuromagnetism,
    neurochemistry, neurobiology, behavioral neuroscience, mathematical
    modeling, and computer simulation. Recently, these faculty have begun
    to unravel the biological mechanisms underlying cognition, learning and
    memory. As an example, NYU scientists have made important contributions
    to visual processing, deriving the most successful methods available
    for studying nonlinear interactions in neuronal information processing;
    emotion, giving the first real glimpse into the neuroanatomy of fear;
    neural development, with landmark work on the vision system; and the
    neural bases for auditory function, including neural sensitivity to
    auditory motion stimuli.
        With these strengths, New York University is strategically placed
    to create a new and distinctive center that will produce a new
    understanding of the brain, and new ways of using that knowledge for
    improving human health and welfare. The Center for Cognition, Learning,
    Emotion, and Memory will capitalize on our expertise in physiology,
    neuroanatomy, and behavioral studies, and will build on active studies
    that range from the molecular foundations of development and learning
    to the mental coding and representations of memory. The Center will
    encompass diverse research approaches, including mathematical and
    computational modeling, human subject psychological testing, use of
    experimental models, and electrophysiological, histological, and
    neuroanatomical techniques. Examples of the kinds of research that will
    be conducted are taken from our current research efforts, which are now
    dispersed in the departments of biology, chemistry, neural science,
    psychology, and computer science: Neural scientists are investigating
    the anatomical and physiological pathways by which memory can be
    enhanced; the conditions that facilitate long-term and short-term
    memory; and the brain sites where all these memories are processed and
    stored.
        Neural scientists, working with computational scientists, are using
    digital imaging to characterize normal and pathological mental
    processes in humans. Developmental biologists are studying the
    molecular basis of development and learning. Vision scientists are
    studying form, color and depth perception; visual identification; the
    varieties of visual memory; and the relationship of vision and
    perception to decision and action. Neural scientists are studying the
    neuroanatomy and physiology of emotion. Physicists are taking magnetic
    measurements of brain function that trace the decay of memories.
    Behavioral scientists are studying learning and motivation, acquisition
    of language, memory and aging Neurobiologist and psychiatrists are
    conducting clinical studies of patients with nervous system disorders,
    especially memory disorders. These existing researchers are well
    recognized by their peers and have a solid track record of sustained
    research funding from federal agencies and private foundations.
        As we move through the last years of the ``Decade of the Brain,''
    NYU, through this new Center, is strategically positioned to lead and
    contribute to accomplishment of the goals of this important initiative.
    Establishment of this Center requires support to bring together
    investigators in the different disciplines that address cognition,
    learning, and memory. Centralized core resources are required to
    facilitate collaboration and add efficiency to the research and
    training functions. New faculty who specifically bridge the disparate
    areas of knowledge and expertise need to be hired and ``set up.''
    Support must be provided to attract students to this new area and to
    promote work in this area, especially for those from groups
    traditionally under represented in the sciences.
        While other academic institution are also conducting research into
    brain studies, New York University has special strengths in important
    emerging research directions that are central to this Subcommittee's
    priority areas. To elaborate, vision studies at NYU follow an
    integrated systems approach that has been shown to be the only
    successful approach to unraveling this complex system, and that has
    established NYU as an internationally known center for neuroscience
    studies in vision. The interest in vision, a key input to learning, is
    associated with focused studies on the learning process, particularly,
    the interaction with memory and behavior. These researchers are
    exploring hard and exciting questions: How does vision develop in
    infancy and childhood? How does the brain encode and analyze visual
    scenes? What are the neural mechanisms that lead to the visual
    perception of objects and patterns? How do we recognize letters and
    numbers? How do perceive spaces, depth, and color? How does the brain
    move from vision and perception to planning and action? How does the
    brain process what we see?
        Advances in Biomedical and Behavioral Research.--Research conducted
    in our Center will by its nature address the loss of memory through
    aging or disease (including Alzheimer's), as well as disorders of
    emotional systems that commonly characterize psychiatric disorders.
    Many of the most common psychiatric disorders that afflict humans are
    emotional disorders--malfunctions in the way emotional systems learn
    and remember--and many of these are related to the brain's fear system.
    Neurobiological studies of emotion and emotional memory in the brain
    will generate important information about the brain systems that
    malfunction in, for example, anxiety, phobias, panic attacks, and post-
    traumatic stress disorders. Research into the brain mechanisms of fear
    will help us understand where our emotions come from, why these
    emotional conditions are so hard to control, and what goes wrong in
    emotional disorders. Ultimately, the research will generate clues for
    prevention and treatment of emotional disorders, focusing perhaps on
    the ways in which unconscious neural circuitry can in effect, be
    altered or inhibited.
        Accordingly, we believe that the work of this Center is an
    appropriate focus for the Environmental Protection Agency. The focus of
    the Center for Cognition, Learning, Emotion, and Memory is entirely
    consistent with the Department's commitment to the environmental
    sciences. We believe the Center will help enhance the Department's
    commitment to education, and especially science. Thank you for the
    opportunity to submit this testimony for the hearing record.
                                     ______

    Prepared Statement of Lorne M. Mendell, Ph.D., Society for Neuroscience

        I am testifying on behalf of the Society for Neuroscience, the
    largest scientific organization in the world dedicated to the study of
    the brain and spinal cord. Our organization consists of more than
    28,000 basic and clinical neuroscience researchers affiliated with
    universities, hospitals and scientific institutions. We are very
    grateful for this opportunity to present our testimony and for all that
    the Subcommittee has done to support neuroscience research.
        I present this testimony to advocate for increased research funding
    for the National Science Foundation and the Department of Veterans
    Affairs to facilitate the progress of research already being conducted
    at these institutions and to aid in the funding of future projects and
    grants. NSF and VA have faced serious limitations on their research
    programs, but last year this Subcommittee showed its support with an
    increase given to both NSF and VA. The president's request for fiscal
    year 1999 is much higher than what was recommended last year. We hope
    that this Subcommittee will do all in its power to recommend an
    increase in the appropriation at least equal to that proposed by the
    President to provide sufficient funding for NSF and VA for fiscal year
    1999.
        The field of neuroscience, only a quarter of a century old, has
    already made major contributions to the welfare of our nation's
    citizens. New insights and effective treatments have been developed for
    previously hopeless diseases. Without adequate funding at NSF and VA,
    our fight against neurological diseases and disorders such as
    Alzheimer's, Parkinson's, mental retardation, stroke, severe
    depression, schizophrenia, and spinal cord injury, to name just a few,
    would suffer serious setbacks.
                          national science foundation
        For fiscal year 1999, the administration's budget request is almost
    $3.8 billion for NSF, a ten-percent increase over fiscal year 1998 and
    the largest increase ever recommended by a president. The
    administration requested $2.8 billion for Research and Related
    Activities, an 11.8-percent increase over fiscal year 1998. This
    includes $417.8 million for Biological Sciences, a 12.7-percent
    increase over fiscal year 1998, and $150.3 million for Social,
    Behavioral and Economic Sciences, a 15-percent increase over fiscal
    year 1998.
        As one of the most broad-based federal funding agencies, NSF is
    able to maintain a strong representation of scientists covering diverse
    disciplines. This strength allows the agency to fund the best and
    brightest researchers, whose discoveries may cross into other
    scientific fields. NSF funds researchers at more than 2,000 colleges,
    universities, and other institutions in the United States, funds merit-
    reviewed research in all 50 states and receives more than 50,000
    requests for funds annually, including 30,000 new proposals. The
    researchers at NSF have aided the advancement of scientific knowledge
    while furthering technological developments around the world. In fact,
    five out of the eight Nobel Laureates in the natural sciences in 1996
    received NSF funding at some point in their career.
        Some of the most exciting and challenging scientific research
    opportunities address the mapping of function onto the structure of the
    brain. NSF plays the pivotal role in the development and support of
    this multidisciplinary research area through activities that provide
    unique opportunities for neuroscientists to collaborate with
    investigators in mathematical, computer and information sciences and
    engineering. Teaming modern brain scientists employing molecular
    biology, neurogenetic, neurophysiological, psychological and
    computational techniques with investigators in these other scientific
    disciplines provides a broad essential scientific infrastructure. This
    will ultimately lead to the development of novel solutions to problems
    in neuroscience research. A wide spectrum of model systems, ranging
    from single-cell organisms to the human brain, are included in the
    research portfolio of NSF and hold real promise in unlocking the
    mysteries of brain diseases and disorders.
        Basic research is the key to understanding neurological and mental
    disorders, and medical breakthroughs cannot be achieved without a
    significant increase in funding. NSF funds projects that investigate
    basic and fundamental questions about brain structure and function, and
    NSF funds hundreds of studies on the fundamental properties of the
    central nervous system. Much of what we know about complex higher
    nervous and cortical function has been the result of basic brain
    research. NSF also supports basic research in molecular genetics, which
    is highly important to understanding the brain. Much of basic
    neuroscience research is at the cellular and molecular level, and these
    studies are playing an ever-increasing role in our understanding of
    brain function as well as our ability to design therapies to treat the
    damaged brain and spinal cord.
        A few examples of the important research conducted at NSF:
      --NSF-sponsored research supports a great deal of this country's
            research in developmental neurobiology, a field dedicated to
            how the brain evolves, develops and changes.
      --NSF-sponsored research programs have pioneered the development of
            cognitive neuroscience, which combines the study of behavior,
            cognition and artificial intelligence systems with basic
            neurobiological studies.
      --NSF-sponsored research studies the physiological and psychological
            processes involved in the production and perception of speech
            and on the biological basis of language in the central nervous
            system.
        The Society for Neuroscience is deeply and firmly committed to the
    basic science approach and strategy represented by NSF and supports the
    Coalition for National Science Funding's request, as well as the
    president's request, for a 10-percent increase for NSF for fiscal year
    1999. CNSF is an ad-hoc advocacy group that supports enhanced funding
    for NSF and is made up of groups with representatives from the physical
    and natural sciences, the social and behavioral sciences, mathematics,
    engineering, higher education, and the industrial world. We all believe
    that research conducted at NSF serves as the very foundation that
    scientists build upon.
                         department of veterans affairs
        For fiscal year 1999, the administration has requested $300 million
    for the VA Medical and Prosthetic Research Program, a ten-percent
    increase over fiscal year 1998. We are grateful that this Subcommittee
    increased the budget for the VA Medical and Prosthetic Research Program
    last year, and hope that it will be able to provide an increase to
    match at least that of the president for fiscal year 1999. This program
    deserves strong support from this Subcommittee since it has failed to
    keep pace with inflation during the last decade. It has been a great
    concern to many that Congress and the administration, who have been so
    dedicated to the continued funding of research and who have seen the
    benefits research has to offer, would undervalue the growth of VA
    Medical and Prosthetic Research. The level of research funding will, in
    a very direct sense, compromise the health of tens of millions of our
    veterans and society at large. Advances in research conducted at VA
    have a profound and long-lasting impact all over the world.
        One of the greatest aspects of VA-sponsored research is that it not
    only aids our nation's veterans, it also integrates clinical and basic
    research, and assures the rapid transfer of new knowledge from bench to
    bedside. Following decreases in funding over the past years, VA has
    been able to fund only 15 to 20 percent of approved health research
    projects. In 1986, VA funded 2,434 investigator-initiated research
    projects. Because of decreasing resources, VA was only able to fund
    approximately 1,414 programs in 1997. VA-sponsored research has led to
    many discoveries in the neurological arena and promises to bring more
    with adequate funding. A few examples of the important research
    conducted at the VA:
      --VA-sponsored research has developed an Alzheimer's disease
            assessment scale that helps diagnose the condition early while
            enhancing the quality of life for sufferers of Alzheimer's
            disease by producing memory therapy, a non-pharmacological
            technique.
      --VA-sponsored researchers are developing treatments for
            schizophrenia after finding that the severity of schizophrenic
            symptoms is associated with the level of dopamine breakdown in
            the spinal fluid and blood.
      --The VA hopes to expand its Cooperative Research Agreement with the
            National Institutes of Health. This collaboration will leverage
            VA, NIH and private sector funding to promote investigation in
            designated research areas such as spinal cord injury,
            rehabilitation and mental health. This cross-agency partnership
            will aid in the promise of research not only for our nation's
            veterans, but for every American.
        In the past, more than half of the nation's physicians received
    some part of their medical training through the VA. The VA medical
    system provides an excellent opportunity to conduct large clinical
    trials, and veterans receive highly skilled medical care through
    various affiliation arrangements. However, inadequate funding has
    inhibited VA's ability to recruit high-quality researchers as it had
    done in the past. As a result, VA has had to reduce its staff,
    consolidate hospitals and clinics, and lower a number of existing
    services at medical centers. Because of the continuing shortfall of
    research funding within VA, the status and the very integrity of the
    entire VA research program is in serious jeopardy. This is tragic for
    the nation's millions of veterans as VA loses valuable research
    opportunities and America's veterans lose experienced clinicians.
        After the increase in funding last year, VA researchers were able
    to take advantage of their large patient population and coordinated
    study programs and continue to have the highest percentage of
    physician-researchers in any federal agency. For every dollar
    appropriated for research, the VA attracts an additional $1.22 in
    extramural, outside funding. This funding comes from federal agencies
    supporting VA clinicians, from the private sector, corporations,
    pharmaceutical companies, and nonprofit health organizations looking
    for unique VA research opportunities.
        The Society for Neuroscience recommends $314 million for the VA
    Medical and Prosthetic Research Fund for fiscal year 1999, $42 million
    over fiscal year 1998. This recommendation is based on the Independent
    Budget for the Veteran's Administration which is also supported by more
    than 50 groups dedicated to research funding at VA. The Society has
    also endorsed the Friends of the VA Medical Care and Health Research's
    proposal, which recommends a VA medical care appropriation of at least
    $18.1 billion and a VA health research appropriation of at least $300
    million. FOVA consists of more than 60 national academic, medical,
    scientific, research, voluntary health and patient advocacy
    associations. The group advocates appropriate funding for health
    programs that serve the nation's veterans.
        In conclusion, the Society for Neuroscience recognizes the
    constraints that the drive for deficit reduction has placed on all
    discretionary programs for fiscal year 1999. We are also fully aware of
    the many critical programs this Subcommittee must fund. However, we
    strongly believe that the research programs we advocate are investments
    for the future, and we urge you to place NSF and VA research among the
    Subcommittee's highest priorities.
        We are grateful for this opportunity to present testimony to this
    distinguished Subcommittee. We encourage members of the public and the
    Subcommittee to visit Brain Briefings, our monthly newsletter, on our
    Web site (http://www.sfn.org/briefings/) to learn how basic
    neuroscience discoveries lead to clinical applications. This testimony
    is also available on our Web site (http://www.sfn.org/legislative/
    index.html).
        Thank you for your consideration of our requests.
                                     ______

      Prepared Statement of Catherine Baker Stetson, Stetson Law Offices,
                             P.C., Albuquerque, NM

        Our purpose in writing is to provide you with public witness
    testimony on the need for increased funding for Indian Housing programs
    in fiscal year 1999.
        The current budget request submitted by the Department of Housing
    and Urban Development (HUD) for programs under the Native American
    Housing Assistance and Self-Determination Act (NAHASDA) is simply
    unacceptable. The no-increase $600 million request addresses neither
    the actual need for housing in Indian Country, nor the costs of
    transition to a new program.
        To illustrate the need of housing in Indian Country, we need look
    no further than the Pueblo of Zuni in northern New Mexico. Three years
    ago, the Zuni Housing Authority compiled a waiting list of over 200
    families seeking housing assistance. The survey found that, on Zuni
    lands, two to three families are living together in each home. In many
    cases, the houses are not equipped with electricity or running water.
    In one case, a family of five was found to be living in a one-room cook
    house no bigger than many people's backyard toolsheds.
        In southern New Mexico, the Mescalero Housing Authority also has
    compiled a waiting list of over 200 families. Overcrowding is even
    worse here, with four families living together per house. In addition
    to the obvious lack of available housing, Mescalero has also a severe
    problem with its 30-year-old water delivery and sanitation systems.
    These problems range from low water pressure to poor water quality,
    both of which are resulting in increased health risks. Estimates to
    repair the system range from $10 to $20 million.
        Another example of the housing problems faced by Indian tribes
    comes from the Pueblo of Tesuque. A recent survey found that the
    majority of available housing stock on Tesuque lands was over fifteen
    years old and in poor condition. Respondents listed a range of problems
    including overcrowding, erosion, poor plumbing, lack of heating, leaky
    roofs, drafty windows, and even a lack of doors.
        In Arizona, the Yavapai-Apache Nation has a current waiting list
    for housing with over 100 names on it; however, construction is at a
    standstill due to a lack of funds. To make matters worse, most current
    housing units are over twenty years old and in desperate need of
    repair. A large number of survey respondents cited the urgent need for
    roof, electrical, and plumbing repairs. Overcrowding is another huge
    concern, with as many as four to six families living together under the
    same roof.
        NAHASDA was passed last year to streamline Indian housing programs
    and provide Indian tribes with greater flexibility and autonomy to
    address their particular needs. It replaced a number of programs dating
    back to the 1960's with the new Indian Housing Block Grant program.
        Under the previous programs, tribes were prevented by HUD from
    administering their own housing programs. Instead HUD placed this
    responsibility with Indian Housing Authorities, which it insisted be
    created as separate entities. Now, NAHASDA returns the responsibility
    for housing to tribes, which usually have no experience in
    administering housing programs, developing and maintaining projects,
    collecting rents, handling evictions, and so on.
        To assume the responsibility without the benefits of expertise or
    experience is devastating. Without sufficient training or transition
    funding, it is near impossible. To make matters even worse, tribes must
    familiarize themselves with a whole new set of rules by July 1, 1998,
    when their Indian Housing Plans are due. Indian tribes are being forced
    to make the transition to a new program, with new people, and a brand
    new set of rules, all without adequate training or assistance and under
    a fast-approaching deadline. This scenario is not designed to bring
    success, only more heartburn, struggles, and failures.
        The Administration's request does not acknowledge the time and cost
    it will take many tribes to integrate their new housing
    responsibilities into their community master plans. Nor does it account
    for the cost of developing new comprehensive plans, writing reports,
    and conducting impact analyses. Nor does it provide sufficient money
    for tribes to conduct environmental reviews required now by the
    regulations. Tribes are being forced to make a major transition without
    adequate funds to pull it off. It is unfair, it is unreasonable, and it
    is a recipe for disaster.
        Given this situation, we believe it is of paramount importance that
    you provide the full authorization of $850 million for the Indian
    Housing Block Grant in the fiscal year 1999 appropriation. Such a level
    is critical to the success of the new program and to the confidence of
    Indian tribes as they begin this new test in self-governing.
        To facilitate the transition and maximize the chance of success, we
    also request that the Title VI and Section 184 loan guarantee programs
    be funded at $10 million each. These programs complement the Indian
    Housing Block Grant and provide tribes with the leverage needed to
    encourage private sector participation.
        Most tribal leaders are extremely grateful for the autonomy that
    NAHASDA will bring in the future. All they are asking is that the new
    authority be backed up with the resources necessary to carry it out.
                                     ______

       Prepared Statement of Theodore Paskinski, President, St. Joseph's
                             Hospital Health Center

        Mr. Chairman and Members of the Subcommittee, thank you for the
    opportunity to present this testimony. I am Theodore Pasinski,
    President of St. Joseph's Hospital Health Center in downtown Syracuse,
    New York. St. Joseph's is a non-profit 431-bed hospital and health care
    network providing services to Onandaga County and to patients from 15
    surrounding counties. St. Joseph's is best known for its ranking as the
    # 1 hospital in New York State for open heart surgery in terms of
    lowest overall mortality rate. We are very proud of this ranking, which
    we have held for two consecutive years. What many people do not know is
    that we are also the largest hemodialysis center outside metropolitan
    New York. My statement today is focused on these two areas of expertise
    at St. Joseph's and how we plan to initiate a chronic disease
    management model that will benefit our current patients with heart and
    kidney disease and enhance the quality of life for at-risk patients in
    the region. We see this initiative as one with not only health
    enhancement benefits but also with significant positive economic
    implications for the community and the region. I will explain this
    dynamic in general terms for the Subcommittee.
        St. Joseph's provides over $7 million in bad debt and charity care
    to our service region. This comes to about 4 percent of our operating
    budget. This number has steadily risen over the years and we feel it
    will continue to do so unless some dramatic steps are taken. In order
    to increase access to patients who are underserved and at-risk for
    disease, we have implemented a program of ``patient-centered care.'' We
    believe we achieved our # 1 ranking for cardiac care through this
    process, which employs a secondary prevention model for disease
    management. By applying a multidisciplinary team approach to heart
    disease and preparing patients before surgery and rehabilitating them
    after, we have reduced mortality rates as well as the number of second
    hospitalizations. We have done this to improve the overall health of an
    underserved and underinsured patient base, but also for practical
    financial reasons. While our rehabilitation and education programs for
    our cardiac patients are largely unreimbursed, we are rewarded by
    having to perform less expensive charity care on patients who would
    typically end up back in the hospital without disease management.
        Recognizing that early assessment is important to reducing the
    number of expensive treatments required later in life, St. Joseph's
    instituted a Wellness Place at a local mall so that people could stop
    in at their convenience. The Wellness Place provides free, general
    health screenings such as blood pressure readings, cardiac and diabetes
    risk assessment, counseling and patient education and seminars. Last
    year, approximately 15,000 people used the Wellness Place. Nearly 1,000
    of these people were determined to be at risk for heart disease,
    diabetes, or vascular problems. These individuals were offered follow-
    up services intended to change lifestyle, such as nutritional
    counseling, smoking cessation, exercise programs and other similar
    regimens. They were also offered a choice of primary care physician if
    none was identified. This is all done at considerable unreimbursed
    expense to St. Joseph's but with the knowledge that a great deal of
    money will be saved in the long run--for the patient, the Medicare
    system and the hospital. The most dramatic economic implications I
    mentioned are encompassed within this concept--but not all. At risk
    patients are working people who may lose jobs if their disease
    progresses. It is important to realize, however, that patients with
    diagnosed diseases or who have congestive heart failure, may still work
    and lead productive lives if an effective disease management program is
    initiated at the earliest stage possible. The other economic benefits
    come in the form of the support required for this program. I will
    detail those later in this statement.
        Assessment is the first line of defense in chronic disease
    management; but, there are many other factors involved after this step
    is taken. A program for management of disease must adequately educate
    patients and then foster a sense of individual responsibility for the
    importance of following prescribed regimens. This takes a great deal of
    initial monitoring and time spent with patients by telephone, at
    community health centers, and in the home. This also requires
    coordinated community participation by physicians, nurses, pharmacists,
    physical therapists, educators, behavioral specialists and even
    employers.
        Diabetes, leading to kidney disease and kidney failure, is the most
    expensive disease in the country. The second most expensive, and # 1
    admitting diagnosis for Medicare, is congestive heart failure. The U.S.
    spends more than $7 billion annually in Medicare dollars for these
    diseases. The clinical relationship between chronic kidney failure and
    heart disease (e.g., high blood pressure) requires similar early
    intervention techniques as well as later management, treatment, and
    rehabilitation. Utilizing resources already developed and in place for
    our cardiac rehabilitation program, St. Joseph's is proposing to
    further develop a chronic disease management program focused on
    hemodialysis. Combining resources in this way will be cost effective
    and has the potential to radically change the management of kidney
    disease.
        The specific objectives of the program will begin with early
    identification. Timely referrals to a nephrologist can be improved so
    that more aggressive treatment can be initiated to prolong kidney
    function and allow better preparation of the patient for dialysis.
    Second, we will identify, investigate, evaluate, and implement
    technology that will promote in-center self care and home hemodialysis
    modalities. The Aksys Corporation has developed a product that has the
    potential of achieving this objective. Third, we will utilize the St.
    Joseph's Cardiac Rehabilitation Model for the renal patient. This model
    will emphasize education and exercise with the goal of improving the
    percentage of patients that stay employed, reduce frequency and length
    of hospitalizations, and improve patient acceptance of and control over
    disease processes. Finally, we will apply our disease management
    techniques to our overall goal of reducing the percentage of candidates
    for kidney transplantation. The ultimate goal of the renal patient and
    the health care industry is to have renal patients lead a ``normal''
    life. Currently, kidney transplantation is the modality that is most
    associated with that goal.
        Our history of service and specialization in the areas of cardiac
    and kidney disease has proven that there is a demonstrable need for a
    chronic disease demonstration in these areas for the Central New York
    region. The demonstration will involve relationships and initiatives in
    Dialysis, Cardiac Care, Home Care, and Wellness. What we lack at this
    point, is a facility that can be shared by both cardiac and dialysis
    patients. Our current dialysis facility, the largest outside the New
    York Metropolitan area, is woefully inadequate in every way. The
    facility was originally built as a modular, temporary, unit over 20
    years ago. We now treat our overload of patients in the hallways and
    have legitimate safety concerns that come with overcrowding and
    questions as to the future structural integrity of the plant itself. We
    have not replaced this facility for financial reasons but, fortunately,
    have been able to treat patients satisfactorily. We have three
    satellite clinics in the region that are also operating at capacity.
    Our goal is to implement our demonstration program in an on-campus
    facility that will provide the space needed for dialysis, exercise
    facilities, classrooms, meeting rooms, examination rooms, and nurse and
    allied professional training space. Training of personnel is an
    important aspect of implementing an innovative chronic disease model.
        In terms of economic development for the region, we believe that
    keeping our patients healthy and productive will have the most dramatic
    impact on the economy albeit in the long term. For the shorter term, we
    believe the training programs that we currently provide and will expand
    in areas such as home care, nursing, rehabilitation specialists, and
    counseling, to name a few, will bring employment opportunities to
    people in and around Syracuse. As we expand our efforts, we will likely
    train people outside the immediate area to be able to serve the
    outlying areas where our satellite clinics are and in homes in more
    remote locations. The facility we envision will also provide many
    construction jobs over the next couple of years. The two story
    facility, equipment and program operation will cost approximately $12.5
    million. St. Joseph's is requesting Federal partnership grant funding
    of $5.1 million that will also cover start-up operating costs. We
    estimate, based on our current services, that our operating budget will
    exceed $5.5 million per year. St. Joseph's will provide, through
    private sources, the remainder of the estimated total.
        We recognize the magnitude of this request but believe
    wholeheartedly that this facility, and the implementation of our
    chronic disease management model will repay this initial investment
    many times over in terms of Medicare savings and in terms of providing
    a national model for replication across the country.
        Thank you.
                                     ______

    Prepared Statement of Rev. Aloysius Kelley, S.J., President, Fairfield
                                   University

        Mr. Chairman, thank you for providing the opportunity to submit
    testimony concerning an important initiative Fairfield University is
    undertaking to ensure the progress of information technology education
    and training in several educationally underserved cities in the State
    of Connecticut. The need has never been greater for technology
    resources and training to be accessible to broad audiences in local
    communities, school districts, and the workforce in Connecticut. The
    acquisition of current technological skills is essential to ensure that
    Americans are equipped to compete in a global marketplace. School
    children require as broad a foundation in the uses of technology for
    research and learning as do adults attempting to re-enter the workforce
    or retrain for new positions. A centralized Information Technology
    Center at Fairfield University with state-of-the-art equipment, trained
    personnel, and a broad range of technological resources and services
    can meet the needs of this wide audience. The potential for this Center
    to have a significant impact on the State of Connecticut is further
    enhanced by the extensive educational expertise of the faculty. The
    three distinct audiences that are faced with the challenges associated
    with constant advances in technology are: Business and industry;
    primary and secondary education; and higher education.
        Technology advances have resulted in an ever-changing workplace
    environment. As Connecticut seeks to address the educational needs of
    its citizens and meet the workforce needs of employers, it must develop
    strategies for capitalizing on the resources and strengths of its
    higher education system. Some of the challenges facing business and
    industry include:
      --Increases in Information Technology Careers.--The Labor Department
            estimates that an average of 95,000 new computer scientists,
            systems analysts, and programmers will be needed every year
            from now until 2005. The Department of Commerce estimates that
            technology represents 50 percent of the nation's future
            economic growth.
      --Changes in the Workplace.--Recent State cutbacks in banking,
            insurance, and manufacturing have produced alarming
            unemployment rates among highly trained workers. Lower paying
            jobs in other industries sectors have replaced these work
            opportunities.
      --Advanced Technology Skills Requirements.--Connecticut's workforce
            training needs center around adult students who must modernize
            their skills in order to be competitive in the contemporary
            workplace.
        Partnerships between higher education and primary/secondary
    education can expand resources, create needed experiences and exposure
    for students, and help increase academic motivation and commitment.
    Some of the challenges facing primary and secondary education include:
      --Improving Performance Standards.--A recent study published by the
            National Assessment of Educational Progress indicated that more
            than half of urban public school students, many from areas
            similar to those surrounding Fairfield, scored far below
            national averages in reading, math, and, science.
      --Increasing Career Development Services.--Federally funded movements
            like School-to-Work were founded to help all students improve
            and excel in basic and advanced educational areas, while
            simultaneously preparing them to enter the modern-day
            workforce.
      --Providing Advanced Technology Skills Training.--The computer
            industry has initiated outreach efforts, putting equipment and
            software into schools to train students in information
            technology, helping to increase skills and combat the shortage
            of high tech employees.
        Post-secondary education must research and develop technology based
    training modules for students and faculty, design curriculum that
    capitalizes on the use of technology in the learning process, and
    develop productivity assessment tools to measure results. Some of the
    challenges facing higher education include:
      --Assessing the Impact of Technology.--A widespread awareness exists
            throughout the educational community that technology requires a
            thoughtful and systemic assessment so that its full potential
            can be realized within the learning experience.
      --Training Students and Faculty in the New Technology.--Developing
            technology-based training modules for students and faculty that
            ensure maximum productivity.
      --Designing Technology-Based Curriculum.--The need to develop
            instructional innovations that capitalize on the use of
            multimedia technology and the World Wide Web.
    A Proposed Response to the Challenge: An Information Technology Center
            at Fairfield
        Telecommunications technology is the vehicle through which
    institutions of higher education can provide broader educational access
    to the community. Students, teachers, and the unemployed are the
    principal potential beneficiaries of on-line training sites throughout
    the community. Connecticut's Fairfield University possesses a singular,
    award-winning resource that positions it well to make an important
    contribution in this regard. An already established state-of-the-art
    telecommunications infrastructure consists of a fiber optic network
    that links every computer in every classroom, faculty office and
    student dorm room to the information super highway. In total, 23 campus
    buildings share voice, video, and data services. The backbone portion
    of this system was recently upgraded to 155 Mbits from 10 Mbits. In
    addition, the University operates satellite dishes for program
    downlinking and teleconferencing and a campus television network with
    50 channels, eight of which are programmed exclusively by the
    University. The University won a national award for its technology
    infrastructure.
        Fairfield University has recently committed to a major expansion
    and renovation of its Library with the express purpose of establishing
    an Information Technology Center for the 21st century. This facility
    will support both the traditional functions of the University Library
    as well as serve as the center for the digital library of the future.
    In the same vein, the University has recently made commitments to an
    expanded role for Academic Computing on campus, particularly in the
    areas of training and support. The convergence of computing, library,
    and information technology resources has been occurring with more and
    more frequency across the country. On university campuses, this trend,
    along with that of collaborative teaching and learning, is proceeding
    at a rapid pace. Recently, Fairfield University combined the Library
    and Academic Computing under a single administrative unit. The
    continued interaction of technology with media, libraries, and
    instruction suggests that the centralization of these resources can
    provide benefits both to the University and to the community.
        Building upon the existing telecommunications infrastructure,
    Fairfield University can provide expanded services to the community.
    Utilizing a distance learning model, training opportunities can be
    developed serving the school systems, State agencies, and businesses.
    Proposed new training opportunities can be designed to increase skills
    thereby improving workforce readiness for emerging employment in the
    State.
        The Center will offer:
        A Facility With: Satellite up-link and redistribution; Electronic
    classrooms; Multimedia rooms; An auditorium; and Computing and
    projection equipment.
        Technology Resources: Electronic information databases; and A
    digital library collection for community and business use.
        Technology Services: Training and Retraining; and Distance
    Education.
        Technology Research and Development: Research in collaborative
    teaching and learning; and Technology based curriculum design
    consulting.
        Fairfield University's telecommunications capability is currently
    one of the best in the United States and can, with minimum
    reprogramming, be upgraded to provide comprehensive educational
    resources to nearby Bridgeport, Norwalk, Stamford, and other
    communities. The construction of the Information Technology Center, as
    part of an expanded library and information center, is needed in order
    to provide a centrally located facility to coordinate current outreach
    efforts, and to develop new ones which maximize the use of technology
    and available resources. The proposed Information Technology Center
    will become a hub for collaboration with all facets of the community.
        A wide variety of partnerships will be forged within the University
    and with the community in an effort to capitalize on the resources
    available in the Information Technology Center. A Technology Learning
    Team will be created at Fairfield comprised of a broad range of
    partners including University administrators, faculty, businesses,
    primary and secondary education representatives, community agencies,
    etc. The expertise of this team will be utilized to build new
    partnerships and expand existing ones.
        Fairfield's Technology Learning Team will initially pursue the
    following projects to benefit the students and faculty at Fairfield.
    The Team will:
      --Design and develop a productivity assessment model that will
            measure the impact of technology uses in the classroom and the
            learning process.
      --Create and test a technology-training module that instructs faculty
            in the potential uses of various information technologies for
            teaching and learning.
      --Create and test a student technology training module designed to
            enrich the students' knowledge about the uses of technology and
            to enhance their skills in the identification, evaluation, and
            effective retrieval of information from a wide range of print
            and electronic resources.
      --Assist faculty in the development of technology-assisted curriculum
            that supports all aspects of their coursework.
      --Train a broad range of faculty and students, creating a cadre of
            trainers that will expand the University's technology-
            knowledgeable human resources.
        Fairfield's Technology Learning Team will build partnerships with
    the corporate community in an effort to meet a variety of training and
    education needs identified by the industry partners. These
    collaborations will:
      --Develop instructional models that are tailored for corporate
            training and retraining programs.
      --Provide support for Fairfield University's Center for Global
            Competitiveness by teaching corporate clients about knowledge
            management and competitive intelligence.
      --Train corporate managers and graduate students in the evaluation
            and retrieval of electronic information resources.
        Fairfield's Technology Learning Team will work with representatives
    from primary and secondary education and the existing outreach programs
    in the various Schools within the University. Collaborations will be
    designed that address the emerging needs at the primary and secondary
    level as they relate to technology and career development. The
    Information Technology Center at Fairfield will:
      --Provide a state-of-the-art facility that will be open to the
            community for ``train-the-trainer'' sessions in various aspects
            of technology utilization.
      --Introduce primary and secondary educators and administrators to the
            cost-effective utilization of the latest information
            technologies.
      --Provide a forum for direct consultation with teachers and
            administrators in the effective design of technology-based
            curriculum models.
        Fairfield University's telecommunication capability is one of the
    best in the country. The construction of an Information Technology
    Center will help to coordinate and expand existing outreach efforts as
    well as provide the foundation for new collaborations. Using expanded
    technology resources, faculty will be able to design and develop new
    curricula. The current technology resources at Fairfield, combined with
    the existing expertise of faculty and administrators, represents a
    strong foundation upon which this Information Technology Center will
    build. This proposal seeks a federal partnership grant in the amount of
    $5,525,000 to assist in the establishment of the Center at Fairfield
    University. A Federal partnership demonstration at Fairfield University
    has the potential of meeting the economic development needs of
    Connecticut's schools and businesses as well as the broader community
    throughout the State.
        This request for $5,525,000 will provide part of the financial
    resources to upgrade, expand, and renovate a large portion of the
    library structure and establish the proposed Information Technology
    Center for the State of Connecticut. The total project budget is
    $18,504,785 and will construct and equip 14,000 square feet of new
    space. The estimated cost for the entire Library expansion is
    $18,504,785. Fairfield University will provide the balance of this
    project through University resources and gifts.
        We believe a Federal partnership demonstration at Fairfield
    University has the potential to meet the economic development needs of
    Connecticut's schools and businesses as well as the broader community
    throughout the State. We appreciate the Subcommittee's attention and
    consideration of our proposal for such a partnership opportunity.
        Thank you.
                                     ______

           Prepared Statement of Peter M.P. Norris, President, SPIN-2

        Mr. Chairman, SPIN-2 appreciates the opportunity to submit this
    statement for the hearing record of outside witness views on issues
    concerning the fiscal year 1999 Appropriations Act for VA/HUD and
    Independent Agencies.
        SPIN-2 is a joint venture between Aerial Images, Inc., of Raleigh,
    North Carolina and SOVINFORMSPUTNIK, the commercial division of the
    Russian Space Agency. The goal is to commercialize high resolution, 2-
    meter remote sensing imaging from Russian mapping satellites. After a
    successful launch and recovery within the past three weeks, the data is
    expected to become available within the next several weeks. At two
    meter resolution, SPIN-2 data is 250 percent higher resolution than
    previously available through remote sensing channels. Ten meter
    resolution stereographic SPIN-2 data is used to produce the most
    accurate digital elevation models in the world made from satellite
    data.
        The focus of my remarks concerns NASA's purchase of available
    remote sensing imagery to support the commercial industry. The NASA
    Justifications discuss the planned launch of LANDSAT-7 for December,
    1998. A recent NASA press release indicates that the launch has been
    delayed. The data from that satellite will not be available until
    sometime next year. SPIN-2 will have data earlier and at a higher
    resolution than that of LANDSAT-7.
        In the commercialization of remote sensing data, the archives of
    USGS will be structured to accommodate and reconcile data from a number
    of sources. SPIN-2 desires that our data be among that collection.
        A number of government agencies are already purchasing our data,
    and we have a sizable order list for the new data becoming available
    shortly. We are on the screen for the industry, and would favor the
    NASA purchase of a diverse data set for its commercial acquisition
    exercise this and next fiscal years.
        SPIN-2 data is currently being utilized by the private sector,
    international development organizations, and U.S. federal, state and
    local agencies for:
        (1) Analyses of environmentally polluted areas by comparing old and
    new 2-meter resolution data (Historical 2-meter resolution data is
    compared with current photography to understand the past and present
    appearance of a number of polluted sites around the U.S.);
        (2) Detailed mapping of government facilities (A number of
    locations of US. government facilities at foreign locations and in the
    U.S. are being mapped by U.S. government agencies using 2-meter
    resolution data.);
        (3) Preparation of detailed digital elevation models (These digital
    elevation models are composed of height measurements at 10 meter
    intervals allowing for production of topographic maps with contour
    lines at 10 meter intervals. The elevation information is also being
    used by the cellular telephone industry to assist in radio frequency
    modeling by identifying locations that obstruct radio transmissions.);
        (4) Preparation of detailed GIS databases for E-911 activities (2-
    meter resolution, ortho-rectified data allows for precise location of
    individual dwellings for assignment of discrete addresses utilized by
    the enhance emergency dispatching system.);
        (5) Urban planning (The center lines of roads and the outlines of
    city structures are easily delineated using 2-meter data. These
    features are essential components of GIS systems used by urban
    planners.);
        (6) Monitoring of crop cultivation (Field boundaries of cultivated
    areas are easily, and accurately delineated using 2-meter data. This
    information is used for increasing the accuracy of crop yield
    estimation.);
        (7) Cadastral map planning (2-meter resolution data issued for
    production of preliminary land ownership maps in areas of the world
    where cadastral map technology is just being introduced. These
    preliminary maps serve as an interim database until refined, and more
    accurate maps can be compiled.);
        (8) Serving as a base for delineation of utilities information such
    as electrical grid layout for cities; and
        (9) Production of 1:50,000 scale topographic maps (The satellite
    system that acquires 2-meter resolution and 10-meter resolution imagery
    was originally designed specifically for the production of 1:50,000
    scale maps.).
        Mr. Chairman, thank you for this opportunity to present this
    statement for inclusion in the outside witness hearing volume. We would
    be pleased to answer any questions you or the staff might have.
                                     ______

    Prepared Statement of Mary Ann Kleine, Director of Administration, Gold
                                Gate University

        Mr. Chairman, members of the Subcommittee, I thank you for the
    opportunity to submit this statement on behalf of Golden Gate
    University and its Agriculture Business Resource Center located in
    Monterey, California. The Agriculture Business Resource Center is part
    of the Monterey campus of Golden Gate University, and has been in
    existence for twenty-six years.
        Although degree programs are, and have been, the traditional focus
    of Golden Gate, the Monterey campus has significantly broadened its
    focus to include training programs which are targeted at specific
    industries. Most notable among these programs is one oriented toward
    the agriculture industry, created in response to the demands of various
    growers, processors and shippers which are part of California's $22
    billion per year agriculture industry.
        Unlike many industries, the agriculture industry has traditionally
    been under-represented in training programs except for ad-hoc
    workshops. In addition, the industry has an unusually inflexible
    schedule which necessitates innovative program design and delivery. For
    example, many Salinas Valley growers and processors move their
    operations and employees to Yuma, Arizona in the winter to ensure year-
    round production. Golden Gate has responded by transporting instructors
    to the Yuma sites so that employees can be trained without interruption
    to production cycles.
        Mr. Chairman, this subcommittee is exceedingly familiar with the
    importance of the agriculture industry to the U.S. economy, and the
    positive trade balances the industry has produced over the years.
    California has played a key role within the industry, leading all
    states in the production of more than 75 crop and livestock
    commodities. In fact, California's agriculture industry produces a
    total of 250 different crop and livestock commodities which generate
    some $22 billion in direct production, and another $70 billion in
    related activity. In 1994, the state produced exports of $12 billion
    which represented 15 percent of all U.S. agriculture exports. That
    trend continues today as exports are holding to record proportions.
        The response to the Golden Gate Agriculture Business Resource
    Center has been overwhelming. In large part, this response is driven by
    the export potential for expanding the sales of California agriculture
    products into existing and developing markets overseas. For example,
    the Pacific rim countries continue to provide expanding market
    opportunities for California agriculture products. Additionally, the
    traditional European markets have further opened to U.S. products, as
    have the components of the former Soviet bloc. In the case of these
    ``new republics,'' shipments of fresh products and seeds are increasing
    at a dramatic pace.
        In the domestic U.S. market, consumer tastes have changed as people
    have become more health-conscious and demanded more fresh vegetables
    and fruits in their diets. In addition, so-called ``convenience'' items
    continue to be produced on a broader scale to accommodate the needs of
    middle class families where two-earner households are prevalent.
        Each of these market demands--rising market expectations in other
    countries, domestic expectations of more fresh vegetables and more
    convenience foods--are welcomed in the grower, processing and shipper
    communities in California. But those demands which come to the growing
    regions force changes and new needs within the industry.
        Perhaps the greatest general need which accompanies these growing
    market demands is the requirement for companies to have a skilled,
    permanent, year-round workforce so as to increase job retention. This
    way, all growers, processors and shippers will be better able to meet
    growing domestic and export demands. At the same time, from the
    employee perspective, training provides employees with enhanced skills
    and knowledge levels which, in turn, allow them to advance within their
    companies.
        The need for a skilled, permanent and year-round workforce is very
    important for companies to remain competitive in an industry which is
    being driven in many new directions. As you know, for example, foreign
    competition is always a threat due, in large part, to lower operating
    costs. Nevertheless, Monterey County, California, as an example, has
    been able to compete with Mexico and Latin America in the fresh fruit
    and vegetable markets as these countries have not been able to
    distribute fresh value-added products effectively in the U.S. Rather,
    the value-added products exported to the U.S. from these areas remain
    canned and frozen.
        A large part of the success in the case noted above is rooted in
    the development and adoption of new technologies which allow for light
    processing and packaging of vegetables. This facilitates the ability of
    the Monterey County growers and processors to better compete with lower
    cost rivals. To remain competitive, however, the various technologies
    must be continually updated and adapted so that cost-saving production
    processes are enhanced.
        An excellent example of the value of enhanced production can be
    found in the value-added sector of the agriculture industry. This
    sector, which came into existence in the 1960's, is now one of the
    strongest segments in California's agriculture industry in general, and
    that of Monterey County in particular. Over the years, since its
    inception, this sector has been enhanced in great leaps.
        The highly specialized, value-added sector requires in-house
    company laboratories, research and development staff and equipment, the
    latest automated packaging equipment, sophisticated and modern
    facilities and a highly skilled workforce. This means that agriculture
    companies must train and retrain employees to meet the challenges of
    new and expanding technology bases.
        It is the need for increased skill levels which has motivated the
    various companies in the Monterey County agriculture industry to seek
    ways to develop employee skills on a continuing basis. As mentioned
    earlier, the companies need a skilled, year-round and permanent
    workforce to meet market demands. In providing opportunities for
    employees to enhance their skills, the company ensures continuity of
    its workforce because employees can be promoted from within.
        The Golden Gate Agriculture Business Resource Center has designed
    and is carrying out a broad-scope program which addresses the needs of
    the agriculture companies and employees in the Monterey County growing
    regions. With its high-quality, flexible approach, the Center's
    programs cover all levels of employees in a way which does not
    interfere with production schedules of the individual companies.
        Golden Gate implements its program through various customized
    curricula designed to address the training needs of individual
    companies. Companies benefit from employees who are trained in the
    latest production techniques, product distribution methods, computer
    technology, refrigeration engineering and a range of other subject
    areas which are important to the agriculture industry. The employees
    benefit from programs carried out at work sites which eliminates their
    having to take time off to enroll in traditional academic programs.
        The range of the Agriculture Center program crosses all skill
    levels, allowing for workers with low levels of education to be trained
    in ways which facilitate advancement. It is not uncommon to see lesser-
    educated workers who have moved to supervisory positions from jobs in
    the growing fields. The program also allows for the identification of
    people coming out of the welfare system who are potentially suited for
    agriculture industry employment. If, for example, a company has a need
    for entry-level workers, the Golden Gate Center will design a regimen
    to identify and train such personnel so that they are in a position to
    fit into the company system.
        A large portion of the success of the Golden Gate program is based
    on a clearing-house system which monitors the educational and training
    needs of the agriculture industry, particularly in the Monterey County
    area. Those needs are translated into high quality training programs
    which utilize state-of-the-art methods and technology for delivery. In
    this sense, the Agriculture Business Resource Center is part of a long-
    range, comprehensive vision to provide skills necessary for employees
    seeking job advancement, displaced workers who need marketable skills
    and young people looking for alternatives to traditional college
    degrees. In each case, the very important agriculture sector of
    California's economy will benefit, particularly that portion of the
    industry in the Monterey County growing regions.
        Mr. Chairman, as the demands for diversified training on the part
    of the Central Valley agriculture industry have grown, Golden Gate has
    adapted and expanded its programs accordingly. As part of the
    evolution, Golden Gate has dedicated two buildings, located at Fort
    Ord, California, which were acquired through base closure and re-use
    development activities.
        The buildings and the surrounding area are in relatively good
    condition though in need of renovation. Golden Gate's plan is to locate
    the Agriculture Business Resource Center in these two buildings, given
    their proximity to the Central Valley California growing regions. From
    this headquarters site, the entire area can be serviced through mobile
    classrooms, distance learning and on-site training. Further, the site
    will allow for additional program development in the future. The total
    cost of the entire project is $2 million which includes building
    renovation and internal resource development. Golden Gate will operate
    the Center with its own resources.
        Mr. Chairman, California is the world's sixth largest exporter of
    agricultural products. For each $1 billion in export sales, nearly
    30,000 jobs are created. Monterey County is the top vegetable producing
    county in the nation, with the agriculture industry employing 25
    percent of the county labor force. All of this is to say that there is
    significant opportunity for the California agriculture industry to
    expand and further enhance its role in the U.S. economy.
        The Golden Gate Agriculture Business Resource Center, based on
    existing industry needs and demands, can be a catalyst to move this
    growth forward. In so doing, we will strengthen the state and local tax
    and employment bases many times over the level of this modest grant
    assistance request. I ask that you consider this request as one that is
    good for the U.S. agriculture industry, and can be a model for other
    states in the future.
        Thank you.
                                     ______

     Prepared Statement of Sunia Zaterman, Executive Director, Council of
                    Large Public Housing Authorities (CLPHA)

        Mr. Chairman: On behalf of the Council of Large Public Housing
    Authorities (CLPHA), thank you for inviting us to testify before the
    subcommittee. As you know, CLPHA's membership manages over 40 percent
    of the country's 1.3 million public housing units, has assets ranging
    from 1,250 to 160,000 units, and administers a significant share of the
    section 8 tenant-based assistance program.
        We greatly appreciated your presence and stirring comments at a
    recent CLPHA members' meeting. Unfortunately, your prediction that 1998
    would be ``the year of public housing'' is having trouble
    materializing. Instead, we seem headed for the ``year of roads and lots
    of them'' and more tax cuts. Having listened to ``balanced budget''
    speeches for some years as our funds decreased, we are indeed now
    confused as to how the budget caps, the ISTEA bill, and tax cuts can
    all be honored with anything left for domestic discretionary programs,
    such as public housing. Assisted housing seems headed downhill fast:
        First, housing for poor people has again been asked to pay for
    military and weather emergencies--in vast disproportion to other
    accounts--with the House's rescission of a whopping $2.2 billion slated
    for tenant-based assistance, heretofore very broadly supported housing
    aid. And this comes at a time when, according to Secretary Cuomo's
    testimony before this subcommittee, the country has an unprecedented
    net loss of affordable housing.
        Second, Congress has failed to adopt the deregulatory changes that
    have been pending, in various forms, since the end of the 104th
    Congress. We are grateful for the help that you and Senator Bond have
    given us on a year-to-year basis with the ``extenders'', but many PHA's
    are hesitant to gamble on the permanence of the more far-reaching and
    sensitive changes, such as replacing the federal preferences. The
    public housing program remains much the same over-regulated program
    that we all lament--several decades of HUD regulations and
    Congressional amendments piled sky-high.
        Third, HUD's request for operating subsidy is short $338 million
    and the requested level for modernization funds virtually leaves the
    backlogged needs untouched. As things are going, our initial estimate
    shows that losses in the operating support will approach $5 billion
    between fiscal year 1993 and fiscal year 2001. For rehabilitation, we
    have lost $1.2 billion each year since fiscal year 1995, when our funds
    were rescinded to pay for the weather disasters and terrorism of the
    time. It appears that Congress is repealing sub silencio its sixty-year
    promise of decent shelter for all Americans.
        Who are these Americans that have provoked such fiscal punishment?
    Mainly the 3.4 million poor households in public housing: the old (44
    percent of our units), the disabled (15 percent of admitted
    households), and the hundreds of thousands of children and their
    parents who make up the balance. In addition, there are 5.3 million
    families in HUD's category of worst-case housing: overpaying for rent
    or living in substandard housing or both. Perhaps representative of it
    all is the Secretary's comment at your hearing that we are making
    history by not replacing as many affordable housing units as we are
    losing.
        Our good news: (1) HOPE VI, although complicated, is moving forward
    successfully on many fronts: rejuvenating inner city neighborhoods,
    creating more socially viable communities, forging PHA partnerships
    with nonprofits like the Enterprise Foundation and LISC, and with
    entrepreneurial developers and architects. Just around the corner from
    where we now sit, the Ellen Wilson Redevelopment will show what can be
    done. Not too many miles from Mr. Neuman's district, Milwaukee's
    Hillside has transformed a pariah project into a neighborhood
    centerpiece. In Mr. Freylinghausen's State of New Jersey, Newark has
    replaced unmanageable family highrises with attractive modest
    townhouses. Mr. Chairman, we appreciated the visit by subcommittee
    staff to the Park du Valle development in Louisville, Kentucky and hope
    their report was reassuring. (2) Of CLPHA's 60+ large housing authority
    members, only two remain ``troubled'': Chicago and St. Louis, both
    recovering with experienced executive directors.
        Congress asked us to house the poorest and we are--the average PHA
    household income is $6,500 per year--but now we are enduring
    debilitating cuts. We gave the quid: serving the poorest, but are not
    receiving the quo: financial support. Public housing has become a major
    unfunded mandate and the residents and those on waiting lists are the
    sufferers. In fiscal year 1999, we seek the following, which we believe
    to be reasonable requests, especially since we lost so much in the
    deficit era: Operating Subsidies: $3.156 billion; Modernization/
    Capital: $3.7 billion; HOPE VI Revitalization: $550 million; Drug
    Elimination Grants: $350 million; Supportive Services: $75 million.
        Operating subsidies.--HUD incorrectly claims that it is fully
    funding the Performance Funding System (PFS). Its request for $2.8
    billion is over $300 million shy of the correct figure of $3.156; its
    claim of an additional $113 million in carryovers is an unfulfilled
    assumption. Each year, HUD operating subsidy requests understate PFS
    requirements by relying on annual rosy scenarios which are never
    corrected when the scenario turns un-rosy.\1\ This time the Department
    and OMB have overestimated the number of units being demolished, thus
    reducing subsidy needs. After a thorough review with our members, who
    are busily removing obsolete projects, we are convinced that HUD has
    overestimated demolitions by at least 10,000 units this year, thus
    understating subsidy by more than $20 million for that alone. Second,
    HUD has assumed a 7 percent increase in tenant income over the next two
    years--an extraordinary leap unsubstantiated by any experience the
    PHA's are having. HUD banks on the current good times, but the current
    economy does not affect: (1) the 44 percent of our households who are
    elderly; (2) nor our many welfare families struggling with welfare
    reform--some dropping out of welfare-to-work and others dropped out by
    sanctions who now look to minimum rent. These are hardly the bases for
    a jump in rental revenue. Our estimate is a 3 percent increase. In
    dollars, the difference between our estimate and HUD's is $80+ million
    in needed subsidy.
    ---------------------------------------------------------------------------
        \1\ So bad has been this practice that the Housing Act was
    temporarily amended to make HUD calculate PFS ``without adjustments for
    estimated or unrealized savings'' (see section 9(c)(2)). In the
    deliberations over H.R. 2, amendments were sponsored by Messrs. Joseph
    Kennedy and Barney Frank to bar this practice. We urge the Committee to
    reinstate the cited Housing Act language, which--unlike HUD's
    practice--expired in fiscal year 1994.
    ---------------------------------------------------------------------------
        Modernization/capital.--HUD's own studies, the National Commission
    on Severely Distressed Public Housing, and now OMB agree that $2.1
    billion is needed annually just to meet normal wear and tear costs in
    the public housing stock. HUD's request of $2.5 billion is barely above
    these ongoing maintenance needs, and in the words of the OMB Passback,
    ``will allow the Department to tackle [only] a small part of the
    enormous capital needs backlog.'' Need I say more? The objective
    analyses conclude that an annual level of $4 billion to $4.5 billion is
    needed to bring the stock up to standard within a decade. We were on
    track to that goal before the fiscal year 1995 rescissions. The pre-cut
    appropriation of $3.7 billion, coupled with the $550 million for
    revitalization of our HOPE VI sites, had us headed to decent shelter
    for all our tenants within the foreseeable future. We understood budget
    constraints in a deficit situation, although we never knew why poor
    people's needs had to be forgone so disproportionately. But the needs
    for modernization didn't change after the rescission. We hope that you
    will put us back on the right track by raising our modernization level
    at least to $3 billion, if not more.
        The funds appear to be in the subcommittee's hands. The Secretary
    testified to $690 million recoverable from the section 8 mod rehab
    program; other sources say that figure may top a billion dollars. This
    is surely enough to handle the elderly housing shortfall and to step up
    modernization efforts. PHA's look forward to the reforms that will
    enable them to seek a broader social and economic mix and to become
    more self-sustaining, but it can't market a substandard housing stock.
        Modernization is a program that also effectively and efficiently
    addresses the Secretary's aim to enhance employment in the inner
    cities. Nothing is more effective than construction in providing jobs
    to persons of very low and modest incomes. The multiplier effect in the
    market place is that $1 billion in construction creates at least 18,000
    jobs in direct construction and production of the broad range of
    materials, appliances and equipment that comprehensive rehabilitation
    entails. Under section 3 of the Housing and Urban Development Act of
    1968, as amended, low income families are to be hired in carrying out
    such HUD grants. Moreover, the construction-related unions are reaching
    out to public housing and other inner city persons to bring them into
    the work force. Unlike the new, vaguely-described programs proposed by
    HUD, modernization is a sure thing and the PHA's can, in most cases,
    deploy the money quickly to private contractors. It is a ``win'' all
    around: better housing, a protected property investment, and jobs where
    they are needed most.
        We also request that your bill once again allow PHA's to use up to
    10 percent of any year's modernization funds for operating purposes.
    Such flexibility is very helpful.
        HOPE VI.--We believe that this program is fulfilling its goals and
    we greatly appreciate the Chairman's support. This is a complicated,
    bold effort and you have been patient as HUD and the PHA's have
    ventured forward. Dreadfully overbuilt, obsolete projects are being
    removed across the country--these well-documented caricatures of public
    housing are being replaced with sensible apartments and townhouses.
    Newark is a gleaming example--13 highrise buildings have come down in
    the last two years and hundreds of townhouses will be built in their
    place. We are also increasing tenant satisfaction and income diversity:
    Milwaukee's Hillside has become a prized development with the number of
    working households increasing from 15 percent in 1993 to 55 percent in
    1997; DC's Ellen Wilson redevelopment is a neighborhood nonprofit/
    entrepreneur joint venture, combining for-sale housing with a limited
    equity cooperative, a broad range of incomes, private management, and
    supportive services for the residents. These stories are duplicated in
    Atlanta, Baltimore, Louisville, and elsewhere. PHA's have made many
    partnerships with private developers and managers and, according to
    Deputy Assistant Secretary Bacon of HUD's HOPE VI office, have
    leveraged private investments in 90 percent of these undertakings
    through use of low income housing tax credits.
        Beyond removing blight and improving housing opportunities, HOPE VI
    will be the catalyst for neighborhood renewal in many areas. It is an
    investment that will turn liabilities into assets. However, HUD's
    emerging total development cost policy flirts with ending this
    prospect--it is a pennywise pound foolish approach. CLPHA has given
    your staff an elaboration of our concerns and recommendations, which
    aim to carry out this subcommittee's history of pushing HUD to
    revitalize housing and neighborhoods, right up to last year's
    neighborhood initiative.
        We support HUD's request for $550 million, but ask that you bar the
    use of these vital capital and social support funds for tenant-based
    relocations. Section 8 funds necessary for HOPE VI relocations were
    taken from the Department's allotment for various forms of relocation
    or FHA project support, until several years ago when Congress first
    allowed use of HOPE VI for relocation certificates, because HUD claimed
    it had mistakenly failed to request the section 8 setasides. HUD has
    converted that temporary relief into a permanent, sizeable, annual bite
    out of HOPE VI; it totaled $70 million in fiscal year 1997. This
    diversion undermines the result Congress seeks in transforming obsolete
    public housing and, in the process, will allow a backdoor creation of
    long-term section 8 obligations.
        Section 8.--We are devastated that Congress would once again turn
    to housing assistance for the poor, to the tune of $2.2 billion, to pay
    for military operations, this time in Bosnia and Iraq, and for weather
    calamities. Patriotism and equity would say that if offsets are to be
    made, and we are among those that think them unnecessary, all should
    share. Please reconsider this action. Housing has given at both home
    and the office. In addition, please discontinue the 3-month delay for
    the reissuance of vouchers and certificates. The ``savings'' from a
    delay are no longer necessary, families are being denied needed
    shelter, and the scheme has high bureaucratic costs.
        With respect to HUD's request for 100,000 vouchers, it is premature
    to comment until the issue of ending or replacing the $2.2 billion
    rescission is resolved. In all events, we recommend that the Committee
    first address the need to conserve what subsidized housing that exists:
    a proper operating subsidy and restored modernization funds. Of course,
    we all want to serve as many poor persons as funds permit.
        Public Housing Drug Elimination Program.--No public housing-related
    program has been better received by PHA's and residents alike than
    PHDEP. PHA's are using drug elimination grants to successfully enhance
    police protection and address crime prevention in innovative ways
    through cooperation with residents and local officials, but more
    assistance is needed to build on these successes. PHDEP has not
    received a general funding increase in several years; CLPHA recommends
    $350 million for fiscal year 1999.
        We also recommend that PHDEP funds, at least for large housing
    authorities, be distributed by formula to enable PHA's to plan long-
    range crime prevention strategies, recruit more effectively, and
    provide assurances of continued security. Large PHA's would accept a
    reduced per unit dollar grant in exchange for the predictability of a
    formula; the present competitive structure undermines sustained,
    effective program performance. As with modernization funding, use of a
    formula would therefore be more efficient than a competitive grant and
    would reduce staff burdens on HUD. It would also avoid the inexplicable
    failure of HUD to distribute the entire fiscal year 1998 appropriation,
    and we appreciated your questioning of HUD about that occurrence during
    these hearings.
        Supportive services.--The supportive services earmark in CDBG has
    been a small program with significant positive results for the elderly
    and the disabled, particularly in ``mixed population'' settings, that
    is, where the elderly and nonelderly disabled share the same building.
    As this subcommittee recognized in both fiscal year 1997 and fiscal
    year 1998, service coordinators provide ``tested and proven benefits''
    and are ``an essential management tool in elderly housing'' (see H.
    Rpt. 105-175 and H. Rpt. 104-628, respectively). Last year's setaside
    of $7 million for service coordinators and congregate housing services
    was an important first step in meeting the needs of our elderly
    population, which occupy more than 40 percent of the nation's public
    housing units, but more is needed. CLPHA urges that overall supportive
    services funding be increased to $75 million and that a proportionate
    40 percent of that sum ($30 million) be directed exclusively for
    service coordinators for the elderly and mixed population buildings,
    and congregate housing services for the elderly. As the supportive
    services monies have also been helpful in training residents for moving
    to work, the balance of the overall earmark should go to welfare-to-
    work programs for public housing families.
        Deregulatory reforms.--As stated earlier, we continue to await the
    enactment of permanent, comprehensive deregulatory reforms; it has now
    been almost six years since the last major public housing bill. Despite
    the brevity of this year's legislative calendar, CLPHA remains
    cautiously optimistic that your colleagues on the authorizing
    committees will soon conference the pending reform bills, H.R. 2 and S.
    462, because we cannot afford another year of disappointment. While we
    are very grateful for the reforms provided by the appropriations
    committees on an annual basis--the so-called ``extenders''--most PHA's
    are unwilling to implement significant changes on a one-year lease.
    Given the proven uncertainty of the authorization process, we urge you
    to make permanent the essential reform provisions already contained in
    past appropriations bills, specifically: repeal of federal preferences
    and one-for-one replacements, the ability of PHA's to establish ceiling
    rents, minimum rents of up to $50 per month, and flexible modernization
    with the ability to use up to 10 percent of any year's modernization
    funds for operating purposes. We understand your discomfort in making
    permanent changes through an appropriations act, but the precedent
    exists with last year's market-to-market legislation. Furthermore, none
    of the ``extender'' provisions conflicts with the pending authorization
    bills, and all are desperately needed. Please help.
                                   conclusion
        CLPHA believes that its foregoing recommendations are the minimum
    funding levels necessary for PHA's to fulfill their statutory
    obligations and to serve many of America's most vulnerable citizens.
    With adequate financial support and permanent programmatic reforms, we
    can still make 1998 ``the year of public housing.'' Again, thank you
    for the opportunity to testify and your continued support.
                                     ______

     Prepared Statement of the American Association of Homes and Services
                                 for the Aging

        The American Association of Homes and Services for the Aging
    (AAHSA) is pleased to have this opportunity to present our comments on
    the fiscal year 1999 Administration budget request for the U.S.
    Department of Housing and Urban Development (HUD). AAHSA is the largest
    organization representing nonprofit sponsors of senior housing who own
    and manage over 300,000 units of market rate and federally assisted
    housing--including the largest number of sponsors of HUD Section 202
    elderly housing facilities. We are especially interested in the
    affordable housing needs of older persons and the budget proposals
    regarding federally assisted housing that affect this special
    population. This committee has shown particular interest in ensuring
    that increasing numbers of elderly persons are appropriately housed in
    suitable, affordable, decent and safe housing.
        Unlike many other private housing sponsors, as nonprofit sponsors
    of elderly housing, we respond to entirely different motivations in
    developing housing for the poor, the needy, and the frail elderly. Our
    motivation is born of mission not profit. As stated in our testimony to
    this committee last year, ours is a mission of helping those whose
    needs are the greatest and of striving to provide housing to all low-
    income elderly who need it. However, despite the best of intentions, it
    is still not enough. HUD's 1996 study on worst case housing needs shows
    that 1.2 million households are headed by an elderly person who spends
    more than 50 percent of their income on rent or lives in severely
    substandard housing. And, the recently released 1997 HUD study
    continues to show over 1.5 million poor elderly persons with unmet
    housing needs.
        Because the Administration has proposed such sweeping changes in
    the Section 202 program this year, our testimony will predominantly
    focus on that program. But, in addition, AAHSA is concerned with
    funding for service coordinators, Section 202 conversion, and
    modernization and retrofit. The Section 202 Supportive Housing for the
    Elderly program is near and dear to us because it works, and it works
    well. However, we are faced with a triple threat from the Clinton
    Administration proposal that recommends a fundamental change in the
    program. We are pleased that during Secretary Cuomo's testimony before
    the committee, several committee members expressed their strong concern
    with, and opposition to these program changes.
        However, the Administration proposal does serve the purpose of
    opening the debate over the program's future and structure. But, before
    we seriously consider changing the program: changing its funding
    structure, changing its delivery mechanism, changing its
    administration, changing the type of housing it provides, we need to be
    cognizant of what those changes will entail. We need to take care that
    they are the changes we desire, and we need to keep foremost in mind
    how they may ultimately affect the residents they are designed to
    serve.
                                    overview
        The Section 202 program has served the national interest for almost
    forty years. It has evolved from a loan program to a capital advance
    program; from housing for the low- to moderate-income elderly to
    housing the very-low income elderly; from an unsubsidized program to
    being coupled with Section 8 rental assistance to project rental
    assistance contracts. And as the program has evolved, it has kept pace
    with the changing needs of the residents being served. The elderly are
    the fastest growing segment of our nation's population, and the aging
    of the baby boomers will only accelerate that trend. There are some
    330,000 residents in 6,200 Section 202 facilities. But, as stated,
    despite the success of the program, we are not nearly meeting the need
    and demand for new housing.
        Since 1994, only thirty to forty percent of the applications
    eligible for Section 202 awards have been funded. There simply are not
    enough available funds for the other sixty to seventy percent of
    applications. In a recent national survey sampling of our members, we
    discovered that in some 470 projects, there are over 52,000 persons on
    the waiting list and the average wait is over two years.
                      hud fiscal year 1999 funding request
        The first Administration threat to Section 202 concerns its funding
    level. Funding for the development of new Section 202 units has dropped
    significantly since the late 1970's when over 20,000 units a year were
    funded. Congress appropriated $645 million to build close to 7,000
    units in fiscal year 1997 and fiscal year 1998. Unfortunately, the
    President's proposed fiscal year 1999 budget would cut Section 202
    funding to $159 million with a third of the funds earmarked for
    vouchers. That means only $109 million would be available to expand the
    supply of affordable elderly housing. That amount would only develop
    1,500 units, representing a funding cut of over 83 percent compared to
    current levels.
        HUD has characterized this budget as the smartest and largest HUD
    budget in a decade. However, when it comes to Section 202, this budget
    is neither smart nor large. The Administration funding request is
    troubling and puzzling. Troubling because it slashes funding for the
    Section 202 program when federal policymakers are speaking of budget
    surpluses, and when the Administration proposes the largest funding
    increase for other HUD programs in a decade. Puzzling because while the
    Administration praises Section 202, it proposes legislative changes
    that would destroy the fundamental nature of this special, unique and
    successful program. From our perspective, the Administration's proposal
    amounts to little more than trying to save the program from its
    success.
        There is also a jaded cynicism at work that says if the
    Administration proposes no, or low funding for Section 202 in their
    budget, due to the popularity of the program, Congress will add the
    funding back. The Administration would then apply the budget authority
    it would have requested for Section 202 to other programs.
    Unfortunately, if the budget authority is added back by Congress,
    elderly housing providers are perceived as having ``robbed Peter'' the
    other housing programs, to ``pay Paul'' the Section 202 program. This
    is an alienating, no-win, zero-sum game that is divisive and
    destructive. What makes this scenario all the more insidious in fiscal
    year 1999 are the generous increases proposed in most other areas of
    the HUD budget. The latest revelations by Secretary Cuomo of some $691
    million in excess Section 8 moderate rehabilitation funds found by GAO
    in their recent audit of HUD accounts, would provide a respite in
    fiscal year 1999 from this Administration budget chicanery, provided
    these funds are applied to the Section 202 program as suggested by
    Cuomo during his testimony before this committee. We oppose the
    inadequate funding request and would encourage Congress to restore
    Section 202 funding to the fiscal year 1996 level of $830 million by
    using the excess funds identified by HUD Sec. Cuomo during his
    testimony before the appropriations committees as being available for
    that purpose.
                     consolidation of section 202 into home
        The second threat to Section 202 concerns block granting. In
    addition to funding cuts, the Administration recommends consolidating
    the Section 202 program with the HOME Program. We are obviously
    disturbed by this proposal. If the objective is to subsume Section 202
    into HOME, Section 202 loses its distinctiveness as a program for the
    elderly. If the objective is to maintain Section 202 as a separate
    program under HOME, it simply becomes another set-aside program whose
    funding level and administration at the state and local level are
    problematic. If the objective is to give states and localities greater
    control over decisionmaking for local housing needs, then a more
    appropriate funding level should have been proposed, one that would
    ensure more than four elderly housing units to be constructed in each
    congressional district. If the objective is to reduce HUD's
    administrative burden because of staff capacity and downsizing, then
    there are other avenues that should first be explored, including
    consolidated processing. However, if the objective is to eliminate the
    Section 202 program, then HUD's proposal has merit.
        We are somewhat mystified that HUD has chosen to propose shifting
    Section 202 into HOME in light of the recent findings from the GAO
    study comparing HOME and Section 202. As pointed out in the study, from
    1992-1995 the Section 202 Program funded 1,400 elderly housing
    projects, with nearly 52,000 new units for the elderly, while HOME
    funded only 30 elderly housing projects with less than 700 new units.
    Section 202 and the HOME program are both successful and valuable
    programs; but the two programs are designed to meet fundamentally
    different housing needs.
        HOME has not been used as a major producer of new, affordable
    housing units for low-income elderly persons. Historically, that has
    been Section 202's role. Section 202 has been the primary government
    program responding to the special housing needs of low-income elderly
    Americans. Section 202 elderly housing delivers high quality housing
    and appropriate supportive services at affordable rents to low-income
    seniors. It is recognized as the nation's best and largest producer of
    affordable housing for low-income seniors, and has built a major
    portion of the nation's supply of quality, affordable elderly housing.
    In this light, it does not make sense to shove a square peg into a
    round hole. Section 202 should not be shoved into HOME to satisfy
    questionable objectives. We oppose the consolidation of Section 202
    into HOME.
               tenant-based vouchers vs. project-based assistance
        The third Administration threat to Section 202 concerns vouchers.
    We believe it is important to place into context what makes elderly
    housing unique. As we see it, elderly housing has special design
    features unique to older persons. Features such as grab bars, pull-
    cords, elevators, increased lighting, and the like. Elderly housing
    provides a sense of physical and emotional security, which is
    particularly crucial for vulnerable older persons. It prevents a sense
    of isolation. It provides a cost effective means to link supportive
    services with housing for older persons, particularly critical in
    promoting independence and delaying more costly institutional care.
    And, elderly housing promotes community volunteerism. It provides and/
    or links community services, both formal and informal, through public
    and private institutions, neighbors, families and friends. Housing for
    the elderly is more than a unit, it's home and it's a community.
        However, vouchers are ideally intended to address short-term and/or
    transitional affordable housing needs, while older persons seek
    suitable and affordable long-term housing. The older resident seeking
    elderly housing wants a place to age-in-place and prevent or delay
    placement in other institutional care settings. Vouchers make it more
    difficult for older persons, particularly more frail elderly and
    persons who need the service enriched environment of elderly housing,
    to find available and suitable housing in the community. Vouchering out
    part of the Section 202 program would assume that the critical need is
    simply affordability, discounting the other benefits of elderly
    housing. Vouchers assume that suitable housing for the elderly already
    exists in the community. Vouchers do not expand the supply of
    affordable housing for the elderly.
        The short-sighted Administration proposal to reduce funding for
    Section 202 and ``do more with less'' by substituting vouchers for new
    units, at best, diverts attention from the real issue which is to
    address the inadequate supply of suitable and affordable housing for
    the elderly. At worst, it is a cynical attempt to boost the
    Administration's budget numbers on paper by claiming a greater number
    of elderly will be served, however inappropriately. We oppose the
    Administration's proposal to turn Section 202 into a tenant-based
    rental assistance program using vouchers.
                              service coordinators
        In our facilities we have witnessed the very real phenomenon of
    ``aging in place.'' Residents who moved into Section 202 projects
    twenty years ago when they were 65 are now 85 years of age. The profile
    of an average resident in elderly housing is a very-low income eighty
    year old woman receiving Social Security, and approximately 90 percent
    of these women are living alone. Our Section 202 facilities have come
    to reflect the vast support systems that are necessary for this frail,
    elderly woman to live independently with dignity and respect. We have
    long viewed Section 202 facilities as a part of the continuum of care
    with the benefits from economies of scale that accompany groups of
    older persons living together. Under the continuum of care concept, we
    now have a conglomerate of services in our Section 202 facilities to
    help make life easier for the elderly we serve, and the use of service
    coordinators in elderly housing facilities is an integral part of the
    continuum of care.
        In fiscal year 1999, the Administration once again proposes to fund
    service coordinators as an eligible activity in a new $55 million
    Resident Opportunity and Supportive Services (ROSS) program under the
    Community Development Block Grant program, with $7 million earmarked
    for service coordinators and congregate housing. Similar to last year,
    this amount is expected to be applied towards expiring contracts. It is
    our understanding the $7 million amount requested by the Administration
    is woefully inadequate, as some $15 million is needed to renew service
    coordinator and Congregate Housing Services contracts in fiscal year
    1999. While we are aware of the committee's reluctance to create new
    set-asides, we would prefer that service coordinators be a part of
    routine operating expenses funded through the Section 8 amendment
    account. We urge Congress to provide at least $25 million in funding
    through the Section 8 amendments account to renew expiring service
    coordinator and congregate housing contracts and for new service
    coordinator contracts in fiscal year 1999.
                           modernization and retrofit
        A missing factor in the continuum of care equation for existing
    Section 202 and other elderly housing facilities is a funding mechanism
    for modernization and retrofit. Just as our residents are aging-in-
    place, our housing is aging, and is in need of modernization and
    retrofit. Some of this housing is over thirty years old, and many
    facilities need retrofitting to accommodate their aging residents,
    including adapting facilities for the delivery of supportive services.
    Many facilities are simply obsolete in terms of design and building
    materials; yet, these facilities generally lack the reserves for
    adapting their units to meet the needs of aging residents. Since the
    demise of the Flexible Subsidy program at HUD, there has not been a
    federal program to provide funds for modernization of federally
    assisted housing facilities. This should be corrected and we believe
    Congress should provide funding for modernization and retrofit to meet
    the long term physical plant needs of elderly housing facilities.
         conversion of section 202 loan portfolio and section 8 rental
                                   assistance
        Over 4,500 Section 202 facilities containing approximately 215,000
    units were financed using direct government loans to nonprofit sponsors
    from 1976 through 1988. Between 2001 and 2015, virtually all of these
    projects will have expiring section 8 contracts. Like the FHA
    multifamily portfolio, a primary issue facing this housing is the need
    for renewal of the Section 8 contracts. Current HUD policy calls for
    the renewals for one year only. In 2001, approximately 300 projects
    will require renewal. The number will climb each year until it reaches
    4,500 projects in 2013. The estimated annual cost of renewal will be
    approximately $250 million in 2001 and will increase to $2.9 billion in
    2021.
        Congressman Rick Lazio recently led 17 bi-partisan co-sponsors in
    introducing H.R. 3635, the Senior Citizen's Housing Financial
    Restructuring Act of 1998. The legislation would allow sponsors of Sec.
    202 facilities having outstanding loan balances and receiving Sec. 8
    rental assistance to convert to the capital advance program with an
    accompanying project rental assistance contract. In its simplest form,
    conversion could have no or little financial impact on Section 202
    facilities, but would budget the subsidy in a different way. By
    forgiving the principal and interest of the loan, the need for Section
    8 subsidy is reduced by the amount of principal and interest payment.
    The forgiveness of outstanding Section 202 loans would initially have a
    one-time mandatory budget cost. However, the up-front costs of
    conversion would, over time, be more than offset by ongoing
    discretionary savings and lasting benefits to the HUD budget, elderly
    housing sponsors, and elderly residents.
        We believe that Congress has a unique opportunity to address these
    issues because of the much-anticipated budget surplus, and unlike much
    of the rest of the Section 8 inventory, the contract renewal problem
    does not become significant for Section 202 until after the year 2000.
    Unfortunately, the forgiveness of debt on the Section 202 portfolio
    cannot be achieved under current budget scoring conventions. While we
    know this does not directly fall under the purview of this committee,
    we would encourage Congress to pursue the feasibility of changing
    existing budget rules to permit debt conversion to be carried out in
    ways to minimize the budgetary impact and reflect the real, long-term
    costs, savings, and other benefits of converting this inventory.
                                   conclusion
        In a final note on Section 202, despite our strong support for the
    Section 202 program, we are not willing to allow the program to rest on
    its laurels. Section 202 is a good program, but we believe it can be
    made better. As HUD looks for ways to relieve its administrative
    burdens, we think Section 202 can also contribute to streamlining and
    administrative reform, especially through consolidated processing with
    a small, experienced staff in its funding availability application and
    award process; and paperwork reduction in its funding reservation
    process. Former Secretary Cisneros once called Section 202 the crown
    jewel among HUD programs, and we agree. It has served this nation well,
    and we believe that with the appropriate attention, reform and
    resources it can continue to deliver high quality housing and
    appropriate supportive services at affordable rents to low-income
    seniors. We stand ready to work with this Subcommittee and the Congress
    to make these things happen.
                                     ______

                         DEPARTMENT OF VETERANS AFFAIRS

      Prepared Statement of Chuck Burns, National Service Director, AMVETS

        AMVETS has not been the recipient of any federal grants or
    contracts during fiscal year 1998 or the previous two fiscal years.
        Our testimony today will address primarily the National Cemetery
    System (NCS). Since its establishment, the NCS has provided the highest
    standards of compassionate service to each eligible veteran and family
    member eligible for interment in the system's 115 cemeteries. The
    National Cemetery System, its monuments, its land and the historical
    interments contained within are indeed national treasures which must be
    maintained, nurtured and, most of all, protected.
        Despite NCS's continuing high standard of service and the
    Administration's proposal for an $8 million increase in budget
    authority for fiscal year 1999, we feel the system has been and
    continues to be under-funded. Since 1973, the annual burial rate within
    the NCS has almost doubled to 73,000. Most WWII veterans are in their
    mid-70's and the overall projected veteran death rate is expected to
    peak in the year 2008 with more than 620,000 deaths. Already, the
    average monthly death rate of WWII veterans is 36,000.
        Even with the projected completion of new cemetery projects in
    Chicago, Cleveland, Albany, Seattle and Dallas-Fort Worth in calendar
    year 1999 and projected expansion of six other existing cemeteries, NCS
    will be hard pressed to meet the growing demand for space. We join with
    this Committee in encouraging the Administration to consider adding
    even more cemeteries to meet the growing demand for burial in a
    National Cemetery.
        Historically, only about 10 percent of eligible veterans opt for
    interment in an NCS facility. Despite this seemingly low demand rate,
    if funding is not forthcoming for new acquisitions and development of
    existing land, the legal entitlement will be an empty promise, as
    veterans are denied access based on non-availability. Of the 115
    National Cemeteries, 22 are closed to new burials and 36 are only open
    to cremated remains. Within the next two years, the number of National
    Cemeteries open to first interments of casketed remains will be further
    reduced by 50 percent.
        Donations of space have helped ease the crunch somewhat, although
    in a piecemeal fashion. A truly national system must have the
    unqualified budgetary support of both the Executive and Legislative
    branches to ensure that all eligible veterans who so choose have the
    right to interment in a National Cemetery. We repeat our call for a
    National Cemetery or state-supported cemetery within 75 miles of 75
    percent of the veteran population. We remain steadfast in our support
    for fiscal responsibility, but it must not come at the expense of
    denying an eligible veteran the most enduring benefit--burial in a
    National Cemetery.
        The members of the Independent Budget acknowledge the ability of
    the dedicated staff of the NCS who continue to ably perform their
    mission despite budgetary shortfalls, inadequate staff, aging equipment
    and increased workload. The NCS is a labor intensive workplace, which,
    in the foreseeable future, cannot be supplanted by machinery. The
    unique maintenance needs of the NCS can only be met through adequate
    staffing. Currently, the NCS is deficient 275 FTEE's (full time
    employee equivalents) that need to be funded to ensure the adequacy of
    cemetery operations.
        The National Cemetery System is faced with a number of serious
    challenges. Chronic underfunding remains the most serious and presents
    the greatest challenge to accomplishing its mission of compassionate
    service to each veteran and family eligible for burial. We have
    identified other major areas of concerns and recommendations that are
    crucial to ensuring the integrity of the NCS.
        Inadequate Burial Space.--Presently, NCS has approximately 330,000
    gravesites available with the capacity for adding 1.5 million sites on
    undeveloped land, if resources become available. The State Grant
    Program, operated by VA, provides an reasonable and accessible
    alternative to those who desire burial in a national cemetery, but
    because of distance must forgo the use of the burial benefit. Recent
    state budget surpluses in many states have made it possible for more
    states to participate in this program.
    Recommendation
        Congress must ensure that adequate burial space is available for
    all eligible veterans and their families who desire burial in a
    national or state veterans cemetery. Funding for the State Grant
    Program must be adequate to cover all state funding requests.
        Dignified Burials for Deceased Veterans.--Citing budgetary
    constraints, the military services have not been providing honor guards
    for veterans funerals, beyond a single representative of the Department
    of Defense who presents a flag to the deceased veterans's family on
    behalf of the Government. This denial of appropriate honors is
    particularly shameful during this time when so many WWII veterans are
    being buried in national cemeteries.
    Recommendation
        Congress should enact legislation guaranteeing that all veterans
    being buried in national cemeteries receive appropriate military
    honors; further Congress should direct a transfer of funding from DOD
    to VA that would be sufficient for VA to contract for these appropriate
    services.
        Quantico National Cemetery.--Opened in 1983, Quantico was viewed as
    the alternative site for burial for Arlington National Cemetery. Less
    than six percent of Quantico's 790 acres have developed for burials.
    Because of its large inventory of available, yet undeveloped land,
    Quantico holds the potential of becoming the largest of all the
    national cemeteries.
    Recommendation
        VA should develop and Congress should support an aggressive
    marketing strategy and major construction plan to make Quantico
    National Cemetery a desirable and well-utilized alternative to burial
    in Arlington.
        Recently, national attention has focused on possible abuses
    regarding eligibility for burial in Arlington National Cemetery. Burial
    in Arlington for casketed interments is reserved for military personnel
    who died on active duty, career military retirees and holders of our
    Nation's highest military valor awards, such as the Medal of Honor,
    Silver Star, Distinguished Service Medal and Purple Heart, among
    others. Under the rarest of circumstances waivers are granted to
    individuals for compassionate reasons or other reasons related to high
    government service.
        During the last few years, requests for waivers have grown from a
    handful during previous Administrations to more than 69 during the
    Clinton presidency. The veterans community is duly concerned about the
    perceived arbitrariness of the waiver process in this Administration.
    Inequities in the application of the process demeans the honor of
    burial in a national cemetery. We urge the Congress to enact
    legislation that would require all waivers for burial be subject to an
    apolitical, uniform process that ensures objectivity and guarantees the
    integrity of current regulations regarding burial in Arlington National
    Cemetery.
        Our recommendations to ensure the integrity of the National
    Cemetery System for fiscal year 1999 cost out at approximately
    $99,919,000 an increase of $13 million in budget authority over fiscal
    year 1998 and includes the costs for our recommendation of an
    additional 275 FTEE's to meet current and future staffing needs.
        Mr. Chairman, this concludes our statement.
                                     ______

              Prepared Statement of the American Heart Association

                                you are a target
        Chances are heart attack or stroke will be the death or disabler of
    you or someone you love. Heart attack, stroke and other cardiovascular
    diseases are America's No. 1 cause of death and a main cause of
    disability. Cardiovascular diseases account for nearly 1 of every 2
    American deaths.
        The American Heart Association is pleased to provide
    recommendations on fiscal year 1999 appropriations for the Department
    of Veterans Affairs' Medical and Prosthetic Research program. This
    program consists of four components: Cooperative Studies Program,
    Health Services Research and Development Service, Medical Research
    Service; and Rehabilitation Research and Development Service.
                           you can make a difference
        The AHA, dedicated to reducing death and disability from heart
    attack, stroke and other cardiovascular diseases commends this
    Committee's support of the VA Medical and Prosthetic Research program.
    AHA applauds the President for proposing a 10.3 percent increase over
    the fiscal year 1998 budget, but we believe that this amount would not
    provide sufficient funds for this important program. The AHA is
    concerned that insufficient money is being devoted to America's No. 1
    cause of death--heart disease--and our No. 3 cause of death and the
    leading cause of permanent disability--stroke.
                         how you can make a difference
        The AHA recommends a fiscal year 1999 appropriation of at least
    $325 million for the VA Medical and Prosthetic Research program. Our
    recommendation, consistent with that of the Friends of VA Medical Care
    and Health Research, will allow maintenance of fiscal year 1998
    initiatives and full implementation of new initiatives for fiscal year
    1999. The AHA challenges our government to significantly increase funds
    for heart and stroke research through the VA Medical and Prosthetic
    Research program. We strongly urge the VA to establish heart and stroke
    centers to advance the battle against heart attack, stroke and other
    cardiovascular diseases--America's No. 1 killer and a leading cause of
    disability. Our government's response to this challenge will help
    define the health and well-being of citizens in the next century.
                                still number one
        Heart attack, stroke and other cardiovascular diseases have been
    the leading cause of death since 1919. More than 58 million Americans--
    1 in 5--suffer from one or more of these diseases. Millions of
    Americans have risk factors for cardiovascular diseases--about 50
    million have high blood pressure, 38 million have high blood
    cholesterol and 50 million smoke. Over the last 20 years there has been
    a dramatic increase in the indicators of prevalence of heart disease
    and stroke.
        While heart disease and stroke occur at all ages, they are most
    common in Americans over age 65--an age group that is now about 13
    percent of the U.S. population and will be 20 percent by year 2010. By
    the year 2010, the percentage of veterans over 65 years of age will be
    about three times that of the general population or 42.5 percent of the
    veteran population. The VA's planning models recognize that its aging
    patient population demands more care. More than 4.49 million or 16.4
    percent of the veteran population reported suffering from ``heart
    trouble'' in the 1993 National Survey of Veterans. More than 990,000 or
    3.6 percent of the veteran population are stroke survivors. As the
    veteran population ages, the number of veterans afflicted by heart
    disease and stroke will increase substantially.
        Cardiovascular diseases put an enormous burden on our economy.
    Americans will pay an estimated $274 billion for cardiovascular-related
    medical costs and lost productivity in 1998. No other disease costs
    this nation so much money and that amount is expected to increase
    dramatically with the growth of the senior citizen population.
         insufficient va resources devoted to heart and stroke research
        The Department of Veterans Affairs Medical and Prosthetic Research
    program plays an important role in heart and stroke research and
    deserves the strong support of Congress. In fiscal year 1997, VA
    support for research on heart disease was $16.1 million (a 23.6 percent
    reduction from fiscal year 1996), accounting for 6 percent of the
    fiscal year 1997 VA's Medical and Prosthetic Research budget. In fiscal
    year 1997, VA-supported stroke research represented $3.1 million or 1.2
    percent of the VA's Medical and Prosthetic fiscal year 1997 budget. In
    addition to its own program, the VA investigators spent an additional
    $33.8 million on heart research and $7.7 million on stroke research
    from outside sources.
              va heart and stroke research benefits all americians
        The mission of the VA Medical and Prosthetic Research program is to
    ``discover knowledge and create innovations to advance the health and
    care of veterans and the nation.'' While the primary purpose of the VA
    health care system is the provision of quality health care to eligible
    veterans, VA-supported research contributes to the quality of care by
    bringing talented and dedicated physicians into the VA system.
    Discoveries from VA-supported research benefit veterans, science and
    the world's health.
        VA cardiovascular research represents an integral part of the
    overall scientific effort in this field. VA researchers include many
    nationally recognized, distinguished scientists and several Nobel
    Laureates. Several VA investigators have been acknowledged for their
    work in cardiovascular research. Also, VA investigators provide core
    faculty support at major medical schools affiliated with VA
    institutions.
        The Medical Research component of the VA Medical and Prosthetic
    Research program supports both basic and clinical research, primarily
    investigator-initiated peer reviewed studies. This component provides
    funds for support of VA-based faculty members (M.D's or Ph.D's) at
    various stages in their careers, multicenter cooperative studies--a
    large portion of which are cardiovascular studies--and research
    equipment. The presence of a VA research program aids the VA. This
    small, but internationally recognized, highly competitive research
    program in fiscal year 1998 supports 2,123 investigators at 115 VA
    facilities nationwide.
        VA cardiovascular research is largely clinical in nature. The VA is
    a major contributor to this nation's clinical research, playing a
    unique role in the research community because of its ability to
    immediately translate research findings into clinical practice.
        VA-supported research has produced landmark results and
    revolutionized treatment in the cardiovascular area. You and your
    family have benefited directly for VA heart and stroke research.
    Several cutting-edge examples follow.
        Inflammed Arteries.--Many heart attacks and strokes are the end
    result of atherosclerosis, the disease process that causes obstructed
    blood vessels. VA-supported research has shown a major way inflammation
    causes atherosclerosis or hardening of the arteries. Scientists found
    large numbers of a certain receptor on inflammatory cells in heart
    blood vessels. If researchers can create a way to stop the receptor,
    atherosclerosis could be prevented.
        Prediction of Heart Bypass Surgery Success.--In 1995, an estimated
    573,000 heart bypass surgery procedures were performed on 363,000
    patients in the United States at an average cost of $44,820 per
    procedure. Generally, one year after surgery, 10 to 15 percent of the
    vein grafts used in these procedures become blocked. VA research has
    found that reducing the temperature of the solution used to harvest the
    vein grafts may stop heart arteries from becoming clogged with
    atherosclerosis. The study also discovered that while a daily aspirin
    stops artery vein blockage for a year after surgery, long-term survival
    depends on the extent of underlying disease before the procedure and
    the length of time of the procedure.
        Gene Therapy May Help Heart Failure.--About 4.9 million people in
    the United States suffer from congestive heart failure, the leading
    cause of hospitalization for Americans age 65 and older. VA researchers
    have found in non-human studies that inserting a gene in heart cells
    affected by heart failure started an active increase in the chemical
    that triggers the cells to beat stronger. Additional research in this
    area could provide a new lease on life for millions of Americans.
        Stroke Risk Reduction.--About 9 percent of older Americans suffer
    from the most common type of an irregular heartbeat, atrial
    fibrillation, a risk factor for stroke. Research has shown that low
    doses of the blood thinner warfarin can lower the risk of stroke by
    about 80 percent in patients suffering from atrial fibrillation.
        Stroke Survivor Improvements.--Stroke is the leading cause of
    permanent disability in the United States and the No. 3 killer. VA
    studies have produced therapies to enhance quality of life for
    survivors. VA researchers have created a software program to assess and
    correct stroke-related speech disorders and have developed a
    rehabilitation procedure to restore arm movement. Researchers have
    identified seven pathways associated with motor recovery from stroke.
        Medication vs. Bypass Surgery.--An estimated 573,000 coronary
    artery bypass surgery procedures were performed on 363,000 patients in
    the United States in 1995. In a landmark study, VA researchers found
    that heart medication works just as effectively as coronary artery
    bypass surgery for most patients with blocked arteries.
        Aspirin and Angina.--About 7.2 million Americans suffer from angina
    (chest pain) due to insufficient blood supply to the heart. In another
    landmark study, VA research found that aspirin cuts deaths and heart
    attacks by 50 percent in patients suffering from unstable angina.
        Angioplasty Benefits.--In 1995, an estimated 434,000 angioplasty
    procedures were performed on 408,000 patients in the United States to
    restore blood flow to the heart by widening narrowed arteries. VA
    research was the first to evaluate this procedure. Results showed that
    after undergoing angioplasty, patients suffered less pain and can
    exercise longer than those taking only medication. Another study showed
    that clot-busting drugs produced comparable results to those of
    angioplasty at cost savings of $3,000 per patient.
        Heart Failure Drugs.--About 4.9 million Americans suffer from
    congestive heart failure, the often disabling inability of the heart to
    pump sufficient blood throughout the body. A VA study showed that heart
    medications can enhance the heart's pumping ability and keep sufferers
    of congestive heart failure alive. These study results have
    revolutionized heart failure treatment.
        Non-Q-Wave Heart Attack.--Of the estimated 1.1 million Americans
    who will suffer a heart attack this year, an estimated 750,000 will
    experience the non-Q-wave--EKG classification--version. VA research
    showed that noninvasive treatment of non-Q-wave heart attack survivors
    is just as effective or in some cases better than invasive procedures
    such as bypass surgery and angioplasty. Higher death rates for victims
    were associated with invasive procedures.
         heart and stroke research challenges and opportunities for va
        The research advances highlighted above and other progress have
    been made possible by congressional support of the VA Medical and
    Prosthetic Research program. Thanks to research, no longer does a heart
    attack or a stroke necessarily mean immediate death. Now that more
    people are surviving, heart attack and stroke can mean permanent
    disability, costly medical attention, and loss of productivity and
    quality of life.
        Challenges and research opportunities to advance the battle against
    heart disease and stroke abound. Examples of on-going VA research are
    highlighted below.
        Heart Failure Studies.--The growing number of patients suffering
    from congestive heart failure has earned this disease the title of
    ``the new epidemic.'' VA research is examining whether the addition of
    beta-blockers to standard treatment reduces deaths and enhances health
    and quality of life of patients with heart failure. Another study is
    creating a large DNA bank of sufferers to examine the genetic basis of
    heart failure. The first large scale, international, randomized
    clinical trial is assessing the role of digitalis in the modern
    treatment of congestive heart failure. It is evaluating the effects of
    this 200-year old treatment in preventing deaths from heart failure,
    the leading cause of hospitalization of Americans age 65 and older.
    Heart failure represented more than 22,000 VA hospitalizations in 1990
    at a cost of about $100 million. Research results will improve
    treatment of heart failure.
        Heart Attack Research.--An estimated 1.1 million Americans will
    suffer a heart attack this year. VA research is assessing the most
    cost-effective way to diagnose and treat suspected heart attack victims
    without the use of costly invasive procedures. One such procedure being
    examined is a computer analysis of the heart's electrical signals
    during exercise. Findings from this study could save money, improve
    health care and reduce the number of surgical procedures.
        Warfarin and Aspirin Study.--Heart attack remains the single
    largest cause of death in the United States. A VA-sponsored study is
    analyzing the effects of warfarin, a blood thinner, plus aspirin versus
    aspirin alone in reducing deaths from heart attacks. Research results
    could save 20,000 lives each year.
        Atherosclerosis and Iron Research.--Atherosclerosis or hardening of
    the arteries is a major risk factor for heart attack and stroke. VA
    research is evaluating the concept that too much iron in the blood
    stream causes atherosclerosis. Results of this research could
    revolutionize the treatment of heart attack and stroke.
        Cholesterol Drugs.--About 37.7 million American adults have
    elevated blood cholesterol levels, a major risk factor for heart attack
    and stroke. An estimated 11 million veterans are at increased risk of
    heart disease due to high cholesterol levels. A clinical trial is
    comparing the use of the drug gemfibrozil versus a placebo in reducing
    cholesterol levels. Results could provide cost savings if the drug
    gemfibrozil can replace the more expensive statin drugs.
        Irregular Heart Beat and Stroke Drug Trial.--An estimated 1.5
    million Americans suffer from atrial fibrillation, the most common
    irregular heart beat, which causes more than 75,000 strokes a year. A
    VA study is evaluating the efficacy of two promising drugs in
    maintaining normal heart beat. Research results will enhance treatment
    for atrial fibrillation and reduce stroke risk.
        Stroke Rehabilitation.--Stroke will strike about 600,000 Americans
    this year; most survivors will remain permanently disabled. Studies to
    enhance functional capacity and capabilities of stroke survivors are
    underway.
        The number of VA research applications has grown slightly over the
    last five years, but funding cuts and/or inflationary increases
    severely restrict support for approved applications. For the programs,
    which were reviewed for fiscal year 1998 funding, more than 30 percent
    of approved applications were funded. Ten years ago, 50 percent of the
    approved applications were funded.
        Through fiscal year 1998, total dollars appropriated for the
    Department of Veterans Affairs Medical and Prosthetic Research program
    have decreased $79.3 million since 1985 at an average annual rate of
    about 3 percent. However, there has been a decrease in terms of
    constant ``1985 dollars'' of $60 million.
        The Medical Research programs highlighted below are of interest to
    the AHA.
        Investigator-Initiated Studies.--During fiscal year 1998 this
    program will constitute 56 percent of the Medical and Prosthetic
    Research appropriated budget and will support an estimated 1,431
    investigators. Under the President's 1999 budget, this program would be
    level funded from the fiscal year 1998 appropriated level. These
    investigators comprise the core of all VA research and provide the
    preceptorship for career development awardees.
        Cooperative Studies.--In fiscal year 1998 this program supports 48
    clinical trials. The VA offers a unique opportunity for cooperative
    studies due to close linkage among hospitals. These studies provide a
    mechanism by which research on the effectiveness of diagnostic or
    therapeutic techniques can achieve statistically significant results by
    pooling data on patients from a number of VA hospitals. The Cooperative
    Studies Evaluation Committee evaluates proposals developed by teams of
    VA clinicians and biostatisticians. The VA under this mechanism has
    supported many landmark clinical trials in the cardiovascular field
    (e.g., studies in high blood pressure treatment and coronary artery
    bypass surgery). Under the President's fiscal year 1999 budget, this
    program would receive a $4 million increase from the fiscal year 1998
    appropriation.
        Career Development Awards.--Applications for these awards are
    reviewed both locally and by the VA Central Office. This program has
    experienced a decrease in the number of awards by 58 percent from a
    high in 1991 of 212 awards to a low of 88 awards in fiscal year 1997.
    In response to the Research Realignment Advisory Committee suggested
    rejuvenation of this program, a review began in fiscal year 1997 for
    the VA's Medical Research Service, Health Services Research and
    Development Service and, for the first time, Rehabilitation Research
    and Development Service. This will result in an anticipated 135 Career
    Development Awards in fiscal year 1998.
                                 action needed
        Today's investment in biomedical research will lead to future
    returns. These returns include continued decreases in death rates from
    heart attack, stroke and other cardiovascular diseases, reduced federal
    outlays for hospital and long-term care expenses, a well-trained cadre
    of biomedical researchers and a more healthy and productive society.
        The American Heart Association recommends a fiscal year 1999
    appropriation of at least $325 million for the VA Medical and
    Prosthetic Research program. Our recommendation is consistent with that
    of the Friends of VA Medical Care and Health Research. An appropriation
    of this amount will allow maintenance of fiscal year 1998 initiatives
    and full implementation of new initiatives for fiscal year 1999. A
    fiscal year 1999 appropriation of at least $325 million for this
    program would continue current research momentum in cardiovascular
    diseases within the VA and help to maintain the VA's vital role in the
    overall scientific effort in this field. We strongly urge the VA to
    establish heart and stroke centers to advance the battle against heart
    attack, stroke and other cardiovascular diseases--American No. 1 killer
    and a leading cause of disability.
                                     ______

       Prepared Statement of Dr. Roy A. Church, President, Lorain County
                               community College

        Mr. Chairman and members of the Subcommittee, thank you for the
    opportunity to present a statement regarding an important career
    training and economic development initiative being undertaken in Ohio
    by the Lorain County Community College.
        This initiative involves the creation of a One-Stop Job Training
    and Employment Skills Resource Center at an abandoned hospital in the
    City of Lorain. This effort received $800,000 in start-up funds last
    year, and the $2 million sought for the Resource Center should complete
    the linkage between the converted hospital and the Community College.
        The community leaders believe this is an important first step
    toward attracting and educating the large population of adults lacking
    access to job training and higher education opportunities. The Center,
    which is in the heart of a declining urban city, is part of the
    solution for regional economic development. I will attempt to describe
    in general terms for the Subcommittee the elements of this effort.
        The economic opportunities brought about by technology have
    bypassed Northeast Ohio and similar areas across the nation. In many
    urban school districts, a majority of high school graduates (especially
    among special populations) do not complete a rigorous course of study
    that prepares them for completing a college degree or for entering
    high-skill, high-wage careers.
        The Center is designed to serve adults, who often lack a sufficient
    mastery of basic information technology skills. This Center will
    provide the training, services and resources to help them function
    effectively in a technologically-advanced workplace. Included in this
    group are dislocated workers who are unlikely to return to a previous
    industry or occupation.
        Lorain County Community College (LCCC) has leased space in a
    converted 400,000 square foot facility in downtown Lorain, which will
    serve as a satellite hub for a comprehensive distance learning program
    made available at a new one-stop training center providing counseling,
    adult and child daycare, applied training and job search opportunities.
    Through distance learning, adults attending LCCC classes at the Center
    will have access to such campus curricula as information technology
    certification, allied health training, pre-med and/or physician
    training.
        The One-Stop Job Training and Employment Skills Resource Center is
    an integral component of LCCC's ``21st Century Connected Learning
    Community.'' LCCC will join with other agencies and organizations to
    serve the unique needs of the urban area. I will describe the various
    components to be included in this Center.
        The Department of Veterans Affairs operates a community outpatient
    center providing primary care access for veterans. This clinic can
    provide opportunities for health training, which may have a
    telemedicine component providing links to medical universities and
    Veterans Hospitals and clinics in Ohio.
        The Lorain County Community Actions Agency (LCCAA) is a private
    non-profit social service organization serving low- and moderate-income
    individuals and families of Lorain County. LCCAA currently provides a
    wide range of programs and services, including Head Start, Home
    Weatherization Assistance, Senior employment, nutrition and
    transportation services, congregate living, Emergency Home Energy
    Assistance Program and other emergency services. LCCAA believes that
    family support, combined with education, training and employment
    services is most effective in developing long-term self-sufficiency.
    LCCAA is prepared to address welfare-to-work needs of Lorain to provide
    a broader range of services to a larger number of people. In addition,
    LCCAA intends to set aside space as an incubator for micro-enterprises.
    Community development, training, administrative and financial experts
    would be available for consultation to assist entrepreneurs in building
    viable, sustainable businesses. The Community College will play a
    significant role in designing these programs.
        The Catholic Charities is also a private not-for-profit
    organization to be located in the Center. They are establishing a
    Family Resource Center and may relocate a transitional housing complex
    at the site. The tenants of this multi-unit complex would be able to
    access the educational services provided by Lorain County Community
    College and all other services to be located at the complex.
        Humility of Mary Assisted Living Services will provide assisted
    living to persons with Alzheimer's disease and provide other senior
    services. Senior will be able to attend classes and students will be
    able to work with senior citizens as part of a health aide training
    experience.
        SCCI Hospital of Lorain, Ohio plans to convert a portion of the
    complex into a 45-bed acute care hospital certified by HCFA as a long-
    term Acute Care Hospital and will provide health careers training
    opportunities for community college students. The level of care
    provided is post-acute, which is a level between an acute hospital and
    skilled nursing care. SCCI's goal is to be part of the continuum of
    care to allow patients to return to their utmost quality of life.
        With deployment of necessary telecommunications infrastructure,
    LCCC will be able to provide a very broad range of training experiences
    at this urban center for adults, dislocated workers and high school
    students seeking career training. This Center's telecommunications
    infrastructure will also link Lorain County Community College to Lorain
    City Schools. This critical link will enable LCCC to bring distance
    learning applications to this urban school district.
        The other tenants of the converted hospital complex in downtown
    Lorain will be provided with access to an applied learning experience
    on-site and, with two-way communication, these experiences can also be
    brought back to the Community College campus. The possibility of a
    telemedicine connection with the Department of Veterans Affairs will
    provide an outstanding link to LCCC, which currently provides physician
    training at the campus.
        This critical first step of reaching out to the region will launch
    the broader economic development and job-training initiatives that LCCC
    has been developing on campus over the last couple years and enhance
    successful programs in engineering and manufacturing that have been in
    operation. LCCC is requesting a Federal partnership of $2.1 million to
    help fund the telecommunications infrastructure and linkages necessary
    for the distance learning component of the initiative. With this
    relatively small investment, Lorain Community College can become the
    learning hub that will help Lorain County successfully meet the
    technological challenges of the 21st Century.
        Thank you.
                                     ______

        Prepared Statement of Linda Boone, Executive Director, National
                        Coalition for Homeless Veterans

        Mr. Chairman, I am Linda Boone, Executive Director of the National
    Coalition for Homeless Veterans (NCHV). On behalf of our members,
    located in thirty-nine states, the District of Columbia and Puerto
    Rico, I thank you for the opportunity to present the views of NCHV in
    regard to a number of the priorities expressed in the fiscal year 1999
    Budget proposal submitted by the President to the Congress.
        We thank you for your leadership, Mr. Chairman, as well as your
    distinguished colleagues on this Committee for your efforts in
    carefully reviewing the fiscal year 1999 Budget in order to do
    everything you can to ensure that our Nations' covenant with the men
    and women who have served in the United States military is fully met.
        The National Coalition for Homeless Veterans (NCHV) strongly
    endorses the recommendations of the Veterans Independent Budget and
    Policy (IBVSO) for fiscal year 1999. In general, NCHV endorses the
    IBVSO recommendations for overall appropriations for all aspects of
    operation of the United States Department of Veterans Affairs' (VA)
    programs for fiscal year 1999. The IBVSO correctly points out the
    drastically diminished purchasing power of funds appropriated for
    medical care since 1980, and the fact that such appropriation for the
    Veterans Health Administration has lagged far behind the rate of
    increases for the private sector and for Medicare.
        In particular, NCHV would draw your attention to the recommendation
    that third party payments only be used as a supplement to appropriated
    dollars, and not as a substitute for appropriated funds. This is a
    particularly important issue for homeless veterans. Virtually no
    homeless veterans have any private medical coverage, and many may not
    qualify for any Medicare coverage. Many homeless veterans suffer from
    neuropsychiatric medical conditions, in addition to physiological
    problems. Most private insurance plans provide very minimal coverage
    for neuropsychiatric treatment, and typically specifically exclude
    coverage for war related injuries, including Post Traumatic Stress
    Disorder (PTSD). The concern is that the substitution of the third
    party payments for appropriated funds cannot help but affect the shape
    and emphasis of the service delivery, both in range and quality
    services delivered, to adjust to the funding stream(s). This is
    particularly likely to occur if the third party collections are relied
    upon for basic operations, no matter how conscientious and vigilant the
    structure of the Veterans Health Administration (VHA) may be in trying
    to guard against these phenomena. NCHV firmly believes that such third
    party collections should augment, not supplant funds appropriated in
    the best interest of the Nations' duty to veterans.
        The National Coalition for Homeless Veterans (NCHV) believes that a
    glaring major omission in the fiscal year 1999 VA Budget request is the
    lack of a clear commitment to creating adequate transitional housing.
    The dramatic shift that continues to take place within the Veterans
    Health Administration from inpatient models of service delivery to
    outpatient models of service delivery as a primary methodology has
    created significant difficulties in providing quality medical treatment
    for low income veterans, homeless veterans, and other veterans in ``at
    risk'' situations. That problem is becoming larger and more pressing
    each month. While perhaps it will be the case that truly objective
    research in the future will bear out the contention that the outpatient
    mode of delivery of neuropsychiatric treatment and services is as
    effective (or possibly even more effective) than the more expensive
    inpatient delivery of such treatment, that will only be the case when
    there are safe, clean transitional housing facilities, which are devoid
    of drugs and alcohol available to veterans under treatment in that
    locality. This is already a major (although generally publicly
    unacknowledged) problem at the majority of VA Medical Centers.
        As one illustration of the negative impact on medical care caused
    by the lack of adequate units of safe, clean, sober transitional
    housing, the success rate of the ``Homeless Veterans Outreach Program''
    at one VA Medical Center (VAMC), in a major metropolitan area in the
    Eastern United States, diminished from success with more than 50
    percent of their veteran patients to less than 30 percent success. This
    was in the first year after the length of the stay on the psychiatric
    wards and the substance abuse wards was reduced to one week or less for
    all but the handful of veterans at the very greatest risk to themselves
    and others. All concerned believed that the lack of safe, clean
    transitional housing that has a supportive atmosphere determinedly free
    of drugs or alcohol for these veterans to reside while in treatment is
    the major impediment to the outpatient treatment and services offered
    to be effective. NCHV is in strong agreement with the IBVSO that the
    lack of adequate safe, clean, sober transitional housing is a quality
    of medical care issue. Perhaps one of our more active members (who
    served as a medic in Vietnam) phrased this problem most aptly when he
    says: ``You cannot deliver definitive medical care when you are still
    in the mud and under fire. You must first get the casualty to a safe
    and clean place that is set up for medical care.'' We urge the
    Committee to urgently address this crucial problem.
        NCHV believes that what is needed to begin to rectify this growing
    problem that directly affects medical care vitally needed by many
    veterans most in need is for early passage by the Congress and
    enactment by the President of the fine legislation introduced in the
    other house as H.R. 3039, the ``Veterans Transitional Housing Act of
    1997.'' It is NCHV's understanding that similar legislation may soon be
    introduced in the Senate.
        The National Coalition for Homeless Veterans (NCHV) believes that
    this basic concept of utilizing loan guaranties in order to access
    private capital is a good way to create more transitional housing
    facilities by means of creating this highly creative, yet very fiscally
    prudent, loan guaranty authority program. NCHV urges the strong support
    of you and your colleagues for early passage of this vital legislation
    by the House of Representatives, and for any action as may be necessary
    by this Subcommittee to ensure that the needed budgetary authority is
    available when this legislation is enacted. It is estimated by the
    Congressional Budget Office (CBO) that the cost of this program will
    potentially be $7 to $10 Million over five years, in order to yield
    $100 Million worth of safe, clean transitional housing that is devoid
    of drugs and alcohol.
        These additional units of transitional housing, as noted above, are
    necessary in order to begin to alleviate the acute shortage of such
    transitional units in order to maximize the usefulness of the
    (considerable) resources devoted to serving these veterans by means of
    the ``Partial Hospitalization Program (PHP) or other essentially
    outpatient treatment methods of service delivery. This appears to NCHV
    to be a very good investment indeed, yielding more than $10 worth of
    such housing units for every taxpayer dollar invested, with the rest of
    the needed capital being secured in the private sector.
        As important and useful as early enactment and implementation of
    the Veterans Transitional Housing Act would be, the need for additional
    transitional housing units for veterans receiving care from VA is of
    such a magnitude, and such a broad geographic distribution, that
    additional actions must be taken to ensure quality medical care at each
    VA medical facility.
        Specifically, NCHV urges that you and your distinguished colleagues
    include language in the fiscal year 1999 Appropriations bill for VA
    that will ensure that the VA Homeless Veterans Grants & Per Diem
    Program is funded via the VA internal allocation of funds at the full
    $10 Million currently authorized by the Congress. While NCHV is aware
    of the reluctance of the Congress to return to ``fencing'' of program
    dollars in most cases, specific language in either the Act or the
    Committee report pointing out the need may well accomplish the desired
    result. Approximately $6 Million has been allocated for this program to
    date for fiscal year 1998 by the internal procedures of the VA. Of
    these funds, $4.7 will be spent on per diem and $5 Million on grants to
    create additional units of transitional housing. It is useful to note
    that in fiscal year 1997 $3.3 Million was expended on grants to
    community based organizations to acquire and renovate additional units
    of transitional housing, and only $2.7 Million on per diem.
        As units currently in the process of construction or renovation
    become operational, an ever larger share of the authorized $10 Million
    must be spent on per diem charges to support the proper operation of
    the housing previously acquired by means of Grants pursuant to this
    program. Although this program has not even begun to keep pace with the
    increased need for such housing, NCHV believes that this program will
    no longer be able to create any additional transitional housing units
    by fiscal year 2000, as all of the amount currently authorized will
    have to be spent on per diem. There is even some question as to whether
    there will be enough per diem funds under the current program
    authorization that could be allocated by the VA internally to fully
    fund the per diem for activities taking place in transitional
    facilities already created pursuant to this program. This is an
    unacceptable situation. NCHV has contacted the leadership and entered
    into discussions with the staff of the Committee on Veterans' Affairs
    to seek action that will rectify this situation, where the vital needs
    of veterans may well go unmet.
        The National Coalition for Homeless Veterans (NCHV) is very
    concerned that the continuing process of ostensibly decentralizing
    decision making authority within the Veterans Health Administration
    (VHA) by transferring authority for some decisions to each of the
    twenty-two Veterans Integrated Service Networks (VISN's) is having the
    effect of precluding VHA from even having the capacity to produce any
    standardized reporting on a National basis. This makes it difficult to
    obtain a clear picture of the rapid changes in both the amount and the
    types of medical care and services being provided at facilities across
    the United States. In a recent report, the Senate has correctly pointed
    out that virtually all systemic quality control/quality assurance
    programs have been in effect eliminated or debilitated by the
    kaleidoscopic changes, both at the VISN level and at the VA Central
    Office level.
        NCHV holds that perhaps medical care at the VA would be most
    efficient and effective if authority as to how best to accomplish the
    mission(s) of VHA were to be even more decentralized. However, the
    responsibility for setting the mission(s), and holding the VISN's and
    each VA facility accountable for how well that mission is being
    accomplished has been given to the Secretary of Veterans' Affairs and
    to the Undersecretary for the Veterans' Health Administration.
        NCHV strongly believes in the military principle of ``You may
    delegate authority; You may NOT delegate responsibility.'' This
    principle is certainly applicable to these two officials. The VA must
    do a better job of standardizing reporting, and in re-instituting
    meaningful and effective quality assurance systems.
        The National Coalition for Homeless Veterans (NCHV) is also very
    concerned about many anecdotal reports from our members about the
    further diminishment of neuropsychiatric services to veterans. Not only
    is the organizational capacity of the Veterans Health Administration to
    deliver inpatient care for Post Traumatic Stress Disorder (PTSD) and
    for substance being diminished, but the justification of shifting
    resources over to outpatient modes of delivery appears to not be
    keeping pace with the stripping of resources from the inpatient
    neuropsychiatric programs. In other words, the ability of the Veterans
    Health Administration facilities to be able to address the
    neuropsychiatric wounds of war and the requirements of the veterans'
    population for such care, which was already inadequate in the face of
    the overwhelming documented needs, is being further diminished. As the
    IBVSO correctly points out, this diminishment is further compounded by
    the lack of safe, clean, sober transitional housing for veterans who
    are ostensibly being assisted by outpatient neuropsychiatric programs
    or Partial Hospitalization Programs (PHP).
        NCHV urges the Committee and the Congress to take steps to more
    fully assess this apparent diminishment of neuropsychiatric services at
    VA. Further NCHV urges the Committee to take the steps necessary to
    halt and reverse the destruction of the organizational capacity of VA
    to properly address the neuropsychiatric wounds of war as well as to
    properly fund the creation and maintenance of enough units of
    transitional housing and community services in proximity to every VA
    facility in the Nation.
        NCHV believes that the best means of accomplishing all of the above
    noted objectives is for the Subcommittee to request that the Secretary
    of Veterans' Affairs hold each Veterans Integrated Service Network
    (VISN) Director (and by extension each VAMC Director) explicitly
    responsible and fully accountable in their performance goals and
    personal performance evaluation as to how well that VISN has: (1) Met
    the documented need for safe, clean transitional housing units that are
    devoid and alcohol, utilizing VISN funds to fund creation of such units
    in the community in addition to the national Grant & Per Diem program
    funds that may be available; and, (2) Provided a continuum of care for
    homeless veterans seeking care from the VA that includes intensive case
    management services as necessary provided by means of VA personnel or
    by means of contracting with appropriate community based organizations;
    and (3) Maintained the Homeless Outreach program at an acceptable level
    of activity and Government Performance and Results Act (GPRA) type of
    measurable outcomes, as compared to other comparable VISN's in the
    United States; and, (4) Maintained the quality and extent of
    neuropsychiatric care at least at the fiscal year 1995 levels,
    particularly for veterans who are Chronically Mentally Ill and those
    veterans with Post Traumatic Stress Disorder (PTSD) as at least one
    aspect of their diagnosis.
        The National Coalition for Homeless Veterans (NCHV), as noted
    above, endorses the ``Veterans Independent Budget and Policy'' (IBVSO)
    for fiscal year 1999, as presented by top representatives of the four
    sponsoring organizations (AMVETS, the Disabled American Veterans,
    Paralyzed Veterans of America, and the Veterans of Foreign Wars of the
    U.S.).
        The IBVSO is in many ways a much more complete and thoughtful
    document than that presented by the VA, particularly in the sections
    dealing with Seriously Mentally Ill, Post Traumatic Stress Disorder,
    Substance Abuse Treatment, and Homelessness. It is not just a matter of
    the differences in the amount of resources called for to properly
    address these problems in the IBVSO (although the IBVSO did call for
    the proper resources to more adequately address these vital problems).
    Rather, the IBVSO reflects a more proper understanding the magnitude of
    these problems, and what resources and actions are needed to begin to
    provide for quality medical treatment and high quality, effective
    services. NCHV specifically commends these sections of the IBVSO to you
    and your colleagues on the Committee on Veterans' Affairs for closer
    scrutiny as you ponder on the correct course(s)
        The National Coalition for Homeless Veterans (NCHV) wishes to also
    point out that the section of the VA fiscal year 1999 Budget request
    documents that specifically addresses the Homeless Veterans Treatment
    and Assistance Program (pages 2-24 to 2-26) is the only set of goals
    for assisting homeless veterans that VA has publicly stated in an
    official document. The aforementioned goals are identical to those set
    forth in the most recently available VA ``Strategic Plan'' (October
    1997), which is publicly available on the Internet Web site of the
    United States Department of Veterans Affairs.
        The problem that NCHV has with these ``performance goals'' is that
    they are so very minimal. The first goal of trying to increase the
    percentage of VA facilities that perform outreach to homeless veterans
    should not even be an issue. A simple direct order from the Secretary
    of Veterans' Affairs should be all that is needed to ensure that all VA
    facilities are doing their job in this regard, without spending any
    more of the limited time of VA Central Office staff in trying to cajole
    facilities into doing what they should have been doing assiduously all
    along. The second goal of creating 500 new community based beds by the
    end of fiscal year 2000 might in fact be a reasonable and possibly
    adequate figure for beds in safe, clean, sober environments if we were
    discussing the need for such beds for veterans in outpatient treatment
    in Arizona and Illinois only. However, the VA is here speaking of the
    Nation. This figure is startlingly inadequate in the face of the need
    being created by VHA's elimination of inpatient treatment capacity and
    very heavy reliance on outpatient and ``partial hospitalization'' modes
    of treatment service delivery for neuropsychiatric care. Similarly,
    NCHV strongly believes that the goal of providing per-diem payments to
    offset operating costs for up to 3,500 such beds by the end of 2003, if
    the funds are available, is simply inadequate in the face of the very
    significant need which is largely created by VA's own actions.
        As to the last of the performance goals contained in this section,
    NCHV agrees that it will prove to be extremely valuable to all
    concerned, particularly the Congress, if the VA can establish outcome
    measures for housing, employment, mental health, mental health status,
    and substance abuse related to veterans who acquire secure living
    arrangements at the time of discharge from a supportive housing
    program.
        The problem we have here is that VA estimates there are at least
    275,000 veterans who are homeless on any given night of the year, with
    more than double that number homeless at some point during the year
    (i.e., more that 500,000 veterans homeless at some point during the
    year). The highest estimate is that VA has some contact with about
    30,000 homeless veterans during the course of the year (excluding the
    prodigious activity of the VET CENTERS). Establishing outcome measures
    and indices, while useful, cannot really be considered to be strategic
    goals to address a problem that is of the documented magnitude as is
    the number of homeless veterans. It may in fact be a useful tool and a
    limited operational objective, but it is not a goal.
        The United States Department of Veterans Affairs needs a Strategic
    Plan that contains goals and objectives which can (and will) serve as a
    blueprint for each of the twenty-two Veterans Integrated Service
    Networks (VISN's) to prepare operational plans and objectives that will
    begin to meet the pressing vital needs of this most vulnerable group of
    our Nation's veterans. To accomplish this purpose, the goals need to be
    realistic but ``large enough'' to be worthy of our Nation and the men
    and women who served in military service to country. As one example,
    NCHV would suggest that every VA effort and program to assist homeless
    veterans be evaluated to ensure that the explicit goal of assisting the
    veteran to reach the point of being able to ``obtain and sustain
    employment at a reasonable living wage'' is central to each and every
    effort and program.
        Mr. Chairman, thank you for allowing the views of the National
    Coalition for Homeless Veterans (NCHV) to be included in the record of
    these proceedings.
                                     ______

       Prepared Statement of David B. Isbell, Chair, Veterans Consortium
                               Advisory Committee

        Mr. Chairman and distinguished members of the committee: On behalf
    of the Veterans Consortium Advisory Committee, I submit herewith a
    request for a fiscal year 1999 appropriation of $865,000 for the Court
    of Veterans Appeals Pro Bono Program--a program for which the
    Consortium has, from inception, had operational responsibility. That
    amount would represent an increase of $75,000, or 9.49 percent, from
    the fiscal year 1998 appropriation of $790,000.
        I understand that the Subcommittee has previously received our
    budget request, as an attachment to the fiscal year 1999 budget
    submission by Chief Judge Nebeker on behalf of the Court of Veterans
    Appeals; but for ease of reference I have also attached hereto as
    Exhibit A a copy of the document that was attached to that submission
    (bearing the title, The Veterans Consortium Pro Bono Program, fiscal
    year 1999 Budget and Narrative). The second attachment, Exhibit B, is a
    summary description of the history and operations of the Pro Bono
    Program. Also attached, as Exhibit C, is a statistical summary of the
    Program's operations since its commencement in September 1992.
        The Program's budget for fiscal year 1999 contemplates total
    expenditures, including both the ``A'' grant and the ``B'' grant, and
    an allowance for the cost of oversight by Legal Services Corporation
    (LSC), of $863,479. That figure (which, I should point out, is over and
    above the contributions in kind by the organizations participating in
    the Consortium) is rounded to $865,000 in the fiscal year 1999
    appropriation we have requested. A full explanation is presented in
    Appendix A; some highlights will be noted below, following brief
    mention of two notable events of the past year.
                               highlights of 1997
        In August, 1997, the Program held a ceremony in the Hearing Room of
    the Senate Veterans' Affairs Committee to memorialize the placement of
    the Program's 1,000th case. That case involved the appeal of James
    Gaddis, who had won the Bronze Star as a lieutenant in the Army Signal
    Corps in Vietnam. The volunteer lawyers with whom the case was placed
    (who have already won a remand) were former Senators Robert Dole and
    George Mitchell; Senator Dole was with us for the ceremony.
        The other notable event of the last year was a budgetary one: the
    Program managed to switch from a fiscal year corresponding to the
    Federal fiscal year to one coinciding with the calendar year, bringing
    it into alignment in this respect not only with all other recipients of
    grant funds through LSC, but also with its constituent organizations,
    all of which operate on a fiscal calendar year. This change should
    assure that the Program in the future will be able to operate
    comfortably during the annually recurring interim period between the
    time when LSC receives funds appropriated for the new federal fiscal
    year and the time when LSC is able in turn to dispense those funds--a
    lag time that has always been, in the Program's experience, a matter of
    weeks if not months. The change to a calendar-based fiscal year will
    also allow the Program to wind down its operations in an orderly
    fashion should the time come when no further funds are appropriated for
    it.
        The Program was able to operate for the three months between the
    end of the previous federal fiscal year (September 30, 1997) and the
    start of its new calendar-based fiscal year (January 1, 1998) by reason
    of having, at fiscal year 1997 end, unexpended funds left over from
    previous years, in the amount of approximately $159,000. This was
    almost enough to fund the three months of operations remaining in the
    calendar year, though there was a shortfall of some $8,000, which
    NVLSP, one of the Consortium members, generously undertook to bear. In
    addition, PVA took on one more case than called for under the ``B''
    grant, without charge to the Program. Thus, the Program commenced its
    1998 fiscal year with no carryover unexpended funds whatever.
                      the proposed fiscal year 1999 budget
        The $865,000 appropriation requested for fiscal year 1999
    represents a 9.49 percent increase over the $790,000 appropriation for
    fiscal year 1998. The Case Evaluation and Placement Component of the
    Program, which accounts for by far the majority of the budget,
    similarly accounts for the bulk of the increase, and that increase
    reflects the anticipated level of the Program's caseload. The upward
    trend is shown by pertinent statistics from the last two fiscal years.
    Thus,
      --The Board of Veterans' Appeals, from which the appeals reaching the
            Court of Veterans Appeals are taken, issued 34,000 decisions in
            fiscal year 1996 and 43,000 in fiscal year 1997. (Exhibit A.)
      --Total appeals filed in the Court during fiscal year 1996 were
            1,561, of which 1,141 were pro se; the corresponding figures
            for fiscal year 1997 were 2,166 and 1,564, respectively.
            (Exhibit C.)
      --Reflecting the increase in filings in the Court, there was a
            corresponding increase in the caseload of the Case Evaluation
            and Placement Component. Thus, it received 493 applications
            from pro se appellants in fiscal year 1996 but 700 in fiscal
            year 1997; an increase of 42 percent. The Component completed
            the evaluation of 468 cases in fiscal year 1996 and 689 cases
            in fiscal year 1997, but despite this greatly increased
            productivity, as of January 1998 it had accumulated a backlog
            of 170 pending requests for assistance. (Exhibit A.)
        Thus, an increase in screening staff and of related expenses is
    clearly going to be necessary, and this is reflected in the proposed
    budget. In relation to the increase in workload, the budget increase is
    modest indeed--though, hopefully, not too modest.
        The Veterans Consortium Advisory Committee is grateful for this
    Committee's consideration of our budget submission.
                                     ______

                                   Exhibit A

     the veterans consortium pro bono program, fiscal year 1999 budget and
                                   narrative
                                    overview
        The budgeted expenditures of $863,479 represent an increase of
    $73,479 (9.3 percent) over the $790,000 appropriation for fiscal year
    1998, which governs the Program's operating budget for calendar year
    1998. (The Program switched, effective January 1, 1998, from the
    federal fiscal year to a calendar year for operating purposes, so as to
    be synchronized with other recipients of funds from LSC). This increase
    reflects the projected continuing need to deal with a high volume of
    cases in the Case Evaluation and Placement Component, and an
    anticipated continuing increase in the number of BVA decisions and
    resulting appeals to the Court which will result in a corresponding
    increase in the Program's caseload.
        The Pro Bono Program received 700 requests for assistance in fiscal
    year 1997, compared with 493 requests received in fiscal year 1996.
    Despite almost herculean efforts at evaluating cases in fiscal year
    1997 (689 cases evaluated) versus fiscal year 1996 (468 cases
    evaluated), the Program currently (January 1998) has 170 pending
    requests for assistance. This increased demand for Program services can
    only be expected to continue to rise, as the number of decisions issued
    by the BVA increased dramatically in fiscal year 1997 (over 43,000
    decisions, versus 34,000 decisions in fiscal year 1996).
        Personnel costs.--Salary and benefits of those individuals
    performing services for the Program that are reimbursed from grant
    funds--account for 74.5 percent of the proposed budget (the same
    proportion as in the fiscal year 1998 budget), and 52 percent of the
    increase. Personnel costs cover a portion of the time for personnel who
    staff the Outreach and Education Components, and all of the time of
    most of the personnel who staff the Case Evaluation and Placement
    Component (the services of the other staff are provided free of charge
    to the Program). Staff who are reimbursed from grant funds, for all or
    a portion of their salary and benefits, are employees of either the
    National Veterans Legal Services Program (NVLSP) or the Paralyzed
    Veterans of America (PVA). Table A shows in summary form the number of
    persons providing services for each component, and the number of Full
    Time Equivalent (FTE) positions to be paid out of grant funds in fiscal
    year 1998 and fiscal year 1999.

                 PRO BONO PROGRAM PERSONNEL AND FTE DISTRIBUTION
    ------------------------------------------------------------------------
                  Component                Total \1\   Total \2\   Total \3\
    ------------------------------------------------------------------------
    Outreach............................           6        0.21        0.26
    Education...........................          11        1.05        0.80
    Case Evaluation and Placement.......          11        8.00        9.00
                                         -----------------------------------
          Total.........................          28        9.26       10.06
    ------------------------------------------------------------------------
    \1\ Number of personnel providing some service to the program.
    \2\ FTE reimbused by the grant, fiscal year 1998.
    \3\ FTE reimbursed by the grant, fiscal year 1999.

        A fuller breakdown by Component follows.
    Case Evaluation and Placement Component--$643,295
        The fiscal year 1999 budget contemplates an increase of $67,912
    (9.7 percent) over the fiscal year 1998 budget for the Case Evaluation
    and Placement Component (referred to in the budget spreadsheet as the
    ``Screening Component''). Over 40 percent more cases were evaluated in
    fiscal year 1997 than in fiscal year 1996, which resulted in increased
    expenses for office supplies, photocopying, postage, telephone calls,
    etc. Those increased expenses were not provided for in the fiscal year
    1998 budget.
                                   personnel
        There are three categories of personnel staffing this Component:
    lawyers, non-lawyer veterans law specialists, and support staff.
        Two lawyers, the Director and the Deputy Director, function full
    time as such in the Case Evaluation and Placement Component; their
    personnel costs are fully reimbursed by the Program--one position each
    to PVA and NVLSP. The lawyer FTE for this Component reimbursed from
    grant funds, in both fiscal year 1998 and fiscal year 1999, is 2.0.
        Veterans law specialists review the VA claims file and BVA decision
    to determine whether or not each case contains an issue that justifies
    referral to a lawyer. Veterans law specialists come from the
    constituent Veterans Service Organizations (VSO's) and are among the
    most experienced non-lawyer service officers these organizations have
    to offer.
        It is planned that there will be five full time and one part time
    veterans law specialists (VLS) in the Case Evaluation and Placement
    Component in fiscal year 1999--two of these positions being supplied by
    PVA and one by NVLSP, on a reimbursable basis. We anticipate that two
    VLS positions will continue to be donated by Disabled American Veterans
    (DAV) and The American Legion. We also currently have a part-time VLS
    (one day per week) whose services were recruited by Vietnam Veterans of
    America (VVA), for which the Program pays only the employee parking
    expenses. The continued availability of this VLS is uncertain. VLS
    expenses have exceeded and will exceed amounts budgeted in fiscal year
    1997 and fiscal year 1998, due to the relative seniority of VLS
    personnel assigned to the Program. We were able to accommodate these
    additional costs in fiscal year 1997, and can make similar adjustments
    in fiscal year 1998, by delaying the hiring of the third paid VLS until
    sometime in the second quarter of the calendar year. However, we have
    had to make adjustments for these increased cost in our fiscal year
    1999 planning, and that explains why personnel costs increases appear
    to be above the norm.
        There are three full time administrative support staff in the Case
    Evaluation and Placement Component, all employees of NVLSP, and all
    reimbursed out of Program funds.
        The fiscal year 1999 budget reflects an increase of $39,603 in
    personnel costs, of which $15,432 represents the fiscal year 1997 and
    fiscal year 1998 personnel cost adjustments and $24,171 represents cost
    of living increases and merit raises. Efforts have been made to keep
    personnel costs as reasonable as possible; for example, only modest
    cost of living and merit raises have been given to staff in fiscal year
    1998, despite the increased productivity of the Case Evaluation and
    Placement Component in fiscal year 1997.
        The level of salaries and benefits paid to the personnel who staff
    the Program are governed by the personnel policies of the constituent
    organizations of which they are employees--i.e., NVLSP and PVA--and to
    which they may return in the event of termination of the Program or
    rotation of personnel by the organizations involved. Both NVLSP and PVA
    expect to increase their staff salaries up to 5 percent, of which 3
    percent will be a cost of living increase and 2 percent will be
    allocated for merit raises. Increases are reflected in the personnel
    costs of all three Components of the Program in the fiscal year 1999
    budget.
                                   space-rent
        In late fiscal year 1997, after the fiscal year 1998 budget was
    prepared, the Case Evaluation and Placement Component acquired
    additional office space. In addition to annual adjustments the Space-
    Rent line item has been adjusted to account for the increase in monthly
    occupancy expenses. The increase of $12,311 over the amount budgeted
    for fiscal year 1998 appears large because the fiscal year 1998 budget
    did not provide for the increased rent.
                        equipment rental and maintenance
        The Case Evaluation and Placement Component has budgeted for a
    modest increase of $273 over the amount budgeted for fiscal year 1998
    based on actual experience in fiscal year 1997.
                          office supplies and expenses
        The increase of $7,490 over the amount budgeted for fiscal year
    1998 is based on actual experience in fiscal year 1997 and reflects the
    fact that the Program reviewed over 40 percent more cases in fiscal
    year 1997 than in fiscal year 1996.
                                   telephone
        The increase of $1,435 over the amount budgeted for fiscal year
    1998 is based on actual experience in fiscal year 1997 and also
    reflects the Program having reviewed over 40 percent more cases in
    fiscal year 1997 than in fiscal year 1996.
                       travel/continuing legal education
        The increase of $500 is budgeted to cover anticipated travel
    expenses and to allow staff to participate in Continuing Legal
    Education Programs.
                                    library
        The increase of $570 is budgeted to acquire new materials for the
    library and subscribe to publications that we have not had access to in
    the past.
                                   insurance
        The decrease of $2,000 represents savings we expect to realize
    through renegotiation of our malpractice insurance.
                              property acquisition
        The increase of $5,000 is to cover the cost of a new printer (one
    of two that the Case Evaluation and Placement Component has). When the
    Component's computers were replaced last year, the printers were not.
    Now our principal laser printer is starting to cost us more money in
    repair expenses, and will need to be replaced.
                               contract services
        The increase of $3,000 is to cover the costs of completing the Year
    2000 transition for our databases, and to develop an on-line legal
    research capability, including access to the Court's Bulletin Board.
    Outreach Component--$31,181
        Overall, the fiscal year 1999 budget calls for a $6,024 increase
    (24 percent) over the fiscal year 1998 budget for the Outreach
    Component. As indicated below, all but $687 of the increase is in
    personnel costs.
                                   personnel
        These costs are budgeted to increase by $5,337 because we
    anticipate a continued increase in recruiting needs. We assume that the
    need for volunteer lawyers in fiscal year 1999 will continue to
    increase because of the anticipated increase in the number of BVA
    decisions; the budget also assumes that the Program will continue and
    expand its outreach efforts outside of the Metropolitan area. As
    previously discussed, we expect personnel costs to increase by 5
    percent. (Note that while this Component's personnel costs are
    increasing, we are decreasing the Education Component's personnel costs
    by $5,064 from the fiscal year 1998 budget.)
        Three NVLSP lawyers devote a portion of their time to the Outreach
    Component; and the Program reimburses NVLSP for that portion of their
    personnel costs. The aggregate lawyer FTE for the Outreach Component to
    be reimbursed from grant funds in fiscal year 1998 is 0.07; the FTE
    contemplated for fiscal year 1999 is 0.14 to reflect, in part, the
    actual experience in fiscal year 1997.
        Three NVLSP non-lawyers also function for part of their time in the
    Outreach Component; and the Program reimburses that portion of their
    personnel cost to NVLSP. The aggregate non-lawyer FTE for the Outreach
    Component budgeted to be reimbursed from grant funds in fiscal year
    1998 is 0.14; the FTE contemplated by the fiscal year 1999 budget is
    reduced to 0.12.
        Only minor adjustments were made in the other line items and the
    net result of these adjustments increase the budget by $687 over the
    fiscal year 1998 budget.
    Education Component--$125,303
        The proposed fiscal year 1999 budget for the Education Component
    reflects a decrease of $3,242 from the budget for fiscal year 1998.
                                   personnel
        Personnel costs are projected to decrease by $5,064. Our experience
    has shown that we are spending less time than projected on the
    Education Component and more time on the Outreach Component. Therefore,
    we adjusted the personnel costs for this component downward
    accordingly.
        A total of 6 NVLSP lawyers function in the Education Component and
    a portion of their personnel costs is reimbursed by the Program. The
    aggregate lawyer FTE expected to be reimbursed from the Program has
    been reduced from 0.51 in fiscal year 1998 to 0.40 in fiscal year 1999
        Four NVLSP non-lawyers function in the Education Component. All
    four of them will have a portion of their personnel expenses reimbursed
    by the Program. Both the Grant Administrator's time and the
    Administrative Assistant's time have been reduced from the fiscal year
    1998 level. We expect that the audit and contract reporting will be
    more routinized in fiscal year 1999 than in fiscal year 1998. Fiscal
    year 1998 is the first year that the Program will undergo an A-133
    audit. Additionally, there will be a higher level of personnel expense
    in the first quarter of fiscal year 1998 as the Grant Administrator
    position is transitioned from an NVLSP contract consultant to NVLSP's
    newly hired Chief Financial Officer. The aggregate FTE non-lawyer for
    the Education Component budgeted to be reimbursed from grant funds in
    fiscal year 1998 is 0.51, for fiscal year 1999 we are reducing it to
    0.40.
                                     other
        Combined non-personnel expenses are expected to increase by a total
    of $1,822, from $39,472 in fiscal year 1998 to $41,294 in fiscal year
    1999. This represents a five-percent increase and is based on prior
    year's experience.
    ``B'' Grant--$38,700
        The ``B'' Grantee (PVA) has committed to accepting 20 cases at a
    cost of $1,935 per case; representing a 5-percent increase over the
    fiscal year 1998 budget figure of $1,843 per case; and reflects a
    reduction from the total number of cases (24) budgeted in fiscal year
    1998.
    LSC Oversight--$25,000
        This is the figure LSC has furnished as its estimate of the likely
    cost of oversight for fiscal year 1999. LSC also expects that the
    budgeted figure of $20,000 for fiscal year 1998 will prove to be low.
    Total--$863,479
    [GRAPHIC] [TIFF OMITTED] TVA.008

                                     ______

                                   Exhibit B

    the history and operations of the pro bono program at the u.s. court of
                                veterans appeals
        The Program was proposed by the Court of Veterans Appeals in 1991,
    as a means of dealing with the problem presented by the fact that the
    Court was finding that the overwhelming majority of appellants
    appearing before it were pro se--that is, without representation.
    Congress authorized the Court to use up to $950,000 of its funds to
    establish a project for the provision of legal assistance to pro se
    appellants. Public Law 102-229, 105 Stat. 1710 (1991). The authorizing
    legislation specifically provided that the Legal Services Corporation
    (LSC) would make the grants or contracts for such a program, ``pursuant
    to a reimbursable payment'' by the Court. LSC in May 1992 issued two
    Solicitations for Proposals: one for an umbrella program to evaluate
    cases and to recruit and train volunteer attorneys (the ``A'' grant);
    and one for organizations already providing representation to veterans
    to expand such representation (the ``B'' grant). The Consortium, which
    consists of The American Legion, Disabled American Veterans (DAV),
    Paralyzed Veterans of America (PVA) and National Veterans Legal
    Services Program (NVLSP), submitted a proposal to LSC for the ``A''
    grant that was accepted. Three of the participating organizations, DAV,
    PVA and NVLSP (plus another organization, Swords to Plowshares, which
    has since dropped out of the Program), were awarded ``B'' grants, under
    which they undertook to provide representation in a specified number of
    cases. The two grants together comprise the Program, which commenced
    operation in September 1992.
        The Program has three operational components: Outreach, Education,
    and Case Evaluation and Placement. The first of these components
    recruits volunteer lawyers to handle appeals before the Court on a pro
    bono basis: over 800 lawyers, from more than 40 jurisdictions, have
    been recruited to date. The Education Component offers two one-day
    training programs in Washington, D.C., each year in conjunction with
    the D.C. Bar. It offered the training program in Atlanta in the Fall of
    1997, and will be doing the same in Chicago in the Spring of 1998. The
    training program is also made available in the form of videotapes to
    lawyers who cannot attend a live presentation. In addition, the
    Education Component provides to each volunteer lawyer a three-volume
    Veterans Benefits Manual.
        The Case Evaluation and Placement Component, as the name suggests,
    evaluates the cases of appellants who are pro se and who, in response
    to a notice routinely sent to those appellants who remain pro se thirty
    days after filing of their notice of appeal, indicate an interest in
    having representation. In any case where this evaluation turns up an
    issue deserving argument, a memorandum describing the issue is
    prepared, and the case is assigned to a lawyer who has agreed to
    provide pro bono representation. (The great majority of the Program's
    cases are placed with volunteer lawyers recruited and trained by the
    Program's Outreach and Education Components; a minority, consisting of
    more difficult or emergency cases, are placed through the ``B'' grant.)
    In cases that are determined not to merit pursuit of an appeal, the
    appellants are advised as to the most promising course of action for
    them to pursue.
        The volunteer lawyers are provided continuing education in the form
    of mentoring assistance: that is, they are given the name of a lawyer
    (or non-lawyer Court of Veterans Appeals practitioner) in one of the
    constituent organizations, with whom they can consult as needed. The
    Case Evaluation and Placement component also monitors all cases
    referred to program lawyers, to ensure that filing deadlines are not
    overlooked.
        The table that follows, Exhibit C, presents some significant
    statistical information regarding appeals to the Court, and the impact
    of the Program thereon. As it shows, over the 5\1/2\ years of its
    operation, the Program has provided free representation to more than
    1,000 appellants before the Court; and the appellants represented
    through the Program have prevailed in 77 percent of the completed
    cases.
                                     ______

                                   Exhibit C
    [GRAPHIC] [TIFF OMITTED] TVA.009

           LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS

                                  ----------
                                                                       Page
    American Association of Homes and Services for the Aging,
      prepared statement.............................................   784
    American Heart Association, prepared statement...................   789
    American Museum of Natural History, prepared statement...........   673
    American Public Power Association, prepared statement............   650
    American Society of Civil Engineers, prepared statement..........   738
    Anthes, Richard A., president, University Corporation for
      Atmospheric Research, prepared statement.......................   754
    Archuleta, Ed, general manger, El Paso Water Utilities Public
      Service Board, prepared statement..............................   714
    Armstrong, Michael, Associate Director, Mitigation Directorate,
      Federal Emergency Management Agency............................     1
    Association of State Dam Safety Officials, prepared statement....   742

    Bad River Band of Lake Superior Chippewa, prepared statement.....   692
    Baker, Michael G., Ohio Environmental Protection Agency,
      Columbus, OH, letter from......................................   725
    Barnes, Mayor Martin G., city of Paterson, NJ, prepared statement   697
    Bolin, Dave, president, Groundwater Protection Council, prepared
      state-
      ment...........................................................   722
    Bond, Hon. Christopher S., U.S. Senator from Missouri, questions
      submitted by.........................................29, 245 375, 609
    Boone, Linda, executive director, National Coalition for Homeless
      Veterans, prepared statement...................................   795
    Bowen, Jerry W., Director, National Cemetery System, Department
      of Veterans Affairs............................................   169
    Boxer, Hon. Barbara, U.S. Senator from California:
        Prepared statement...........................................     8
        Questions submitted by.......................................    52
    Browner, Carol, Administrator, Environmental Protection Agency...   331
        Prepared statement...........................................   345
    Burke, Dr. William A., chairman, South Coast Air Quality
      Management District, prepared statement........................   727
    Burns, Chuck, national service director, AMVETS, prepared
      statement......................................................   788
    Burns, Hon. Conrad, U.S. Senator from Montana:
        Prepared statement...........................................   338
        Questions submitted by.....................................454, 627
    Bursell, Dr. Sven-Erik, Ph.D., Joslin Diabetes Center, prepared
      statement......................................................   690
    Bye, Dr. Raymond E., Jr., associate vice president for research,
      Florida State University, prepared statement...................   762

    Cagey, Henry, chairman, Lummi Indian Nation, prepared statement..   763
    Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado:
        Prepared statements........................................175, 337
        Questions submitted by.......................................   487
    Campion, Raymond J., Ph.D., president, Mickey Leland National
      Urban Air Toxics Research Center, prepared statement...........   678
    Catlett, D. Mark, Acting Assistant Secretary for Management,
      Department of Veterans Affairs.................................   169
    Church, Dr. Roy A., president, Lorain County Community College,
      prepared statement.............................................   793
    City of Miami Beach, FL, prepared statement......................   648
    Clark, Les, vice president, Independent Oil Producers'
      Association, prepared statement................................   658
    Cobb, Richard P., ILL, Springfield, IL, letter from..............   725
    Cole, Barbara J., director, Lane Regional Air Pollution
      Authority, prepared statement..................................   708
    Collins, Father T. Byron, S.J., special assistant to the
      president of Georgetown University, prepared statement.........   686
    Craig, Hon. Larry, U.S. Senator from Idaho:
        Prepared statements..........................................9, 178
        Questions submitted by............................39, 263, 286, 491
    Crawford, James L., Mississippi Department of Environmental
      Quality, Office of Pollution Control, Jackson, MS, letter from.   724
    Cunha, Manuel, Jr., president, NISEI Farmers League, prepared
      state-
      ment...........................................................   658
    Cuomo, Andrew, Secretary, Department of Housing and Urban
      Develop-
      ment...........................................................    93
        Prepared statement...........................................   105

    Davenport, Robert J., executive director, Passaic Valley Sewerage
      Commissioners, prepared statement..............................   713
    DeAlmeida, Lino, Jr., president, National Utility Contractors
      Association, prepared statement................................   732
    Delaney, Mayor Bruce, city of Gainesville, FL, prepared
      statements...................................................647, 746

    Foley, Maj. Gen. Robert F., Commander, Military District of
      Washington, Cemeterial Expenses, Army, Department of Defense--
      Civil..........................................................   277
    Fox, Dr. Peter, research project manager, Arizona State
      University, prepared statement.................................   686
    Frank, Billy, Jr., chairman, Northwest Indian Fisheries
      Commission, prepared statement.................................   682

    Garner, Mayor James, village of Hempstead, Long Island, prepared
      statement......................................................   711
    George, Father William L., S.J., special assistant to the
      president of Georgetown University, prepared statement.........   686
    Goldin, Daniel S., Administrator, National Aeronautics and Space
      Administration.................................................   287
        Prepared statement...........................................   292
    Gorosh, Kathye, project director, the Core Center, Chicago, IL,
      prepared statement.............................................   757
    Grant, Glen A., Esq., business administrator, city of Newark, NJ,
      prepared statement.............................................   760

    Hagel, Hon. Chuck, U.S. Senator from Nebraska, question submitted
      by.............................................................   557
    Hansen, Fred, Deputy Administrator, Environmental Protection
      Agency.........................................................   331
    Harper, Sallyanne, Acting Chief Financial Officer, Environmental
      Protection Agency..............................................   331
    Hawks, John D., Under Secretary for Domestic Finance, Community
      Development Financial Institutions Fund, Department of the
      Treasury.......................................................   155
        Prepared statement...........................................   156
    Humphreys, Mayor Kirk, city of Oklahoma City, prepared statement.   715

    Isbell, David B., chair, Veterans Consortium Advisory Committee,
      prepared statement.............................................   799

    Johnson, Gary, Chief Financial Officer, Federal Emergency
      Management Agency..............................................     1
    Jones, Kerri-Ann, Ph.D., Acting Director, Office of Science and
      Technology Policy, Executive Office of the President...........   589
        Prepared statement...........................................   590

    Kaatz, Gary, chief operating officer, Forum Health, prepared
      statement......................................................   698
    Kelley, Rev. Aloysius, S.J., president, Fairfield University,
      prepared statement.............................................   775
    Kenny, Michael P., executive officer, California Air Resources
      Board, prepared statement......................................   658
    Kirk, Ken, Association of Metropolitan Sewerage Agencies,
      Washington, DC, letter from....................................   730
    Kizer, Kenneth W., M.D., M.P.H., Under Secretary for Health,
      Veterans Health Administration, Department of Veterans Affairs.   169
    Kleine, Mary Ann, director of administration, Gold Gate
      University, prepared statement.................................   778

    Lane, Neal, Ph.D., Director, National Science Foundation.........   559
        Prepared statement...........................................   582
    Lautenberg, Hon. Frank R., U.S. Senator from New Jersey,
      questions submitted by.........................................   545
    Lazar, Ellen W., Director, Community Development Financial
      Institutions Fund, Department of the Treasury..................   155
        Prepared statement...........................................   159
    Leahy, Hon. Patrick J., U.S. Senator from Vermont, questions
      submitted by...................................................   543
    Lee, Virgo, trustee, NYU Downtown Hopsital, prepared statement...   703

    Mason, Dr. Robert J., director, Environmental Lung Center,
      National Jewish Medical and Research Center, Denver, CO,
      prepared statement.............................................   688
    Mauderly, Joe L., senior scientist and director of external
      affairs, Lovelace Respiratory Research Institute, prepared
      statement......................................................   651
    Maulson, Tom, tribal chairman, Lac du Flambeau Band of Lake
      Superior Chippewa Indians, prepared statement..................   695
    Mendell, Lorne M., Ph.D., Society for Neuroscience, prepared
      statement......................................................   769
    Metzler, John C., Jr., Superintendent, Arlington National
      Cemetery, Cemeterial Expenses, Army, Department of Defense--
      Civil..........................................................   277
    Mikulski, Hon. Barbara, U.S. Senator from Maryland, questions
      submitted by........................................41, 264, 516, 634
    Munger, Hon. Willard M., Minnesota State Representative,
      memorandum from................................................   668

    Nellor, Margaret H., research project manager, Los Angeles County
      Sanitation Districts, prepared statement.......................   686
    New York University, prepared statement..........................   766
    Norris, Peter M.P., president, SPIN-2, prepared statement........   777

    O'Brien, Terrence J., president, Metropolitan Water Reclamation
      District of Great Chicago, prepared statement..................   649
    Ott, Dr. W. Richard, provost, Center for the Engineered
      Conservation of Energy, Alfred University, prepared statement..   707
    Ouchley, Don, general manager, Brownsville Public Utilities
      Board, prepared statement......................................   712

    Paskinski, Theodore, president, St. Joseph's Hospital Health
      Center, prepared statement.....................................   773
    Patrick, Barbara, member, board supervisor, Kern County and
      member, California Air Resources Board, prepared statement.....   658
    Peacock, Robert B., chairman, Fond du Lac Band of Lake Superior
      Chippewa, prepared statement...................................   660
    Peterson, Malcolm L., Comptroller, National Aeronautics and Space
      Administration.................................................   287
        Prepared statement...........................................   292
    Pillsbury, Sarah, Department of Environmental Services, Concord,
      NH, letter from................................................   726
    Polf, William, deputy vice president for external relations and
      strategic programs, Health Sciences Center, Columbia
      University, prepared statement.................................   699

    Raabe, Otto, professor emeritus of radiation biophysical,
      University of California, prepared statement...................   700
    Rapp, George R., Jr., University of Minnesota-Duluth, Duluth, MN,
      prepared statement.............................................   668
    Reheis, Catherine H., managing coordinator, Western States
      Petroleum Association, prepared statement......................   658
    Rice, Patrick W., State of Nebraska, Department of Environmental
      Quality, Lincoln, NE, letter from..............................   726
    Roitman, Howard A., Association of State and Territorial Solid,
      Waste Management Officials, Washington, DC, letter from........   733

    Schlender, James H., executive administrator, Great Lakes Indian
      Fish and Wildlife Commission, prepared statement...............   693
    Shelby, Hon. Richard C., U.S. Senator from Alabama, questions
      submitted by...................................................   474
    Smith, Rory D., Budget Officer, Arlington National Cemetery,
      Cemeterial Expenses, Army, Department of Defense--Civil........   277
    Society of Toxicology, prepared statement........................   705
    Stetson, Catherine Baker, Stetson Law Offices, P.C., Albuquerque,
      NM, prepared statement.........................................   772
    Stevens, Hon. Ted, U.S. Senator from Alaska, questions submitted
      by.............................................................   631
    Sublette, Kerry L., Sarkeys professor of environmental
      engineering, University of Tulsa, director, Integrated Public/
      Private Energy & Environmental Consortium, prepared statement..   654

    Thompson, Joseph, Under Secretary for Benefits, Veterans Benefits
      Administration, Department of Veterans Affairs.................   169
    Tornblom, Claudia, Acting Deputy Assistant Secretary (Management
      and Budget), Cemeterial Expenses, Army, Department of Defense--
      Civil..........................................................   277

    University of Medicine and Dentistry of New Jersey, prepared
      statement......................................................   747
    University of Miami, prepared statement..........................   736

    Waller, Dave, Missouri Rural Water Association, prepared
      statement......................................................   718
    Water Environment Research Foundation, prepared statement........   684
    West, Togo D., Jr., Acting Secretary, Department of Veterans
      Affairs........................................................   169
        Prepared statement...........................................   182
    Witt, James Lee, Director, Federal Emergency Management Agency...     1
        Prepared statement...........................................    11
    Wodraska, John R., general manager, Metropolitan Water District
      of Southern California, prepared statement.....................   670
    Wofford, Hon. Harris, Chief Executive Officer, Corporation for
      National and Community Service.................................    55
        Prepared statement...........................................    57

    Zare, Richard, Ph.D., Chairman, National Science Board, National
      Science Foundation.............................................   559
        Prepared statement...........................................   565
    Zaterman, Sunia, executive director, Council of Large Public
      Housing Authorities, prepared statement........................   780
    Zirschky, John H., Acting Assistant Secretary of the Army (Civil
      Works), Cemeterial Expenses, Army, Department of Defense--Civil   277
        Prepared statement...........................................   278

                                 SUBJECT INDEX

                                  ----------

                 CORPORATION FOR NATIONAL AND COMMUNITY SERVICE

                                                                       Page
    America Reads and literacy.......................................    74
    Auditability, progress in achieving..............................    67
    Auditable financial records, plan to produce.....................    56
    Devolution to States.............................................    74
    Evaluation and effective practices...............................    68
    Further evaluations..............................................    70
    Inspector general, questions for the.............................    90
    National service programs:
        Addressing literacy, example of..............................    87
        Monitoring of................................................    72
    Programs not renewed.............................................    73
    Record, correction to the........................................    71
    Reducing costs and the education-award-only program..............    89
    Requests of the committee........................................    57

                          DEPARTMENT OF DEFENSE--CIVIL

                           Cemeterial Expenses, Army

    Budget highlights................................................   278
    Computer systems.................................................   285
    Contracting out..................................................   283
    Elibility criteria...............................................   284
    Expansion........................................................   277
    Lieutenant Blassie...............................................   284
    Transfer of responsibility.......................................   282

                  DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

    Affordable housing...............................................   148
    Assisted grant programs..........................................   146
    Budget, highlights of............................................   104
    Department, cleaning up the......................................   101
    Disabled, housing for the........................................   120
    Economic development...........................................116, 117
        Initiative...................................................   149
        Issues important to..........................................    98
        Needs........................................................   100
    Elderly housing, new and innovated approaches to.................   151
    Emergency supplemental:
        Disbursement of..............................................   139
        Provided HUD.................................................   138
    Fair Housing Act, implementing the...............................    98
    Financial information systems....................................   145
    Fiscal year 1997 emergency supplemental..........................    96
    Fiscal year 1999 budget..........................................   102
    Forest Services' moratorium on building roads....................   144
    HOME block grant plus vouchers...................................   152
    Home ownership...................................................   104
    HOPE VI..........................................................   122
    Housing..........................................................   103
        For the elderly............................................149, 153
        Need and production..........................................   117
    HUD, excellent vision for a new..................................   102
    Indian country...................................................   146
        Housing funds for............................................   145
    Largest financial institution....................................    95
    Mark-to-Market legislation......................................95, 100
    McKinney Homeless Continuum of Care programs.....................    96
    Necessary reforms................................................   101
    Old inner beltway communities..................................152, 153
    President's budget request.......................................    93
    Public housing authorities:
        Issuance by the..............................................   116
        Reforming the................................................   137
    Public Housing Drug Elimination Program..........................   127
    Reserve account..................................................   103
        No leasing against...........................................   103
    Section 8 account................................................   117
    2020:
        Management Reform Program....................................    94
        Plan.........................................................   120
    Unsubsidized housing.............................................    99

                           DEPARTMENT OF THE TREASURY

               Community Development Financial Institutions Fund

    Awards process, assuring the.....................................   164
    CDFI:
        Is a high priority program...................................   155
        Making significant strides...................................   158
        Program:
            Achieves goals...........................................   165
            Success of...............................................   164
    Fiscal year 1999 budget request..................................   159
    Fund in review...................................................   156
    Goals............................................................   166
    Management requirements, unable to meet..........................   165
    Stimulating private markets......................................   158

                         DEPARTMENT OF VETERANS AFFAIRS

    Access to care...................................................   240
    Fiscal year 1999 budget request..................................   171
    Medical:
        Collections..................................................   191
        Facilities, closing..........................................   241
        Research.....................................................   245
    Medicare subvention..............................................   236
    Patient costs, reducing..........................................   239
    Processing:
        Claims.......................................................   236
        Compensation claims..........................................   237
    Tobacco-related claims, processing.............................238, 239
    VBA's road map to excellence.....................................   238
    Veterans equitable resource allocation...........................   243
    Workload increases, monitoring...................................   244

                      ENVIRONMENTAL PROTECTION AGENCYfirst

                                                                        365
    Animal feeding operations........................................   362
        Authority to regulate........................................   365
        Draft strategy...............................................   374
        Regulation: focus on large operation.........................
        Stakeholder involvement......................................   363
    Base realignment and closure.....................................   352
    Clean water:
        Action plan..................................................   359
            Vs. clean water State revolving fund funding.............   364
        State revolving fund funding level...........................   359
    Data quality.....................................................   347
        Chief information officer role...............................   348
    Edison lab.......................................................   357
    Final cleanup, sites ready.......................................   357
    Fiscal year 1999 President's budget..............................   355
    Food quality.....................................................   338
    Food Quality Protection Act:
        Chemical registration........................................   370
        Coordination between EPA and USDA............................   371
        Measurement of risk..........................................   371
    National Environmental Performance Partnership System............   373
    National Rural Water Association [NRWA] grant....................   372
    Particulate matter:
        Monitors request.............................................   369
        National Academy of Sciences report..........................   366
        Research request.............................................   367
    Regional haze:
        Particulate matter monitors..................................   352
        Visibility research..........................................   353
    Sector facility indexing.........................................   358
    Ship breaking....................................................   349
    Superfund cleanup, slowed........................................   356
    Water quality: Federal agencies' roles...........................   361

                       EXECUTIVE OFFICE OF THE PRESIDENT

                    Office of Science and Technology Policy

    Educating for the future.........................................   602
    Information technology and private sector linkages...............   601
    Knowledge and distributed intelligence...........................   600
    National Science and Technology Council..........................   590
    NSF:
        Budget priorities............................................   597
        Interaction with Department of Education.....................   603
        Major policy issues facing...................................   598
        Research:
            Expanding opportunities for participation in.............   608
            Relationship with private sector.........................   601
        Themes.......................................................   599
    OSTP, responsibilities of........................................   589
    Plant and human genome research, interaction of..................   606
    Plant genome initiative..........................................   604
        Coordination of..............................................   607
        Focus on.....................................................   605
        On the environment, effect of................................   606
    President's Committee of Advisors on Science and Technology......   590

                      FEDERAL EMERGENCY MANAGEMENT AGENCY

    Bosnia amendment, budgetary source for...........................    21
    Buyouts, importance of...........................................     9
    California hazard mitigation grants..............................    22
    Community development block grants...............................    15
    Dam safety....................................................... 2, 26
    Declaration criteria.............................................    27
    Disaster costs, ways to reduce...................................    26
    Disaster relief:
        Burgeoning cost of...........................................     2
        Cost containment in..........................................     3
        Fund.........................................................    14
        Loans versus grants for......................................     6
    Federal terrorism efforts, FEMA's role in........................    17
    Flood predictions................................................    21
    Hazard mitigation grant program..................................    21
    Hazard mitigation grants, time limit for.........................    22
    Mudslides........................................................    27
    Municipal facilities, insurance requirements for.................    28
    National Association of Counties.................................    18
    Natural disaster reduction initiative............................    16
    Predisaster mitigation:
        Criteria.....................................................     4
        Efforts, results of..........................................    23
        Objective criteria for.......................................    25
        Support for..................................................    24
    Project impact, technical assistance for.........................    24
    Terrorist attacks, preparedness for..............................    16

                 NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

    Boeing contract, status of.......................................   314
    Chabrow report...................................................   317
    Downsizing, effects of...........................................   326
    Iranian missile technology.......................................   317
    NASA:
        Future funding of............................................   327
        Senator Bumpers support for..................................   323
    Russian:
        Commitments..................................................   315
        Delays increases cost overruns...............................   320
        Honoring their space commitment..............................   316
    Service module...................................................   320
    Space station:
        Cost overruns................................................   321
        Launches.....................................................   319
        Proceeding with the..........................................   319
        Science......................................................   324
        Total cost...................................................   313
        Useful life expendency of....................................   325
    Transfer authority...............................................   325
    Uncosted carryovers..............................................   328
    Y2K problem......................................................   327

                          NATIONAL SCIENCE FOUNDATION

    Knowledge and distributed intelligence, investment in............   581
    Nanotechnolgoy...................................................   581
    National Science Board's roles...................................   564
    Plant genome research initiative.................................   580

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