[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

_______________________________________________________________________
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                           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.
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[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: [email protected]
    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.
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    \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.
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    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:
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    \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\
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    \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.
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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.
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[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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