[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]



 
 DEPARTMENTS  OF  VETERANS  AFFAIRS  AND HOUSING  AND  URBAN  DEVELOPMENT,


                                   AND 


              INDEPENDENT AGENCIES APPROPRIATIONS FOR 2001 



_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS
                             SECOND SESSION
                                ________

            SUBCOMMITTEE ON VA, HUD, AND INDEPENDENT AGENCIES
                   JAMES T. WALSH, New York, Chairman

 TOM DeLAY, Texas                      ALAN B. MOLLOHAN, West Virginia
 DAVID L. HOBSON, Ohio                 MARCY KAPTUR, Ohio
 JOE KNOLLENBERG, Michigan             CARRIE P. MEEK, Florida
 RODNEY P. FRELINGHUYSEN, New Jersey   DAVID E. PRICE, North Carolina
 ANNE M. NORTHUP, Kentucky             ROBERT E. ``BUD'' CRAMER, Jr.,
 JOHN E. SUNUNU, New Hampshire           Alabama
 VIRGIL H. GOODE, Jr., Virginia     






 NOTE: Under Committee Rules, Mr. Young, as Chairman of the Full 
Committee, and Mr. Obey, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.

       Frank M. Cushing, Timothy L. Peterson, Valerie L. Baldwin,
          Dena L. Baron, and Jennifer Whitson, Staff Assistants
                                ________

                                 PART 2
                                                                   Page
 Chemical Safety and Hazardous Investigation Board................    1
 DOD--Civil, Cemeterial Expenses, Army............................   63
 Neighborhood Reinvestment Corporation............................  101
 National Credit Union Administration.............................  389
 Consumer Product Safety Commission...............................  437
 Federal Consumer Information Center..............................  561
 U.S. Court of Appeals for Veterans Claims........................  631
 Selective Service System.........................................  655
 Community Development Financial Institution......................  747
 American Battle Monuments Commission.............................  807
 Office of Inspector General, Federal Deposit 
InsurancePCorporation.............................................  857
 Office of Science and Technology Policy..........................  917
 Council on Environmental Quality................................. 1009
                                ________

                     U.S. GOVERNMENT PRINTING OFFICE 

64-413 O                     WASHINGTON : 2000  




                       COMMITTEE ON APPROPRIATIONS



                   C. W. BILL YOUNG, Florida, Chairman

 RALPH REGULA, Ohio                    DAVID R. OBEY, Wisconsin
 JERRY LEWIS, California               JOHN P. MURTHA, Pennsylvania
 JOHN EDWARD PORTER, Illinois          NORMAN D. DICKS, Washington
 HAROLD ROGERS, Kentucky               MARTIN OLAV SABO, Minnesota
 JOE SKEEN, New Mexico                 JULIAN C. DIXON, California
 FRANK R. WOLF, Virginia               STENY H. HOYER, Maryland
 TOM DeLAY, Texas                      ALAN B. MOLLOHAN, West Virginia
 JIM KOLBE, Arizona                    MARCY KAPTUR, Ohio
 RON PACKARD, California               NANCY PELOSI, California
 SONNY CALLAHAN, Alabama               PETER J. VISCLOSKY, Indiana
 JAMES T. WALSH, New York              NITA M. LOWEY, New York
 CHARLES H. TAYLOR, North Carolina     JOSE E. SERRANO, New York
 DAVID L. HOBSON, Ohio                 ROSA L. DeLAURO, Connecticut
 ERNEST J. ISTOOK, Jr., Oklahoma       JAMES P. MORAN, Virginia
 HENRY BONILLA, Texas                  JOHN W. OLVER, Massachusetts
 JOE KNOLLENBERG, Michigan             ED PASTOR, Arizona
 DAN MILLER, Florida                   CARRIE P. MEEK, Florida
 JAY DICKEY, Arkansas                  DAVID E. PRICE, North Carolina
 JACK KINGSTON, Georgia                MICHAEL P. FORBES, New York
 RODNEY P. FRELINGHUYSEN, New Jersey   CHET EDWARDS, Texas
 ROGER F. WICKER, Mississippi          ROBERT E. ``BUD'' CRAMER, Jr.,
 GEORGE R. NETHERCUTT, Jr.,             Alabama
Washington                             MAURICE D. HINCHEY, New York
 RANDY ``DUKE'' CUNNINGHAM,            LUCILLE ROYBAL-ALLARD, California
California                             SAM FARR, California
 TODD TIAHRT, Kansas                   JESSE L. JACKSON, Jr., Illinois
 ZACH WAMP, Tennessee                  CAROLYN C. KILPATRICK, Michigan
 TOM LATHAM, Iowa                      ALLEN BOYD, Florida
 ANNE M. NORTHUP, Kentucky
 ROBERT B. ADERHOLT, Alabama
 JO ANN EMERSON, Missouri
 JOHN E. SUNUNU, New Hampshire
 KAY GRANGER, Texas
 JOHN E. PETERSON, Pennsylvania
 VIRGIL H. GOODE, Jr., Virginia 


                 James W. Dyer, Clerk and Staff Director

                                  (ii)



DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND 
              INDEPENDENT AGENCIES APPROPRIATIONS FOR 2001

                              ----------                              

                                           Thursday, March 2, 2000.

          U.S. CHEMICAL SAFETY AND HAZARD INVESTIGATION BOARD


                               WITNESSES

GERALD V. POJE, PH.D., MEMBER
DR. PAUL L. HILL, JR., PH.D., MEMBER
DR. ISADORE ROSENTHAL, PH.D., MEMBER
DR. ANDREA KIDD TAYLOR, DR. P.H., MEMBER

    Mr. Walsh. We will now turn to the U.S. Chemical Safety and 
Hazard Investigation Board. For fiscal year 2001 the board has 
requested $9 million, an increase of just over a million. 
Because the Chemical Safety Board's authorizing statute does 
not require executive branch approval, per se, of the board's 
request, we once again this year have a different request for 
the board submitted by the President. The administration 
request is for near last year's level of $8 million.
    Testifying before the subcommittee this morning will be 
four board members: Dr. Paul Hill, Dr. Isadore Rosenthal, Dr. 
Andrea Kidd Taylor and Dr. Jerry Poje. Dr. Poje will be 
delivering the opening statement on behalf of the entire board. 
We wish to welcome all of you and I would ask Mrs. Meek if she 
has any opening statement she would like to make.
    Mrs. Meek. I would just like to welcome the board, Mr. 
Chairman. I think they are fairly new. It is good to have them.
    Mr. Walsh. I echo those remarks. Your full statement will 
appear in the record, and at this time I would ask that the 
statement prepared at the request of the House and Senate VA, 
HUD and Independent Agencies Subcommittees by the U.S. General 
Accounting Office regarding operation of the Chemical Safety 
Board be part of the record, and Dr. Poje, your entire 
statement will be included in the record. Please proceed and 
introduce anyone.

                         Board's Oral Testimony

    Mr. Poje. Thank you, Mr. Chairman and Congresswoman Meeks. 
I am honored to come before you today representing my fellow 
board members in support of the U.S. Chemical Safety and Hazard 
Investigation Board's fiscal year 2001 appropriation request. 
Seated at the table with me is Dr. Hill, Dr. Andrea Kidd-Taylor 
and Dr. Rosenthal. My comments are those of the full board.
    Mr. Chairman, as I begin my abbreviated remarks on behalf 
of my colleagues, I also want to be assured that the record 
will include the full written record of our comments.
    Mr. Walsh. Without objection.
    Mr. Poje. In fiscal year 2001 the board is seeking an 
appropriation of $9 million, which represents an increase of $1 
million over our fiscal year 2000 appropriation. This amount 
represents the funding necessary for the board to maintain a 
stable operating program and perform a modest number of 
incident investigations. It will also allow the board to 
evaluate and revise its incident selection criteria, 
investigation protocol and procedures for tracking 
recommendations.
    In addition, the board will be able to initiate one safety 
study to complement its investigation and related activities, 
and finally, the increase will permit the board to hire two 
additional staff in our Office of Investigation and Safety 
Programs and to conduct monthly public meetings.
    The mission of the board is no less critical now than it 
was in 1990 when it was first created in legislation. Chemical 
incidents are costly both in human and economic terms. More 
than 14,000 facilities filed accident reports under the EPA's 
new risk management program. A small portion of these 
facilities listed 1,900 major chemical release accidents over a 
5-year period. These incidents caused nearly 1,900 injuries and 
33 deaths to employees and 141 injuries and 42 deaths to 
nonemployees. And we note that public emergency responders 
represented 58 of the injuries and 30 of the deaths among the 
nonemployees.
    [The information follows:]

    Agency note: The Board calls the Subcommittee's attention 
to an error about which the Board was informed only after it 
had delivered its oral and written testimony to the 
Subcommittee.
    After the Board's hearing, the Environmental Protection 
Agency informed the Board that there was a reporting error in 
Risk Management Plan data submitted to EPA. As a result, the 
following change in the Board's oral and written testimony is 
necessary to conform to the facts as now known.
    ``These incidents [caused nearly] caused nearly 1,900 
injuries and 33 deaths to employees[. and 141 injuries and 42 
deaths to nonemployees.''

    Mr. Poje. On the financial side, members of the insurance 
industry have recently estimated direct losses from chemical 
releases within the purview of our board as being about a 
billion dollars per year.

                           management changes

    Just under 2 months ago the chairman and chief executive 
officer of the board resigned his position. This change in 
management represented an opportunity for the board to refocus 
its vision, structure and mode of operation to achieve the 
mission. As part of the effort, the board is reassessing the 
manner by which it both defines and performs its mission and 
concurrently is implementing changes derived from such 
evaluations.
    The mission of our board is to enhance the health and 
safety of workers and the public and to protect the environment 
by uncovering the underlying causes of accidental releases and 
using these findings and supporting research to promote 
preventive actions by both the private and public sectors. We 
accomplish this mission by conducting state-of-the-art 
investigations, producing high quality investigation reports, 
conducting hazard safety and data studies, issuing targeted 
recommendations and advocating effectively for those 
recommendations.

             emphasis on investigations and safety programs

    As you review the board's proposal for 2001, you will see 
that it tracks our restated objectives and priorities. The 
emphasis is on funds and personnel necessary for the conduct of 
investigations and safety program. This emphasis began this 
year and is carried forward in our fiscal year 2001 budget 
request.
    Specifically in fiscal year 2001 we propose devoting 19.2 
work-years and just under $4.2 million for incident 
investigation and related activities. This compares with 10.7 
work-years and just under two and a half million for fiscal 
year 1999.
    A similar increase in special safety studies and technical 
guidance is proposed in fiscal year 2001 where 4.1 work-years 
and $670,000 is proposed compared to the one work-year and 
$284,000 requested in fiscal year 1999.
    We have also decreased the resources devoted to areas not 
directly supporting the conduct of investigations in the area 
of technical information and assistance.
    The board is in the process of developing a strategic plan 
that will describe in detail the goals, objectives and 
performance measures that will help us achieve our mission over 
the next 5 years. In the interim our annual performance plan 
sets forward two strategic goals. First, to reduce the 
reoccurrence of chemical incidents addressed by the board and 
minimize the adverse effects on life, health and property; and 
second, to be a progressive 21st century Federal agency which 
facilitates the accomplishment of the board's mission. The 
specific performance goals associated with these two strategic 
goals are detailed both in our written testimony and in the 
performance plan, both of which have been submitted to the 
subcommittee.
    Following the leadership changes in January of this year, 
the board restated our mission as a basis for restructuring its 
priorities this year and establishing a better foundation for 
its activities in fiscal year 2001 and beyond. In directing 
more focused activities in fiscal year 2000, the board has 
adopted eight critical objectives in order to achieve its 
mission this fiscal year. They are detailed in our written 
testimony.

                     successes and lessons learned

    Our struggles have been offset by significant successes and 
of course lessons learned. Completed incident investigation 
reports and safety studies have been widely applauded for their 
scientific correctness and readability and usability and the 
applicability and practicality of their safety recommendations. 
Significantly, State governors, legislators, trade 
associations, companies and emergency responders accept and use 
the safety recommendations.
    For example, on January 7, 1998, two explosions in rapid 
succession destroyed the Sierra Chemical Company Kean Canyon 
Plant near Reno, Nevada, killing four workers and injuring six 
others. Based on the board's finding, Nevada's occupational 
safety and health enforcement section increased the frequency 
of safety inspections at explosives facilities to at least 
twice a year. Furthermore, in May 1999, the governor signed 
four additional measures aimed at improving safety at 
facilities where hazardous substances are produced.
    On March 27th, 1998, one worker was killed and an 
independent contractor was seriously injured due to a nitrogen 
asphyxiation incident at a Union Carbide facility in Louisiana. 
The Hazardous Materials Training Department of the 
International Association of Fire Fighters, which represents 
more than 225,000 professional career fighters and emergency 
medical personnel, used the board's report as an interactive 
case study on its distance learning website.
    On April 9th, 1998, at the Herrig brothers farm in Iowa, 
two volunteer fire fighters were killed and seven other 
emergency response personnel were injured when a propane tank 
exploded. In response to a CSB recommendation, the National 
Propane Gas Association improved their emergency response 
training materials to better address the hazards of a 
particular type of explosion called a boiling liquid expanding 
vapor explosion, an especially dangerous type of explosion. In 
addition, the Fire Service Institute of Iowa State University 
revised their training program to provide better guidance in 
responding to these kind of dangers

                        y2k and chemical safety

    At Congress' request the board led a multistakeholder 
special safety study initiative to build awareness on the Y2K 
chemical safety problems. We collaborated with the chemical 
industry, particularly small and mid-sized enterprises, warning 
them of the potential for Y2K related computer problems that 
might lead to an accidental release or inhibit automated safety 
protection and response systems. The board also testified 
before Congress, interacted with the President's Council on Y2K 
Conversion, issued safety alerts to governors and major safety 
organizations, promoted a national training initiative and used 
our award winning website as a clearinghouse for Y2K and 
safety.
    Mr. Chairman and Congresswoman Meek, this morning and 
through our written testimony we have shared with you an 
assessment of both the board's accomplishments and some of our 
problems to date. We have charted a new course guided by all 
the members of the board and supported by the professional 
staff of our agency. We have retained the support of key 
stakeholders, and we request the continued support of this 
subcommittee.
    Thank you for this opportunity.
    [Statement by David G. Wood on page 1096.]
    Offset Folios 12 to 28 Insert here

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Walsh. Thank you for your statement, Doctor. Do any of 
the other board members have anything they would like to add 
before we move on? If not, I would like to, at the outset, 
thank you for the candid nature in which you presented this 
budget request. There is obviously no question that it has been 
a rocky road over the past several years as this new Federal 
entity has attempted to create its identity from an organic 
statute that is frankly very big on ideas and short on detail 
as to how to get the job done.
    Growing pains are inevitable in any new organization, and 
although I, along with others, remain concerned with the 
direction you have been and will hopefully be going, the 
important thing at this moment is that you have recognized and 
admitted publicly that the problems exist and are apparently 
taking steps to remedy the situation.
    As I turn to specific questions, let me suggest that anyone 
among you may respond. If there are differences of opinion or 
additional points that need to be made, please feel free to 
interject. In the interest of time, however, I would like to 
try to avoid each member answering every question.
    From a management perspective, what do you believe are the 
most important issues you are or will be confronting which are 
necessary to point the board in the direction contemplated by 
Congress in your organic statute?
    Mr. Poje. If I can answer, Congressman Walsh, a major issue 
we are confronting right now is our hiring plan. We are setting 
a target goal for the year 2000 of bringing ourselves up to a 
full complement of investigation and safety program staff. That 
has been a challenge that we have been facing for the last 2 
years. We have some difficulties.
    The second area that we are trying to address is that the 
Board's focus is within the industry that primarily handles 
chemicals, and the expertise that we are seeking resides within 
that sector. We are finding it is taking us more time than we 
had anticipated to hire that staff but we have done some things 
recently to help do that.
    We have addressed personnel changes at the staff of the 
board to better focus our energies on the hiring plan. The 
chief operating officer and the director of investigation and 
safety programs has this as their highest priority. They are 
working closely with the administrative portion of our agency 
to streamline the process by which we can advertise and hire. 
We have just announced to a number of potential candidates a 
schedule which we are going to bring them in for interviews and 
we have additional emphasis we will be placing over the next 
several months to bring that staff into the organization.
    We think that with a more robust staff in the investigation 
and safety program, the delays that we have met in our own 
investigation report production are going to become much better 
met with our own staff as opposed to high reliance upon 
contractors which dominated our first 2 years of operation.
    Mr. Rosenthal. I have to agree with Dr. Poje.

                      board management assignments

    Mr. Walsh. As far as the board is concerned, it is my 
understanding that each member of the board has taken a 
specific set of management or oversight assignments, all aimed 
at producing smooth operations of the office as a whole. How 
are those assignments split?
    Mr. Poje. Mr. Chairman, if I could say, in January when the 
President accepted the resignation of the chairman, we were 
left with the duty of saying how would we operate in the 
interim. We took two important steps. Based upon extensive 
consultation with our own legal staff and with the White House 
and others in Congress, we decided to fracture the role of the 
chairman-chief executive officer into four different parts.
    One part that I handle is personnel management and 
administration on a day-to-day basis. Dr. Taylor is governing 
all public meetings and board meetings. She is organizing the 
schedules and agendas. Dr. Hill is overseeing the production of 
annual reports, and Dr. Rosenthal is overseeing the management 
of smaller contractual matters. Anything above $10,000 is still 
governed using a board as the whole decision making process.
    We have set a 120-day period to operate under these 
conditions, and we will revisit them in 120 days to see how we 
are performing, measure the operations of the agency and make 
adjustments if necessary, but so far we feel--at least I feel 
personally--we are having a good working relationship as board 
members.
    Ms. Taylor. Also, hiring matters for personnel and our key 
department heads, that decision goes through us.
    Mr. Rosenthal. Mine is a relatively easy task but we set up 
a system by which basically preapproved contracts in this area 
are reviewed on a management by exception basis.
    Mr. Walsh. So you set a time frame of 120 days to revisit 
this bifurcation of responsibility?
    Mr. Poje. Right.

                        staff assignment changes

    Mr. Walsh. Would hiring a chief of staff or chief operating 
officer of the board make operations more efficient or is that 
something you are going to look at in 120 days?
    Mr. Poje. No. Actually, we did enact an action by the board 
as a whole shortly thereafter assigning ourselves these 
executive responsibilities. One of the actions that was taken 
to the board shortly thereafter was recommendations about 
reassignment of existing staff. So two major actions occurred. 
The former chief operating officer was assigned to be my 
special assistant working on more particular matters of 
operations than she had been assigned. We elevated our general 
counsel to the position of chief operating officer, and in 
addition, we streamlined two portions of our management by 
combining investigation and safety programs which prior to this 
had been separated into single programs of investigation and 
safety. And we elevated the director of the safety program to 
the new director of investigation and safety. So that is also 
something we are evaluating. We are tracking it right now, but 
so far we feel confident that that is going to put us in good 
stead for achieving the task of 2000 and moving on to 2001.

                              hiring goal

    Mr. Walsh. On the staffing issue, you established a goal of 
40 full time equivalent employees by the end of fiscal year 
2000. It is my understanding you don't believe you can attain 
that goal now because of the difficulties in hiring.
    Mr. Poje. We think it is attainable, but we are not going 
to tell you it is anything we see as easy. We are putting all 
of our force towards achieving that end because we think it 
only allows us to give you the confidence that what we are 
requesting to do in 2001 will have merits. We want to initiate 
four investigations in 2001. In order to do that effectively we 
are going to have to have our own staff on board to be able to 
mount those challenges. We are certainly seeing that as a very 
difficult task for ourselves, to hiring a full complement at 
40. Currently the board has 23 employees, four board members. 
We will have a special assistant to the board likely hired 
shortly, but most of thehires at the staff level will occur in 
the investigation and safety program.
    Mr. Walsh. When you say 40, does that include the four 
board members?
    Mr. Poje. Including the four members as well.
    Mr. Rosenthal. I think once we get the momentum and the 
word out to the different people, it is a process that will 
proceed rapidly. I think there is an initial delay until people 
get a credible story that we are hiring, that we are looking 
for top technical people and that this is going to be a good 
place to work. You know, you have got to focus. It can be done 
and we ought to take it upon ourselves to get it done.
    Mr. Walsh. That sort of attitude will help, I am sure. Mrs. 
Meek.

                            management style

    Mrs. Meek. My question has to do with your management style 
in terms of your board. I see here that some specific 
responsibilities such as personnel matters are relegated to 
individual board members. Tell me how that works.
    Mr. Poje. I would have day-to-day management 
responsibilities of directing the staff and staff activities. 
So it would involve reviewing assignments that the chief 
operating officer has given to the various program heads and 
ascertaining on a frequent basis how productivity is going on 
within those different Departments.
    We are also, though, still in a phase of development so 
personnel administration and personnel policies are still being 
developed by the board as a whole. In fact, we just voted 
yesterday on a policy to enhance our ability to bring in 
candidates off of the Federal nickle as opposed to asking 
candidates who might be distant in Texas and California to come 
on their own pay to be interviewed by the board. We are 
developing policies by the board as a whole, and I will be 
administering them on a day-to-day basis for the staff.
    Ms. Taylor. Along with the COO in principle.
    Mrs. Meek. The chief executive officer?
    Ms. Taylor. Chief operating officer.
    Mr. Rosenthal. The chairman was the chief executive 
officer, and we don't have one of those now. So we have got to 
make do with that.

                         evaluating performance

    Mrs. Meek. What about the evaluation of people who are 
under you? I noticed that many of your investigations proceed 
slowly, and I am sure that you have reasons for that. How do 
you evaluate the people who work under you?
    Mr. Poje. Realize that I have been in the position for just 
a little bit more than 6 weeks, so I am starting that process 
and establishing a framework for personnel review, but I have 
already asked the chief operating officer to provide to me 
copies of all past performance plans and performance reviews, 
and that is also a priority for him to be assigned to be 
assured that anybody that is already within our staff level and 
all the new people coming in are also going to have immediately 
an effective performance plan established for them. That fits 
well within the work orders that we anticipate hiring them at.

                   appropriation request sufficiency

    Mrs. Meek. And you feel that the $1 million that you have 
requested will be sufficient to do what you plan to do to bring 
this up to par?
    Mr. Poje. The board as a whole developed, in a relatively 
accelerated way in January a budget proposal, a budget 
justification, but it was based upon very robust discussions 
with the staff about projections of their workload, their need. 
Clearly, we think that the board as a whole will be better met 
in answering those questions with evidence next year. But, we 
are confident that we have done a good job this year in putting 
that together and will be assessing it on a regular board 
evaluation program. The board as a whole will not rely only on 
my personnel management. We will be bringing my management 
activities to a board review on a frequent basis.
    Mr. Rosenthal. And I think that is an additional dimension. 
This is a really small organization, and each was coming with 
professional interest and working with the staff and that is 
the reason, at least for me, and I am sure it is for the others 
of taking the job. It is the opportunity to be involved in 
interesting and sometimes exciting work that we spent our lives 
at. We work with the people--over and above your responsibility 
to the small organization, you are a board member and you are 
also perhaps administration, technical person. So we get to 
know the people, and we believe, at least I believe, that we 
need to prove that we can deliver, that we have to build the 
organization and that building in this fashion, in this year, 
and cementing that, what we can do in 2001, which is basically 
the whole situation, we will be able to demonstrate 
conclusively that we gaining value in reducing accidents, 
preventing more from occurring and mitigating the effects of 
those that come.
    I think we have got a solid claim. We have got people who 
are individually committed just as a matter of personal 
satisfaction. It is not just a job.

                            board governance

    Mrs. Meek. I think governance is going to be maybe not a 
problem for you but maybe a challenge for this board. It is a 
small board and you have a very large responsibility, and you 
have had some, not problems, but some challenges in the past. 
So the governance structure has to be worked out very 
cautiously.
    Ms. Taylor. That is why I think this is the start of 
working that out. We have all now had involvement particularly 
with the budget justification and performance plan, developing 
that in January, first part of February. We have kept busy as 
board members working together, all four of us.
    Mr. Hill. I might add, Mrs. Meek, that the Department of 
Justice is still looking at our statutory language to offer us 
some guidance which we have sought for several months now, 
including conversations with White House counsel as well as to 
interpretation and further clarification of that governance 
issues. So we still await that, but in the interim we have this 
working relationship that we are hopeful that will handle the 
situation until things are further clarified, if indeed they 
are.
    Mrs. Meek. Thank you.
    Mr. Walsh. Mr. Goode.
    Mr. Goode. Thank you, Mr. Chairman. This board was created 
by statute how many years ago?
    Mr. Poje. It was created under the 1990 Clean Air Act. No 
members were nominated by the President for Senate confirmation 
until 1994. The funding for the board was not had until 
November of 1997. So the board as a funded operating entity 
didn't open its doors until January of 1998.
    Mr. Goode. Are the board members, all full time?
    Mr. Hill. Yes.
    Mr. Goode. How much are your salaries, just ballpark?
    Mr. Poje. $122,000, I just got a statement.
    Mr. Goode. How many persons work for you, on board right 
now?
    Mr. Poje. As I said, we have 26, including the four board 
members.

                             need for board

    Mr. Goode. Let me ask you this. I am a little familiar with 
Virginia. I don't see what you all are doing that just couldn't 
be under like the Department of Transportation nationally or, 
in Virginia, we have something similar to what you do under the 
Department of Public Safety, and you don't need another agency. 
I mean, I don't see why we just couldn't do it like that with 
fewer people and more efficiently.
    Ms. Taylor. But one of the unique characteristics or 
responsibility for this agency is that we are an independent 
agency. We are not a regulatory body like OSHA or EPA. We 
actually do conduct root cause investigations of chemical fixed 
facilities. There is not an agency that has been responsible 
for that particular area in the past, and we also gain 
information from companies that a regulatory agency may not be 
able to or have privy to that kind of information. We produce 
recommendations, and then one of our responsibilities as an 
agency is to follow up on those recommendations to see that 
they are implemented. We can make recommendations for OSHA on 
things that they might do better, also to companies, and also 
to private entities. So I think we are different in that we 
provide a specific function that neither OSHA nor EPA can 
provide.
    Mr. Goode. If OSHA had an attitude and EPA of saying we are 
going to work with you or fine you, that is just my philosophy. 
I think they ought to have that attitude and not have 
independent bodies.
    Mr. Rosenthal. I think part of the problem is this, and I 
worked for 3 years in a private chemical company, retired at 65 
in 1990 and then went to Wharton, so I have taught in the 
business school environment. I think the difference is this. 
When a regulatory agency comes in, it is difficult to hold the 
same conversation than when an agency comes in that is almost 
not under an obligation to enforce laws. I will elaborate on 
that.
    The fact is that 80 to 90 percent of the chemical accidents 
that occur are not due to new technical findings. They are due 
to the failure of people to do that which they already knew. 
And kind of like the NTSB, our function is to use accident 
investigations to teach people, to sensitize them to, much in 
the way we did with the seat belt campaign with the NTSB, much 
as the way we have done with the voluntary health programs, get 
people to alter diets, quit smoking.
    We are a group that if we are tied to enforcement will find 
it difficult to get this message out in the same fashion, and 
this is the problem that a regulatory agency has.
    I don't think we can profitably keep growing and growing. 
There is only a certain point at which you can get 
investigations, messages out to alter, to sensitize people. Our 
hope is that perhaps if we are widely successful 10 percent of 
the time the messages we put out will cause a person to pause 
before he does something. If he is going to make another batch 
and he knows the safety valve isn't working quite properly, one 
out of 10 times he is going to say I will fix it before I go 
ahead. If we do that we will pick up--I cited the figure of $1 
billion, that is direct cost. That is including liabilities of 
$25 to $50 million an incident.
    Dupont and Dow are completely self-insured, but even taking 
the $1 billion, multiplying it by the industry figure of 
indirect costs up to $4 billion, if we can prevent 10 percent 
of the incidents, we can alter the behavior 10 percent of the 
time, the country as a whole will pick up $400 million a year 
for an investment of $10 million.
    Mr. Goode. What chemical company did you work for?
    Mr. Rosenthal. Rohm and Haas. I worked there for 15 years 
in research, 15 years as technical director of vitalization and 
labs and 15 years as corporate director of safety, health and 
environment.

                       potential industry actions

    Mr. Goode. What if the chemical companies got together and 
formed their own entity to do what you were doing and we told 
OSHA and EPA if there is a violation and these people are 
working on it that they get first crack? You know we tried 
something like that last year with OSHA, not with just chemical 
companies. I thought it was a good idea. That is what you all 
are doing now. There is a lot of opposition to that bill.
    Mr. Rosenthal. There are chemical engineers working on it. 
They have got Responsible Care'. They have got a 
number of programs. The bigger companies have a justice 
behavior modification program. We aim at management as well as 
workers. We say the managers allow the time to do it right and 
workers take the time. So we are not going to replace all of 
that. I am talking about 10 percent contribution. There is no 
single vehicle that will do it all. We think that we create 
value. The fact that the Chlorine Institute, the Chemical 
Manufacturers Association, API, the fire fighters and the 
public interest organizations simply create value also. If we 
don't really deliver in the next couple of years cut us off.
    Mr. Goode. Okay. Thank you.
    Ms. Taylor. I don't know about that.
    Mr. Walsh. He is only speaking for himself on that.
    Mr. Goode. You can't argue with an answer like that.
    Mr. Rosenthal. I'm 75 and can afford to compromise.
    Mr. Walsh. Well, I think that is a good challenge, and 
unless there are any other questions we will end on that note. 
Mrs. Meek?
    Mrs. Meek. No more questions.
    Mr. Walsh. Thank you. Mr. Goode? Thank you all very much 
for coming this morning.


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                                          Wednesday, March 1, 2000.

                  DEPARTMENT OF THE ARMY (CIVIL WORKS)

                               WITNESSES

HON. JOSEPH W. WESTPHAL, ASSISTANT SECRETARY OF THE ARMY (CIVIL WORKS)
JOHN C. METZLER, JR., SUPERINTENDENT OF ARLINGTON NATIONAL CEMETERY

                              Introduction

    Mr. Walsh. Secretary Westphal is front and center.
    We will now turn to the Department of the Army whose fiscal 
year 2001 request of $15,949,000 for operation of the Arlington 
and Soldier's and Airmen's National Cemeteries represents a 
$3,476,000 increase, a 21 percent increase over fiscal year 
2000. Testifying once again this year will be Assistant 
Secretary of the Army for Civil Works, the Honorable Joseph W 
Westphal. Welcome, sir.
    Mr. Westphal. Thank you, sir.
    Mr. Walsh. I will ask you to introduce your colleagues in 
just a moment.
    Do you have any opening statement that you would like to 
make, Mrs. Meek?
    Mrs. Meek. No, I do not. Welcome.
    Mr. Walsh. The floor is yours.
    Mr. Westphal. I have with me the superintendent of 
Arlington National Cemetery, John Metzler. Major General Robert 
Ivany, the commanding general for the Military District of 
Washington, and also Ms. Claudia Tornblom who is my acting 
deputy assistant secretary, and Mr. Rory Smith, budget officer. 
So anybody can answer any questions you have.

                         arlington's importance

    I do not need to tell you the importance of the Arlington 
National Cemetery to our country. That is represented by the 
fact that it handles over 4 million visitors a year. It is a 
national treasury. It is incredibly important to our Nation and 
to its history and culture. We are trying to do the best we can 
now to not just operate and maintain it to the best level 
possible but also to make room for future veterans who wish to 
be buried there. For that reason, Mr. Chairman and Mrs. Meek, 
the President is proposing a $15,949,000 budget for fiscal year 
2001 which is an increase of $3,476,000 over fiscal year 2000. 
The funds we are requesting can be divided into three areas: 
operation and maintenance, administration, and construction.
    Our operation and maintenance request is about $11,535,000 
which funds an average of 20 interments and inurnments daily, 
and the maintenance of about 630 acres of lands. With that it 
supports about 95 of the total 101 FTEs at Arlington. The 
budget also calls for $967,000 for administration of the 
essential management functions related to both Arlington and 
the Soldier's and the Airmen's Home National Cemeteries. Our 
request for the construction part of budget is $3,447,000, and 
I would like to bring to your attention a number of aspects of 
this construction budget that we are highlighting as our 
important initiatives.

                         important initiatives

    First, the budget includes $717,000 to design the next 
increment of the Columbarium Complex. What this would be, Mr. 
Chairman, is again designing structures that would house 
approximately 10,000 new niches. So this is very much needed, 
and this will be spent designing that structure.
    Second, $500,000 is included for the design of relocation 
of existing utilities along one of the major thoroughfares 
traversing the cemetery, taking advantage of economies of scale 
and providing additional burial capacity. The County of 
Arlington is going to be moving a major utility line that goes 
through the cemetery. Our ability to do this design work now 
will enable us to take advantage of the county's work and the 
coordinated utility relocation will save us a considerable 
amount of money.
    Third, we are asking for $400,000 to continue preparation 
of a concept land utilization plan for land contiguous to 
Arlington National Cemetery under the jurisdiction of the 
Department of Defense. This continues the President's goal of 
ensuring that the cemetery remains open to initial burials 
through the end of the 21st century.
    Fourth, $800,000 is included to study the nature and extent 
of repairs required at the Kennedy gravesites, the Robert and 
John Kennedy gravesites, and the reception building at the 
Memorial Amphitheater. The ceiling is falling down and we need 
to get that work done. Of the $800,000, $500,000 is toward the 
study of the Kennedy graves and $300,000 is for the building.
    Fifth, $100,000 is budgeted to continue development of a 
10-year capital investment plan. We initiated this effort in 
accordance with guidance from OMB for a multi-year plan to 
finance the construction projects. This is our internal plan to 
design how for the next 10 years we are going to do this.
    Sixth, $900,000 continues an initiative started in the 1996 
fiscal year to expand contracts for enhancing the appearance of 
the cemetery, while reducing the overall number of government 
employees as part of a government-wide streamlining.

                              master plan

    The 1997 master plan for Arlington National Cemetery 
identified projects to repair and replace aging facilities and 
utilities, preserve and protect historic resources, enhance 
visitor access and circulation, and provide sufficient capacity 
to ensure internment and inurnment of eligible veterans to the 
extent possible within the cemetery's boundaries. We recognized 
last year the need for continuous planning and budgeting 
process which will ensure that we are moving forward at the 
appropriate time with the planning and design of construction 
projects approved by the master plan.

                        capital investment plan

    Moreover, we must move forward on these new projects while 
continuing to maintain the cemetery's existing infrastructure. 
My office has worked closely with thecemetery superintendent, 
Mr. Metzler, and his staff to develop a 10-year capital investment 
planning process to guide and coordinate these efforts. We are pleased 
with the process that was developed as well as the results.
    There is $100,000 included in the fiscal year 2001 budget 
to continue development and regular updating of this multi-year 
plan for scheduling and financing of projects. During fiscal 
year 1999, Arlington National Cemetery accommodated, as I said 
earlier, four million visitors making Arlington National 
Cemetery one of the most visited historic sites in the National 
Capitol region.
    This budget includes $100,000 to continue a study begun in 
fiscal year 1998 to better serve these visitors. The study is 
achieving three things: Developing an estimating procedure and 
reliable estimates for the number of visitors, providing more 
information on the demographics of visitors to Arlington 
National Cemetery and developing methods for getting better 
feedback on customer satisfaction.
    In summary, Mr. Chairman, Ms. Meek and members of the 
subcommittee, I want to emphasize that the funds included in 
the fiscal year 2001 budget are necessary to permit the 
Department of the Army to continue the high standard of 
maintenance and service at the cemetery. I urge your committee 
to give this budget your very favorable consideration. Mr. 
Chairman, that concludes my oral remarks; and I am ready to 
answer any questions you may have.
    [The information follows:]


                          construction budget

    Mr. Walsh. Thank you very much. I would like to express our 
gratitude to Mr. Metzler and to his staff for keeping Arlington 
National Cemetery in the marvelous condition that it is. With 
four million people trampling through, it is a real challenge I 
am sure. It is a magnificent facility and it is given the level 
of care that it deserves and we would like to make sure that we 
support that effort.
    I have a few questions that I would like to ask about the 
increases in the budget. Specifically the construction budget, 
it looks like most of those funds will be for planning and 
design and so forth as opposed to actual construction. If you 
are going to spend roughly 74 percent of the construction 
budget on planning and design, that tells me that next year and 
the year after you are going to have lots of construction 
costs. Is that a safe assumption?
    Mr. Westphal. That is a safe assumption, Mr. Chairman. 
There is a lot of work to be done. Let me give you the broad 
picture. As I see it, our estimates are that within the next 25 
years, approximately, we are going to run out of space. Over 
the next 15 years, the burials themselves become very 
overcrowded. You are conducting ceremonies on top of each 
other.
    We have to address this issue. You have addressed it in 
previous hearings in your work on the committee. To get there 
we are going to need to deal with both additional property we 
have both inside the cemetery as well as property outside the 
cemetery, the Navy Annex and other property such as Fort Myer. 
So we have that to look forward to.
    There is no compromise that can be made. We are simply 
running out of space, and we need to have funds to do that. We 
have one--what we call Project 90, we have done the planning 
and design there for that space, and so we are ready to begin 
construction there. We do not have that in our budget but we 
can move down the road on that, on Project 90.
    A lot of these things of course are just basically 
operating expenses that we need to shore up utility 
relocations, the burial places of President Kennedy and Senator 
Kennedy. We just have a lot of repair and maintenance to do; 
and unfortunately, a lot of this is critical. And as you 
pointed out, once these plans and designs are done, in a year 
we will have to revisit regarding construction.
    Mr. Walsh. You mentioned in your statement that you hope 
that the cemetery would continue to have internments for the 
rest of this century. You also said you have room for the next 
15 years. Excuse me for not knowing, but you have mentioned 
niches. Those are actual internments within the cemetery in 
sort of a mass----
    Mr. Westphal. It is Columbariums.
    Mr. Walsh. Are the facilities where you have actual 
caskets, where you have numbers of them as opposed to all 
internments in the ground?
    Mr. Metzler. That would be a mausoleum. We do not have 
mausoleums at Arlington National Cemetery. All caskets are 
buried in the ground. Right now we are doing about 50 percent 
of our business as casketed remains, and about 50 percent of 
our business is cremated remains. Most cremated remains go in 
the Columbarium, and this number is getting larger each year. 
As we move further down this century, as we are just starting 
we look to see that number continue to increase to as high as 
75 percent of our total business being cremated remains. It is 
a trend in the industry and a trend in this region. It also has 
to do with our eligibility. We look to develop the remaining 
lands that we have and the land that we project to get more 
into cremated facilities, in either niche walls or freestanding 
walls. So that is how we will get to the end of the 21st 
century.
    Mr. Westphal. We have a master plan and report that will be 
coming to Congress which I hope to be cleared by OMB sometime 
in the next month or month and a half. It actually is not there 
yet, we are waiting for final clearance from the Department of 
Defense.
    That plan talks about how do we get beyond the next 25 
years. How do we use the expansion areas within DOD properties 
such as the Navy Annex area which is about 30 acres there? How 
do we use space available down the road at Fort Myer? There is 
space within the cemetery, I do not know if it is owned or 
protected by the Department of Interior, it has some historic 
value to it, and so we will look at that and then there is this 
Project 90 land which is approximately 40 acres. All of that we 
estimate will not get us through the 21st century. It will get 
us maybe half the way there.
    Mr. Metzler. If we develop everything that we currently 
know about, the Project 90, the Navy Annex and the properties, 
our old warehouse, Fort Myer and National Park Service, you get 
close to 2060. Next we are looking at the other parcels of land 
that have been identified in the master plan to see what 
properties may be available to develop beyond that point. Mr. 
Chairman, I would certainly love to invite you and your staff 
to come out and walk the grounds with us and show our 
conceptual plans.
    Mr. Walsh. Good.
    Mr. Westphal. A good time to do that is when we have this 
report that you could then pose questions about.
    Mr. Walsh. Thank you. Mr. Mollohan.

                            budget increases

    Mr. Mollohan. Thank you, Mr. Chairman. Welcome to this 
hearing.
    You propose a large jump in your budget, operations up 11 
percent and construction almost double. What is thereason for 
the increase?
    Mr. Westphal. We have been steady for so long, as I came on 
board and I toured the cemetery and Jack pointed out some of 
the inefficiencies, as I attended ceremonies and saw what was 
there, I felt it was very, very important to urge the 
administration, all of the administration to look positively at 
an increase to get some of this work done now. The President I 
think was personally interested in doing this, and we got 
support from OMB. I believe this is much needed work. It is not 
all--it will not take care of every problem that we have. We 
have to be realistic about budget constraints we face and you 
face.

                           burial regulations

    Mr. Mollohan. What are the current regulations for burial 
in the Columbarium at Arlington?
    Mr. Westphal. Do you mean who is eligible?
    Mr. Mollohan. Yes.
    Mr. Westphal. They would be the same as anyone buried at 
Arlington National Cemetery.
    Mr. Metzler. Any veteran whose last period of active duty 
service ends honorably is entitled to have his or her cremated 
remains placed in the Columbarium as well as spouses.
    The ground burial is a lot more restricted. It is 
restricted to those who die in active duty, those veterans who 
have 20 years of service or greater are eligible or, veterans 
who are recipients of a Medal of Honor or, Distinguished 
Service Cross or, Distinguished Service Medal or, Silver Star 
or, Purple Heart, veterans who are former prisoners of war, 
veterans who have 30 percent disability before 1949, their 
spouses, dependent children and there are a handful of former 
veterans who also go on to be elected or appointed people who 
are entitled. The President does not have to be a veteran.

                               exceptions

    Mr. Mollohan. There was a controversy regarding exceptions 
a few years ago. What is the current position with regard to 
exceptional cases?
    Mr. Metzler. Any person who desires an exception can write 
his or her letter in to my office. We would send it up to the 
Assistant Secretary of the Army for Manpower and Reserve 
Affairs, to the Army general counsel, and finally to the 
Secretary of the Army for a decision. Our letters to the 
Secretary would be to explain past policy practices and make a 
recommendation on this action.

                      soldiers' and airmen's home

    Mr. Mollohan. At times, there have been discussions 
regarding moving the soldiers home or selling some of that 
property. Is the land where the cemetery is located owned 
separately from the Soldier's and Airmen's Home?
    Mr. Metzler. It is a separate facility. At one time it was 
all one complex and referred to as one complex. But the 
Soldier's Home National Cemetery since 1862 has been across the 
street.
    Mr. Mollohan. Thank you, Mr. Chairman.
    Mr. Walsh. Mr. Goode.

                           kennedy gravesites

    Mr. Goode. You had an $800,000 request for Kennedy's grave. 
I always would want that to be in tip-top shape. Why does it 
cost that much?
    Mr. Westphal. Actually of the $800,000, $500,000 is for 
doing a study, looking at the engineering and what repairs are 
needed on both the John Kennedy and Robert Kennedy graves. That 
was the estimated cost.
    Mr. Goode. Do you have to have an engineer?
    Mr. Westphal. Yes. You might want to discuss that.
    Mr. Metzler. First of all, the sites are approximately 30 
years old, visited by about 4 million people a year, so you can 
just imagine the traffic over this area. We have large granite 
walkways going to both sites. Over the years they have started 
to shift and move.
    We have utilities coming to the grave site, water, 
electric, gas. They have not been upgraded over the years. We 
have a big control bunker below the grounds that needs to be 
upgraded and the lines run out to the different grave sites to 
support the Eternal Flame, the fountain at the Robert Kennedy 
grave. Right now we have a hole in the fountain and the water 
is percolating through. It is an open system.
    The foot traffic on the granite and the marble steps that 
lead up to both graves is starting to wear them down. It will 
take an engineering study to start with to tell us what the 
degree of damage is and the repairs that are necessary, and 
then we will be coming back as the Chairman indicated in 
outyears asking for construction funds to actually do the work.
    Mr. Goode. So the $500,000 just does not involve 
engineering?
    Mr. Metzler. It just starts the study process to identify 
all of the problems and to identify a scope of work that would 
be required to do the repairs.

                         videotapes of services

    Mr. Goode. Let me ask, do you have--this is a constituent 
request. Do you have any videotapes of an ordinary funeral at 
Arlington that you can share with the public?
    Mr. Metzler. We do. We have just finished working with the 
Military District of Washington to produce some honor tapes of 
how funerals are conducted on the outside and those productions 
are in their final stages of being completed to be handed out 
to the public to show people how to conduct----
    Mr. Goode. Is that a funeral in Arlington or a military 
funeral outside of Arlington?
    Mr. Metzler. It is a military funeral outside of Arlington 
filmed at Arlington; but we also have training tapes that the 
Old Guard uses that we could make available to a constituent.
    Mr. Goode. Can you send one over to my office.
    Mr. Metzler. Yes. Would you like a standard funeral or 
funeral with full honors?
    Mr. Goode. Standard.
    Mr. Metzler. Standard.
    Mr. Goode. Thank you.
    Mr. Walsh. Mrs. Meek of Florida.

                           contract services

    Mrs. Meek. Thank you. I think my question is better 
directed to Mr. Metzler. I am concerned as to--I see that you 
have a lot of work at the cemetery on the contractual services.
    Mr. Metzler. Yes.
    Mrs. Meek. I know that a lot of it is part of the operation 
and maintenance. I noted that you had $135,000 custodial 
services, and that you had--the competition resulted in a much 
lower bidder receiving the contract leading to significant 
savings. This contractor has worked during the busy season at 
Arlington and performed admirably. My question is how long will 
this contract last and what kind of payment process do you have 
because it seems to me you have a lot of opportunities for 
people to receive work here, and I need to know how do you go 
out for bids for these small jobs?
    Mr. Metzler. Our contracts are handled through the 
Baltimore Corps of Engineers, and it is a competitive bid.So in 
this case the janitorial contract, the low bid, if you would will 
receive the contract.
    Mrs. Meek. How long does this contract last, the one that 
you pinpointed? You said that he has been there since 1998. 
What is the term of that contract?
    Mr. Metzler. Most of our contracts are base year with four 
optional years which each contractor can be extended for 
another year.
    Mrs. Meek.  So this means this person who received this 
contract received it for 1 year first and then it was optional?
    Mr. Metzler. Yes, ma'am. If he agreed and we agreed, we 
extended for each additional year.
    Mrs. Meek.  When you have the same people getting the 
contracts over and over, it limits the amount of help that you 
can give to that community in terms of other people getting the 
jobs. These are public contracts, and if one contractor is able 
to serve well, it is easier. If you know they do a good job, 
you give them the contract again. In the end that might 
diminish the number of people that are able to get into it. Do 
you understand what I mean?
    Mr. Metzler. I do. On this contract, we were able to 
actually save the government money. The same contractor was 
performing on Fort Myer which is an Army base right next to us 
and cutting out some of the overhead of people overseeing the 
contract. So we actually are doing better in terms of saving 
money. The workforce itself works both at Fort Myer and 
Arlington National Cemetery going back and forth.
    Mrs. Meek.  So it is the same workforce under this one 
contract?
    Mr. Metzler. Yes, ma'am.
    Mrs. Meek. So this one contractor could keep this contract 
if he or she is satisfied?
    Mr. Metzler. Exactly, for a maximum of 5 years, and then it 
would be opened up again for bidding.
    Mrs. Meek. I think that satisfies me. I know what happens 
with GSA and all of these other Federal groups. They are very 
quick to reach out to contractors that are easy to work with; 
they know where they are. They can put their hands on them, and 
they bring them into the system again when there are some other 
good contractors who would like to get a chance on these public 
jobs as well. That is my point for asking.
    Mr. Metzler. Yes, ma'am.
    Mrs. Meek. Thank you.
    Mr. Walsh. Any other questions by any of the members? If 
not, we will submit questions for the record.
    We thank you for your testimony.


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                                           Thursday, March 9, 2000.

                 NEIGHBORHOOD REINVESTMENT CORPORATION

                               WITNESSES

GEORGE KNIGHT, EXECUTIVE DIRECTOR
MARGARET KELLY, DEPUTY EXECUTIVE DIRECTOR FOR FIELD OPERATIONS
CLARENCE SNUGGS, DEPUTY EXECUTIVE DIRECTOR/TREASURER
JEFFREY BRYSON, GENERAL COUNSEL/SECRETARY
ROY DAVIS, CHIEF FINANCIAL OFFICER
MARY LEE WIDENER, PRESIDENT, NEIGHBORHOOD HOUSING SERVICES OF AMERICA, 
    INC.
    Mr. Walsh. The subcommittee will come to order. Ladies and 
gentlemen, this morning it is my pleasure to welcome all of you 
to this hearing on the Neighborhood Reinvestment Corporation, 
fiscal year budget 2001. Executive Director George Knight is 
testifying today, and I would like to extend, from the 
subcommittee, a welcome to him and his staff.
    This year's NRC budget request is unchanged from last 
year's appropriation of $90 million, though they requested an 
increase of 10 FTEs. That increase, however, leaves the 
organization well below fiscal year 1999 level. The NRC and its 
local NeighborWorks organizations have extremely impressive 
records nationally. On a more local level, in my own hometown 
of Syracuse, the NeighborWorks organization is extremely 
effective in assisting neighborhoods facing serious housing 
deficiencies. Additionally, Beth Prentice's passion for her 
work provides Central New York with exceptional leadership and 
skillful results. And I am thankful to the organization as a 
whole for all of the work that you have undertaken to help us 
get our neighborhood initiative off the ground.
    Again, this year, NRC has maximized the taxpayer's 
investment by promoting home ownership and by making 
neighborhoods stronger and more sustainable. I am always 
impressed by the ability to leverage public dollars with 
private dollars; a ratio that has increased from 1 to 10 last 
year to 1 to 11.70 over a year's period. Clearly, this is an 
organization that works.
    Mr. Knight, we are glad you can be with us this morning.
    Mr. Mollohan, would you like to make opening remarks?
    Mr. Mollohan. Mr. Chairman, I would like to associate 
myself with your complimentary remarks of Mr. Knight's program 
and welcome him to the hearing and look forward to his 
testimony.
    Mr. Walsh. Thank you.
    Would anyone else like to make an opening comment?
    Mr. Knollenberg. Mr. Chairman, thank you very much.
    I am going to have to be at two places at the same time. I 
will not be able to stick around. But I was very pleased with 
Mr. Knight being willing to take some time and kind of discuss 
some of the questions that I had about the insurance, the Loss 
Prevention Partnerships and, of course, the studies that they 
are doing in a variety of cities, including Detroit.
    So I may not be able to stay long, but I appreciate you 
coming, and thank you very kindly for the information.
    Thank you.
    Mr. Walsh. I would like to also recognize the presence of 
our former colleague from Idaho. Richard Stallings ishere. Good 
to have you with us, Dick.
    Mr. Knight, please, if you would proceed.
    Mr. Knight. Thank you very much, Mr. Chairman. I would like 
very much to introduce with great pleasure Ellen Seidman, who 
is, in addition to being the chairman of Neighborhood 
Reinvestment, the Director of the Office of Thrift Supervision, 
and it is our real pleasure to work under her guidance.
    Mr. Walsh. Good to have you with us.
    Ms. Seidman. It is very good to be here.
    Mr. Knight. I believe you know Mary Lee Widener, who is the 
president of Neighborhood Housing Services of America, the 
secondary market; Clarence Snuggs, who is our deputy executive 
director; Roy Davis, who is our chief financial officer and who 
will be retiring this June after 17 years and represents a 
great personal loss to me and a loss to the Corporation. I 
appreciate his dedication and involvement for these many, many 
years; and Margaret Kelly, our deputy executive director for 
Field Operations.
    It really is a pleasure to be here to tell you some of what 
happened in 1999, to look briefly at 2000 and to request $90 
million for 2001.

                           fy 1999 highlights

    As you mentioned, 1999 was truly remarkable. The 
NeighborWorks organizations across the country, a little more 
than 200 of them, leveraged over a billion dollars in 
investment in local neighborhoods. They assisted 26,000 
families purchase and maintain their homes, and they counseled 
66,000 families. NHSA had its second-best year ever and 
purchased $46 million worth of their loans, and we provided 
training, hands-on, practical training totaling 160,000 contact 
hours.

                          fy 2000 year to date

    So where do we stand in 2000? As you noted, we have a 
slightly reduced appropriation. We had $90 million in 1999, we 
have $75 million this year. I do believe that the NeighborWorks 
organizations are going to attract about $1.1 billion to their 
neighborhoods this year. They will help about 28,000 families 
purchase or maintain their homes, they will counsel about 
68,000 families, and we will be able to provide about the same 
level of training as we did in the previous year. I think Mary 
Lee will purchase about the same level of loans with this 
appropriation.

                    campaign for home ownership 2002

    I would like to tell you very briefly about the success of 
the home ownership campaign, which you have so generously 
supported, which began in 1998 and aims to put 40,000 low-
income families into home ownership. We have data at the 21-
month mark, which is 35 percent of the way through the 
Campaign, and we are right on target--13,800 families. It turns 
out to be just about 35 percent are now home owners.
    But what is truly remarkable is who they are. Fifty-four 
percent of them are minority. Sixty-seven percent of them are 
below 80 percent of median. And for me the number that always 
catches me is that 6.7 percent of them earn less than $15,000, 
6.7 percent of them earn less than $15,000. And, of course, 
very important to our lending partners who are putting up most 
of the capital, the loans are performing well within normal 
ranges. In fact, if I had to say we have a problem in the 
Campaign for Home Ownership, from our lending partners' point 
of view, it is that we cannot generate enough loans.
    The key to this success is the local revolving loan fund. 
It is locally managed, it is locally directed, and one-third of 
these new homeowners have tapped it. And the median loan out of 
the revolving loan fund is a really paltry $4,300.

               using revolving loan funds in rural areas

    A challenge I talked with you about in the past is rural 
areas. How do you serve large, sparsely populated, small-town 
areas scattered across a large geography?
    Well, this year, instead of just telling you about a 
problem, I am going to tell you a little bit about a success. 
In Montana, the Great Falls Neighborhood Housing Services has 
combined with a USDA effort, Resource Conservation and 
Development folks. We provided the training to the RC&D folks. 
They do the original counseling in the small towns. They help 
put the loan package together. The Great Falls NHS, working 
with Statewide lenders and the Montana Housing Finance Agency, 
packages the loan and a family moves in.
    With the increased appropriation you gave us in 1999, we 
were able to make a much larger grant to their revolving loan 
fund, and we saw the number of new homeowners grow from 1998, 
when it had been a 134, to 339 in one year. And marking a first 
for us is a colored graphic in our testimony at the very last 
page.
    Mr. Walsh. A color printer?
    Mr. Knight. Yes, a color printer. We broke down and bought 
one. [Laughter.]
    Mr. Walsh. You figured it was not just a trend.
    Mr. Knight. No, that is right. It was here to stay it 
looked like. [Laughter.]
    It is the very last page of my testimony. And you will see 
that these loans are scattered throughout the whole state. To 
give you a sense of scale, which helps me give a sense of 
scale, this still only represents one loan for every 650 square 
miles in Montana. It is a heck of a big State.

                        looking ahead to fy 2001

    So looking ahead at 2001, what are we looking at? Well, 
interest rates, as you know, have risen by 1 percent, and I 
understand they may go higher. Our neighborhoods have 
experienced some of the predatory aggressive lending practices. 
We are in many communities--and I need not tell you, Mr. 
Chairman--have never quite caught up with the boom of the 
nineties and are still in depressed condition, in terms of the 
housing stock.
    And I believe that our future is most bright if we prepare 
not only for success, but also for the downside. And what has 
worked for us for over 25 years have been these local revolving 
loan funds. They have been the vehicle for progress.
    On page 6 of my testimony, I outline just some of the 
progress over a number of years. In 1993, we were looking at 
$223 million invested. I believe, at $90 million by the end of 
2001, we could easily be at $1.3 billion--so a sixfold 
increase. We are very much interested in enhancing these 
revolving loan funds, and you will see that 88 percent of the 
increased dollars that we have asked for this year will go into 
those funds.
    Secondly, I believe next year I will be able to confirm to 
you that we have figured out and have successfully put families 
into home ownership utilizing Section 8. Congress authorized 
this program and structured it several years ago. We are 
working with three NeighborWorks organizations to do this, and 
we are very close to taking families that are in Section 8, 
some are participating in the Family Self-Sufficiency Program 
and have an escrow that can be used as a down payment. We are 
going to combine it with a conventional mortgage, Section 8, 
and therevolving loan fund and put these families into home 
ownership responsibly and sustainably, because it will involve 
counseling, both prepurchase and post-purchase.
    We are working with local organizations to figure out 
methods to stop predatory lending and to work with those that 
have been victimized.
    And finally, we will continue to work with those 
NeighborWorks organizations that focus on multi-family and now 
currently own over 20,000 units.
    I believe that we have an effective system that we have 
developed over the years. I believe it is a system that can 
sustain itself well, that can absorb the $90 million and use it 
to great advantage. And I look forward to your questions.
    [The information follows:]


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                      SECTION 8 FOR HOMEOWNERSHIP

    Mr. Walsh. Thank you very much. That is a great report. I 
do not know how anyone could argue with those results. A $75 
million investment, returning a billion-plus of investments in 
our neediest communities.
    Mr. Knollenberg. Beats the NASDAQ, right?
    Mr. Walsh. It sure does. [Laughter.]
    It is truly remarkable.
    Mr. Knight. Thank you.
    Mr. Walsh. And the experience that I have had, back to the 
city council and right through my experience here, is that 
Neighborhood Housing Services really provide the American dream 
for people who never would have thought they had a chance. I do 
not have any criticism at all. I think it is remarkable.
    Just a couple of questions. On the Section 8 voucher 
program, this is something that we like to see implemented 
because it was a reform that Congress put in. There is no real 
field experience yet with this; is that true?
    Mr. Knight. This is a diagram of how it works. Network 
members have just gained approval to run demonstrations in 
Burlington, in Long Island and in Nashville just within the 
last several weeks. I have included the financial pro formas 
from both Long Island, which is a very high-cost area where we 
want to test it, and Nashville, which is a very soft market 
area where we want to test it.
    I do believe that the pro formas work. The families are 
already in counseling. They have the down payments. In Long 
Island, we have had----
    Mr. Walsh. Where do they get the down payments?
    Mr. Knight. In Long Island, there are going to be some from 
a Family Self-Sufficiency Fund, and in Nashville, where the 
costs are very much lower, they have saved it. They can save 
it.
    Mr. Walsh. How much are these properties that they are 
buying in Nashville? What are they going for?
    Mr. Knight. They are about $70,000 in Nashville.
    Mr. Walsh. On Long Island, what are they?
    Mr. Knight. Add $100,000. They are about $170,000 in Long 
Island. But the idea, sir, is to take the family's income, as 
it is, and a private lender would make a loan based on that 
amount. We are in very positive conversations with a number of 
lenders in the New York City area that want to do this and then 
the difference would be covered by the Section 8 payments, 
which would repay a loan made out of the revolving loan fund. 
And then the PHA and the NeighborWorks organization would have 
an agreement in which they would work out the payoff of the 
second mortgage.
    So you are not involving the lender with the PHA in all of 
that. The lender and the family have the traditional 
relationship, and then the NeighborWorks organization, in a 
sense, has its traditional relationship with the borrower in a 
second-mortgage position.
    Mr. Walsh. Is there an assumption in all of this that 
sooner or later people will transition from Section 8 to owning 
their own home, sustaining their contribution.
    Mr. Knight. Yes. In fact, the legislation does not allow 
for more than 10 years of Section 8 payment. We believe by 
doing this that this way, in Nashville, we are probably going 
to use between 7 and 8 years of Section 8 payments, and in Long 
Island it may be as short as 7 years. This is very attractive, 
of course, and this is why the local public housing authority 
has been interested because they get the Section 8 voucher 
back, and the family is now owning, with a first mortgage with 
the conventional lender. They are free from the NeighborWorks 
organization, and they are a homeowner.
    [The information follows:]

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    Mr. Walsh. I think it is a great reform, and we are anxious 
to see how it works.
    Mr. Knight. I will keep you posted, and I very much look 
forward to maybe showing you pictures of homeowners next year.
    Mr. Walsh. Great.
    Mr. Mollohan?

                       EFFECTS OF REDUCED FUNDING

    Mr. Mollohan. Thank you, Mr. Chairman.
    First of all, I really do want to echo the Chairman's 
compliments to you, Mr. Knight.
    Mr. Knight. Thank you.
    Mr. Mollohan. You run an excellent program, and it is 
helpful in all parts of the country and certainly West 
Virginia, which we appreciate.
    For fiscal year 2000, Neighborhood Reinvestment received an 
appropriation of almost $75 million, a decrease from the 
previous fiscal year when you received $88 million. From 
looking at the sources and uses by expense category that you 
include in your justification, it appears that this reduction 
resulted in a decrease in the amount of grants that you were 
able to make. What was the effect of the decrease in 
appropriations on your activities and on the activities of your 
affiliates?
    Mr. Knight. We will know the full story, of course, as we 
roll to the end of the year. I think that with our inability to 
make the size of revolving loan fund grants we made in the 
previous year, there will be a slowing of growth. While we may 
have some growth because the funds do revolve, we will not have 
the continuing rate of growth that we have experienced in the 
past.
    The revolving loan fund can be cycled through NHSA, but 
there is also a component that sometimes cannot be, where they 
have made a 0-interest loan that is just amortizing off the 
principal. So we will see a slowing of our growth.
    Ms. Kelly. I am Margo Kelly. I am the deputy executive 
director for Field Operations, Neighborhood Reinvestment.
    The reduction from $90 million to $75 million actually also 
reduced our ability to provide loan counseling at a time when 
the capital for conventional lending was readily accessible, 
but our ability to support the loan counseling, both pre- and 
post-purchase, was reduced. And I think that is something that 
we have noted, that the bottleneck is really at the loan 
counseling level.
    Mr. Mollohan. You are requesting an increase above your 
1999 appropriations.
    Mr. Knight. We are requesting the same as 1999. We had $90 
million in 1999, and we are requesting $90 million in 2001--
make sure I get my years right.
    Mr. Mollohan. Oh, you received $88 million in 1999. You 
requested $90 million.
    Mr. Knight. Right.
    Mr. Mollohan. Is it the revolving loan fund area that saw 
the decrease?
    Mr. Knight. Yes, and the counseling. There is plenty of 
conventional capital available to assist in these communities. 
What is missing are two pieces: the ability to counsel families 
and work with them, and the ability to make these small 
revolving loan funds.
    We were talking to Mr. Knollenberg who has a particular 
interest in some of the property casualty insurance research 
work we are doing and was asking about the insurance 
counseling. And it is the kind of thing that if you have a home 
inspection, then how do you get any help taking the next steps 
if you are not very sophisticated in working with contractors 
and lenders.

                        REVITALIZING COMMUNITIES

    Mr. Mollohan. It sounds to me like we are increasingly 
developing strategies to get into traditional neighborhoods and 
to think of housing in terms of getting people into ownership, 
which I like, I am very interested, in addition to low-income 
housing, in trying to reconstitute all of this housing stock in 
what I call traditional neighborhoods. Anything that moves us 
in that direction and, at the same time, serves low-income 
housing is a wonderful kind of strategy.
    Do you think we are moving in that direction?
    Mr. Knight. Oh, I definitely think we are there. From our 
perspective, when you set out to revitalize a community or a 
neighborhood, it is often a neighborhood that has a large 
number of low-income people, but it also has some people that 
are more moderate income or middle income. You are not going to 
really revitalize that neighborhood unless you can work with 
everybody, and people's needs are different. And so we are 
hopeful that the NeighborWorks organization will work with 
everybody when concentrating on the distressed communities, 
which means you concentrate on lower income families, but you 
certainly do not exclude other families.
    One of the worst things you can do to a neighborhood is say 
we will only serve individuals below 80 percent of the median 
because that stigmatizes the neighborhood and makes it not 
attractive for investment. So that you very definitely want to 
make the neighborhood a neighborhood of choice and that, 
frankly, requires an income mix.
    Mr. Mollohan. When I hear you talking, I almost think you 
are not talking about a neighborhood in my area. Take Fairmont, 
for example, which we spent a lot of time working on, and I 
appreciate that. Every neighborhood in Fairmont is distressed, 
in those terms, because the economic bottom dropped out of the 
whole county. In that case, It was coal. When the bottom 
dropped out of coal, the economic base that supports those 
neighborhoods dropped out.
    The traditional neighborhoods within Fairmont, every single 
one of them would be a distressed neighborhood.
    Mr. Knight. I would agree with you. I would not want to say 
that in Fairmont.
    Mr. Mollohan. I have. [Laughter.]
    Mr. Knight. But I would agree with you. I had the pleasure 
of being with Mr. Mollohan on--I do not know whether it was a 
typically hot July day or not, but the heat finally got to me, 
and we crossed the street to the house that had the banners 
out, and went in their house and sat down and talked. Well, 
there was an older family living on fairly modest income. So, 
statistically, they would probably be low income.
    Mr. Mollohan. Yes.
    Mr. Knight. But they would not consider themselves such.
    Mr. Mollohan. No.
    Mr. Knight. And they would not consider theirneighborhood 
such, and it would be a terrible disservice if I said----
    Mr. Mollohan. They might consider the neighborhood.
    Mr. Knight. They might, but that is a beautiful 
neighborhood to work in.

                        economic revitalization

    Mr. Mollohan. It is a beautiful neighborhood to work in, 
and we are going to make it a beautiful neighborhood again. But 
just thinking that when you talk about it, you talked about it 
sounds like you are talking about selected neighborhoods within 
some more affluent kind of community, which is probably 
typical. But in some of these rural communities, particularly 
in the Upper Ohio Valley, the Midwest, Western Pennsylvania, 
those areas where basic industry has been so disproportionately 
disadvantaged in the new economy, there are towns that 
represent this.
    If you are going to develop a strategy to bring back the 
towns economically, you have to hand-in-hand develop a strategy 
to bring back the housing stock.
    Mr. Knight. Yes.
    Mr. Mollohan. And it is a cheap strategy. Instead of going 
out and building new communities outside the town, you utilize 
the existing infrastructure.
    Mr. Knight. Yes.
    Mr. Mollohan. To the extent that a trend exists that can be 
thought about strategically in a concentrated way with regard 
to traditional communities, I think we are on our way to 
addressing a housing need that has not been thought about quite 
in those terms. I applaud that. And again I very much 
appreciated the opportunity to work with you and your wonderful 
organization. I echo the Chairman's sentiments about the 
quality of your work, and your product and how you maximize and 
manage the funding that we give you.
    Mr. Knight. Thank you.
    Mr. Mollohan. It is our pleasure.
    Thank you, Mr. Chairman.
    Mr. Walsh. Mr. Frelinghuysen?

                     network activity in new jersey

    Mr. Frelinghuysen. Thank you, Mr. Chairman. Thank you for 
the good work you do. Let me echo all of the sentiments that 
were mentioned earlier, and let me thank you for your extra 
efforts in New Jersey since we last met, not only in my 
backyard, but other areas as well.
    Last year you said that the chartering program reviews have 
been completed for the Brand New Day in Elizabeth and Orange. 
How have these relations developed?
    Mr. Knight. Both of those organizations are chartered, 
NeighborWorks organizations now, which means they have access 
to the secondary market, they have access to technical 
assistance, and they are eligible for scholarships to the 
training institutes. I think probably, though, having met both 
of those executive directors, the thing they value the most is 
the ability to get together with peers across the country.
    Mr. Bloom was just in. We pull together annually all of the 
executive directors for a symposium--only about two-thirds 
come--and Mr. Bloom was there, and it was a terrific 
opportunity to share ideas and experiences and learn, as he met 
and worked with other executive directors.
    Ms. Kelly. Actually, both of those directors where there.
    Mr. Knight. Were they?
    Ms. Kelly. And, in fact, both of them have personally told 
me that their membership in the network has given them access 
to resources that really were not available to them before 
including the Training Institute, Neighborhood Housing Services 
of America and financial assistance.
    Mr. Frelinghuysen. Excellent. How about Camden and Trenton? 
I think last year I may have asked about Newark, and I cannot 
remember exactly what your response was. But the general view 
is people often look to Newark to be the most difficult, and in 
reality it is Camden. I just wondered do they have the 
leadership they need and to what extent have you been 
successful working, particularly with Camden?
    Mr. Knight. Camden is struggling. They have lost their 
executive director, and their board is--what would you say--
arguing with each other?
    Ms. Kelly. Yes. Yes. But I think it is also really 
important to say, Camden has always been a challenging 
community for all of us. Neighborhood Reinvestment intends to 
maintain a strong presence in Camden. We are working with the 
existing organization and we have had applications from two 
other organizations in Camden that would like to join the 
network. So we are focusing on Camden as a priority for the 
coming year.
    Mr. Frelinghuysen. The situation is, in some cases, 
incredibly desperate.
    Mr. Knight. It is.

                     working relationship with HUD

    Mr. Frelinghuysen. So I thank you for whatever you can do 
to persevere in that regard.
    Yesterday, we met for quite a long time with Secretary 
Andrew Cuomo from HUD. Could you just tell me, generally, I 
guess in a brief moment, what exactly is your relationship, 
your working relationship with HUD?
    Mr. Knight. Well, of course the funds that you appropriate 
for HUD, CDBG and now Section 8, are terribly important at the 
local level and local organizations use those.
    We work with HUD on the housing counseling side. We are 
actually one of the intermediaries that they fund through their 
housing counseling program, and so we work with HUD in that 
way. And we will work with them as this Section 8 demonstration 
proceeds.
    Mr. Frelinghuysen. We do not always assume that one group 
works with the other. So we sort of like to hear that you 
reinforce that, which is basically what you are doing.
    Mr. Knight. Well, one of the advantages we have by being 
tiny and receiving a few federal dollars, we have to seek out 
those that have more dollars: HUD, Citibank, Allstate, State 
Farm, Bank of America. We have got to go to the folks that 
really have the money, and so we are not too shy about going 
and asking them.
    Mr. Frelinghuysen. I am sure you are not shy. And they have 
been receptive?
    Mr. Knight. Yes. Yes.
    Mr. Frelinghuysen. Across the board.
    Mr. Knight. Well, of course, there are some times where 
ideas do not match, but yes.

                            rural activities

    Mr. Frelinghuysen. I just have a question on page 4 of your 
testimony, the NeighborWorks Campaign for Home Ownership goals 
and results. Is there sort of a breakdown of what exists 
between suburban and rural? I mean you are all over the place, 
which I think is commendable. But could you just sort of give 
us----
    Mr. Knight. We have a breakdown by city, and I will----
    Mr. Frelinghuysen. But if one were to have an overview of 
what you are doing in rural America, because obviously home 
ownership is a dream no matter where you are.
    Mr. Knight. Yes. I would have to say about 40 percent of 
the organizations serve rural places, and I will generate a 
breakdown for you.
    Mr. Frelinghuysen. I do not need a thesis, but I was just 
wondering----
    Mr. Knight. No, no.
    Ms. Kelly. Half of the organizations that we are bringing 
into the network this year are rural organizations, and half of 
the organizations in our Campaign for Home Ownership serve 
rural populations as well. And sometimes they are doing it from 
small population centers and offering assistance countywide; in 
some cases, they are located in very rural communities and 
serving the county as a whole.
    We have been extremely enthusiastic about the effectiveness 
of home ownership in rural environments. In fact, with the 
boost that our budget received in 1999, investment in rural 
NeighborWorks communities increased by over 70 percent. So the 
impact has been felt across the board.
    Mr. Frelinghuysen. Coming from the most densely populated 
State in the Nation, of course, I ask that question perhaps 
being somewhat inclined that we ought to be working more in the 
urban areas. But whatever you are doing, it appears to be 
excellent, and I want to commend you.
    Mr. Knight. Roy pointed out to me that Mr. Apgar is one of 
our six board members, and so to some extent, we have a really 
special linkage with the Department.
    Mr. Frelinghuysen. To New Jersey because that is where he 
comes from. [Laughter.]
    Thank you, Mr. Chairman.
    Mr. Walsh. Mr. Goode?

                     network activities in virginia

    Mr. Goode. Thank you, Mr. Chairman.
    I have been impressed by what the other members of the 
committee have said about NeighborWorks and Neighborhood 
Reinvestment Corporation, and my area is probably as hard up, 
at least parts of my district, as Fairmont, West Virginia, and 
I am familiar with Congressman Mollohan's situation. But 
unemployment for the month of December in Henry County, which 
is adjacent to my home county, was 19.6%. And we have Tultex, 
which was the leading sweatshirt manufacturer in the world but 
went completely out of business and laid off 3,000 workers. And 
I wonder what NeighborWorks and Neighborhood Reinvestment 
Corporation has going in Southside, Virginia.
    Mr. Knight. Nothing. We have not received any applications. 
We would like to work with you and your staff and identify--in 
the same way we worked with Mr. Frelinghuysen--to identify 
organizations that might be appropriate. We have considerable 
experience in rural areas. As I think about your question, I 
will get back a response to you. But many of our organizations 
like Great Falls NHS have expanded to rural areas. Des Moines 
has expanded to the 12 surrounding counties. And then there are 
organizations like the one in Fairmont or in other rural 
places, like Las Cruces, New Mexico, that are freestanding, and 
we would be happy to look with you at any of those models.
    Mr. Goode. Thank you.
    Mr. Walsh. All set?
    Mr. Goode. All set.
    Mr. Walsh. We have to vote. We have about 5 minutes, but it 
is close.
    Does anyone have any other question or comment they would 
like to make?
    I would just offer one more sort of a question. If you had 
additional funds in your budget, could you expand that Section 
8 program to other communities? Would that be a priority?
    Mr. Knight. It would be a priority of ours because it is 
right at the center of our mission, and yes, we could expand 
it. It is limited really now by what we feel is a balancing 
ability to put funds in that versus more flexible loans. Yes, 
we could.
    Mr. Walsh. Fair enough. Thank you very much.
    Mr. Knight. Thank you. We appreciate it.
    Mr. Walsh. Keep up the good work.
    Mr. Knight. Thank you. I will share your comments with Beth 
Prentice.
    Mr. Walsh. Yes, please do.

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                                           Tuesday, March 28, 2000.

                  NATIONAL CREDIT UNION ADMINISTRATION

                               WITNESSES

NORMAN E. D'AMOURS, CHAIRMAN
DENNIS WINANS, CHIEF FINANCIAL OFFICER
CAROLYN JORDAN, EXECUTIVE DIRECTOR
HERBERT S. YOLLES, PRESIDENT, CLF
OWEN COLE, VICE-PRESIDENT, CLF
JOYCE JACKSON, DIRECTOR, OFFICE OF COMMUNITY DEVELOPMENT
CREDIT UNIONS

                            OPENING REMARKS

    Mr. Walsh. The hearing will come to order. We will now 
continue our hearing by taking testimony from the National 
Credit Union Administration on the fiscal year 2001 budget 
request for the Central Liquidity Facility.
    Here with us is Mr. Norman D'Amours, Chairman of the NCUA. 
Welcome back.
    Mr. D'Amours. Thank you, Mr. Chairman.
    Mr. Walsh. You are welcome. I understand there has been 
considerable confusion surrounding this year's budget 
justification. I would like to applaud the National Credit 
Union Administration's efforts and the cooperation they have 
shown with the committee staff to resolve the apparent 
inconsistencies.
    Last year the subcommittee allowed a temporary lift of the 
$600 million cap on CLF borrowing authority in order to assist 
credit unions with their anticipated liquidity needs associated 
with the Y2K bug, or rather, the Y2K scare. The NCUA has asked 
that the appropriation limit of $600 million not be reinstated 
this year, and that the statutory limit of 12 times the 
subscribed stock and surplus contained in Title III of the 
Federal Credit Union Administration Act be applied to the CLF, 
as was the case for fiscal year 2000.
    Last year the subcommittee worked closely with the 
authorizers from the Banking Committee and were able to reach a 
compromise with the understanding that the suspension of the 
cap be for one year only. The Banking Committee has been 
pursuing this issue again this year, and both Chairman Leach 
and Ranking Member LaFalce have asked the GAO for its 
assistance in evaluating policy options in order to assure 
adequate liquidity for member credit unions. The GAO's report 
is expected to be completed in late April, and both committees 
will be reviewing GAO's recommendations with a careful eye.
    New to NCUA's budget is a $1 million request for the 
Community Development Revolving Loan Fund to be used for 
technical assistance grants to community development credit 
unions. While the subcommittee has supported the Community 
Development Revolving Loan Fund with appropriations in the 
past, only the interest from the loans provided has been used 
for technical assistance grants. This $1 million request for 
technical assistance grants obviously represents a significant 
portion of the $11 million total appropriation for the fund.
    Finally, the CLF is requesting an administrative expense 
limitation of $296,303, a significant increase from fiscal year 
2000's limitation of $257,000, more significant when 
considering the total operating expenses for fiscal year 1999 
were only $136,000.
    My colleagues and I look forward to having substantive 
discussions with you about these issues. I would like to offer 
Ms. Kaptur an opportunity for any opening statement, then we 
will go to your statement, sir.
    Ms. Kaptur. Thank you, Mr. Chairman. Everyone, welcome, 
Chairman D'Amours, so happy to have you with us today, and we 
look forward to your testimony.
    I love credit unions. I have been a member of credit unions 
my whole life, and we are very anxious to hear what is 
happening with your depositors, with the various types of 
assistance you offer around the country, and I am just very 
grateful for your attendance this morning, and we look forward 
to your enlightened words.
    Mr. D'Amours. Thank you, Congresswoman.
    Mr. Walsh. Thank you, Ms. Kaptur. Thank you, Mr. D'Amours. 
I apologize for keeping all of you waiting, and we will be as 
brief as we can. We will include all of your statement in the 
record. If you would like to summarize your testimony, that 
will be fine.
    Mr. D'Amours. Thank you, I will. Thank you for that, Mr. 
Chairman. And Congresswoman Kaptur, thank you for your welcome, 
and for this opportunity to appear here before you. I will also 
be as brief as I can.
    I am pleased to be here with you today representing the 
National Credit Union Administration's request for the NCUA 
Central Liquidity Facility, and the Community Development 
Revolving Loan Fund.
    Appearing with me today are Carolyn Jordan, seated to my 
right, the agency's Executive Director; Herb Yolles to her 
right, who is President of the Central Liquidity Facility; Owen 
Cole, seated behind Mr. Yolles, who is the Vice-President of 
the Central Liquidity Facility; and Joyce Jackson, seated to my 
left, who is Director of our Office of Community Development 
Credit Unions, the office that administers the revolving loan 
program and distributes the technical assistance funds.
    We believe, Mr. Chairman, that the cap on the CLF borrowing 
authority should be omitted from the appropriation bill as it 
was for fiscal year 2000 in the Supplemental Appropriations 
Law, P.L. 106-31. Keeping the borrowing limit at the fiscal 
year 2000 level has no budgetary or scoring impact.
    A borrowing cap on the CLF imposed in the appropriation 
process is unnecessary, because CLF borrowing is already 
limited by the Federal Credit Union Act. Under that act, the 
CLF's borrowing is limited, as you noted in your opening 
statement, to 12 times its subscribed stock and surplus. 
Currently that amount would be about $21 billion.
    When Congress first imposed the $600 million cap in 1980, 
that amount exceeded 12 times the subscribed stock and surplus 
of the CLF. Despite the dramatic growth in credit union assets 
and the increase in the CLF's subscribed stock since 1980, the 
appropriations limits was never adjusted until your legislation 
last year.
    As you know, Mr. Chairman, in anticipation of potential 
liquidity demands due to the Y2K date change, this subcommittee 
removed the cap on CLF borrowing in last year's supplemental 
appropriation measure, although Y2K related withdrawals did not 
materialize in the exaggerated amounts we prepared for. We 
should not conclude from this experience that a higher 
borrowing cap is unnecessary or inappropriate. As the Y2K event 
was widely anticipated and generally foreseeable, it makes a 
poor example for gauging the likely magnitude of the actual 
liquidity emergency. Typically, liquidity emergencies occur 
with little or no warning. The severity and duration of such a 
liquidity emergency are also impossible to forecast. Reimposing 
an inadequate borrowing cap on the CLF could prevent it from 
fulfilling its statutory mission to promote credit union 
stability.
    On the matter of the operating expense, Mr. Chairman, the 
NCUA supports the administration's request regarding the CLF's 
fiscal year 2001 operating expense. As you know, these 
administrative expenses do not come from appropriated funds, 
but are paid from CLF income.
    Turning to another subject, I would like to thank this 
subcommittee for providing an additional $1 million for the 
Community Development Revolving Loan Fund in fiscal year 2000. 
As you know, the fund makes loans to low-income credit unions. 
Earnings on that fund provide technical assistance to low-
income credit unions. The President's budget for fiscal year 
2001 includes a request for an additional $1 million to be used 
for technical assistance, and we at NCUA strongly support this, 
because the Community Development Revolving Loan Fund earnings 
are insufficient to meet the technical assistance requests that 
we receive. The additional funds proposed in the 
administration's budget will increase our capacity to provide 
assistance to low-income credit unions.
    Finally, I would like to briefly summarize the current 
condition of credit unions and the National Credit Union Share 
Insurance Fund. Overall the credit union system is in robust 
health. Credit unions had another banner year in 1999. Assets 
and capital are at record levels. The number of problem credit 
unions remains very low.
    The Credit Union Insurance Fund is also strong. For the 
fifth consecutive year, the insurance fund returned a dividend 
to credit union on their deposits in the fund.
    In summary, the credit union industry remains in excellent 
condition with a strong insurance fund. While demand still 
outstrips supply, low-income credit unions are receiving more 
assistance than ever before, thanks in part to this 
subcommittee's efforts.
    We respectfully request that this subcommittee follow the 
administration's recommendation to provide additional funds for 
technical assistance.
    As for the CLF, we respectfully request, Mr. Chairman and 
members of the subcommittee, that this subcommittee approve the 
OMB request for the CLF's administrative expenses, but keep the 
CLF borrowing limit at the fiscal year 2000 level. This will 
assure that the CLF will be well positioned to meet any unusual 
liquidity demands, and may indeed minimize the risk such a 
liquidity demand will in fact occur.
    You referred, Mr. Chairman, to the fact that there appears 
to be some differences in some of the numbers in our 
justification for this year as compared to the previous year. 
We have consulted with your staff on this matter, and we had 
consulted previously with OMB, and in order to be consistent 
with OMB requirements, we changed our reporting and tracking of 
CLF outflows from an accrual to a cash basis, which accounts 
for some of the apparent discrepancies. Your staff has 
requested that we work with them to submit clarifying 
information. We will certainly be doing that, and we are happy 
to do it.
    So I thank you for your attention to this testimony, and 
for receiving us and giving us the opportunity to testify.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Mr. Walsh. Thank you very much for your testimony. By the 
way, in your statement, you made it very clear the present 
system is in very good shape. It provides a great service to 
the American public, and I think there are many strong 
supporters of the credit union movement on this subcommittee, 
myself included. I am a member of two credit unions. They 
financed my first car, my second car, home improvements, any 
number of things, and it is great to be able to walk into an 
institution, be called by your first name, and deal with the 
same people that you have been dealing with over the years. So 
it is a service that is important to the country, and I think 
this subcommittee holds the credit union system in very high 
regard. And for that reason, we want to be very careful about 
the decisions that we make, especially regarding the Central 
Liquidity Facility.
    As mentioned in your statement, in preparation for Y2K, CLF 
made 157 short-term loans, totaling $666 million. The statutory 
limit was raised for last year, and was about 21 billion, which 
was 12 times subscribed stock and surplus. If the CLF is to be 
considered a backup for liquidity needs, why is it so important 
to have $21 billion in borrowing authority?
    Mr. D'Amours. Well, Mr. Chairman, because as I said, the 
liquidity demands resulting from CLF did not materialize to the 
extent that many people at NCUA and Congress and the other 
banking agencies thought they might. In part, that was due to 
the fact that the word had gone out that the CLF was positioned 
as a backup liquidity source should any extraordinary demands 
for liquidity occur. That mere fact, I think, might have helped 
to prevent such kind of panic that would have resulted in such 
demand. So I don't think we can use the Y2K situation, which 
was anticipated, which was planned for and reserved for through 
expanding CLF authority, as an illustration of the kind of 
emergent exigencies that might occur down the road. And I would 
say the fact that the Congress felt it was important in the 
event of a possible emergency to give credit unions a backup 
liquidity facility, which all of the other financial 
institutions have and the credit unions do not, the mere fact 
that planning for a contingent emergency required that action, 
and in my view, that action may have helped to diminish the 
need, I think is evidence of the need for a continuation of the 
process.
    Mr. Walsh. In 1981, when the $600 million limitation was 
imposed, it represented 1 percent of credit union assets. 
According to your statement in the figures submitted, that 
figure, total assets, is about $411 billion; 1 percent of that 
is a little over 4 billion. So if it we are going to compare 
apples to apples, we would need a figure of $4 billion, not $21 
billion to provide 1 percent of the coverage of the assets.
    Mr. D'Amours. I am going to turn to the President of the 
fund for that technical comparison.
    Mr. Yolles. Chairman Walsh, at the time the CLF was created 
in 1979, it was a start-up operation, and in 1981, when the cap 
was first imposed, relatively few credit unions belonged to the 
CLF, perhaps 10 or 20 percent. Today we think about 95 percent 
of the credit union system belongs to the CLF, either directly 
or through a corporate credit union. So the comparison really 
should be how much of that 411 billion is covered by the CLF as 
a backup liquidity provider? And it is virtually all of it, 
versus 1981, when a very small percentage of credit union 
assets, around 50 billion, were covered by the CLF. So that is 
an important fact to consider.
    Mr. Walsh. All right. Well, let me ask you this: where were 
you hardest pressed to provide coverage to these loans?
    Mr. Yolles. Quite frankly, Mr. Chairman, the type of 
wholesale emergency that is contemplated and that CLF really 
serves as a back-stop for has never really occurred since the 
CLF was created. There have been local and regional liquidity 
emergencies. We did have some concern during the Y2K transition 
period, but the demand really----
    Mr. Walsh. But during this time there has never really been 
a run on credit unions?
    Mr. Yolles. Not on a wholesale basis. There have been 
individual--we had a few, two notable regional problems, 
localized problems. The CLF, an analogy has been drawn to, it 
is either you don't close the fire house because there have not 
been any fires, or you know, perhaps maybe the Maytag 
repairman.
    Mr. Walsh. I don't think there is any question that we need 
it. I think the question is how big should it be? And this is 
really not our responsibility. It is really the authorization 
committee's responsibility, and I think we will both look real 
hard at this GAO study that should be out before we have our 
bill ready to go, so depending on what that says and what our 
discussions are with the authorizing committee, we may be able 
to respond.
    Mr. D'Amours. If I could, Mr. Chairman. I think in terms of 
that, when we were preparing at the agency for the Y2K 
possibility, we projected a 15 percent liquidity drain, and as 
I recall, that number came to $40 billion, of which we could 
have, through other sources, met a good part of, but $4 billion 
would not be nearly enough to meet any serious demands for 
liquidity.
    Mr. Walsh. It is sort of a pound of prevention isworth an 
ounce of cure here. [Laughter.]
    For getting the desired result, not what it costs, but at 
what degree of liberalization of this fund is needed? I think 
we ought to be careful here. I think the management has been 
good, things are working well.
    But we cannot take an action really without consulting with 
the authorizing committee, and this study will I think be very 
helpful, and it is timely.
    Moving to this issue of the Community Development Revolving 
Loan Fund, has the National Credit Union Agency had a problem 
transferring the funds from CLF in the past?
    Ms. Jackson. What we have found is that typically our 
appropriations have come through the CLF, and it has caused 
some issues with transferring those dollars from the CLF to the 
development loan program. Last year we thought we had the 
language clarified so that it would come directly to the 
development loan program, and from what I understand, at the 
last minute, something happened and the language did not get 
included, and the regulations that governed it----
    Mr. D'Amours. We have submitted language----
    Ms. Jackson. We submitted language to that--go ahead.
    Mr. D'Amours. We have submitted language that would give 
the funds directly to the Revolving Loan Fund. If this 
committee saw fit to do that, obviously, we think that would be 
a much more efficient way to proceed.
    Ms. Kaptur. You have not been able to expend those dollars 
in fiscal year----
    Ms. Jackson. No, we expended them, but there was a delay in 
the transfer process to the development loan program.
    Ms. Kaptur. I see. Where were the dollars held?
    Ms. Jackson. In the CLF fund.
    Mr. Walsh. Last year the committee appropriated a million 
dollars for this fund. Could you update the committee on what 
percentage of the loan applications for the low-income credit 
unions have been fulfilled?
    Ms. Jackson. Last year we got the million dollars, and we 
were able to meet about 30 percent maybe of the actual 
applications that were submitted. We did about $1.9 million in 
loans, and the reason why we don't give the whole fund out is 
because we still do need to arbitrage income to continue to 
support the technical assistance portion of it. The income only 
comes directly from interest that is earned on the fund, and we 
try to keep the interest rate low, typically around 2 percent 
to the credit unions to borrow. And then we try to keep a 
certain portion of the fund invested at a higher yield, so that 
we continue to make the spread enough to still provide 
meaningful technical assistance.
    So we were able last year, with all of the Y2K issues, to 
meet about $300,000 of the need for credit unions to be Y2K 
compliant in their equipment purchases and updating of 
operational procedures in credit unions. And we had a slowdown 
on requests because we believe credit unions were in that 
preparation state for Y2K and were not necessarily looking to 
start up new lending type programs.
    But the first quarter of this year, we have already 
outpaced the entire request for last year in the revolving loan 
program, and we anticipate about $5 million worth of requests 
for the year 2000.
    Mr. Walsh. 5 million this year?
    Ms. Jackson. Yes.
    Mr. Walsh. How much last?
    Ms. Jackson. Last year we actually disbursed about 1.9 
million.
    Mr. Walsh. What were the requests though?
    Ms. Jackson. The requests were----
    Mr. Walsh. You said that is 30 percent of what was 
requested?
    Ms. Jackson. I'm sorry. I misspoke; I meant to say we 
denied more than 30 percent of requests. Last year we had 
almost 3 million, a little over $3 million in requests, and we 
were able to fund about 1.9 million.
    Mr. Walsh. About two-thirds then?
    Ms. Jackson. We funded about 62 percent of requests. But 
this year demand has already outpaced that in the first 
quarter.
    Mr. Walsh. Why is that?
    Ms. Jackson. Well, we think credit unions now can focus 
more on the programs and lending, rather than Y2K issues, and 
so we are seeing a significant increase in the fund activity.
    Mr. Walsh. On Y2K for a second, in your budget materials 
you define the line items ``expenses of other services'' as 
``costs associated with consulting and contracted services for 
Y2K.'' For fiscal year 2000, the estimate was for $44,000. For 
fiscal year 2001, it is $49,000. Why would you be doing Y2K 
related expenses in 2001?
    Mr. D'Amours. We are not, Mr. Chairman. The line item 
description includes Y2K, because the tables cover 1999 and 
2000 as well as 2001, and we did have Y2K expenses in fiscal 
years 1999 and 2000. The increase though is due to the fact 
that some of the efforts that were expended in Y2K are going to 
be used for training and overhead reimbursements, which we 
didn't do because of Y2K.
    Mr. Walsh. Ms. Kaptur.
    Ms. Kaptur. Thank you, Mr. Chairman, very much. And I just 
wanted to say it is really a pleasure to be on a subcommittee 
where you have a chairman who recognizes how you do development 
in any free enterprise system, and you have people who 
understand the way money works. In many of the communities in 
our country where we still have large numbers of low-income 
people, credit unions really can be the most important ladder 
up for families. I continue to believe that. I have seen it 
work, and I have been disappointed in that the kind of 
attention that was devoted by this administration to the 
Community Development Financial Institution was not focused on 
credit unions, which I thought had a much more immediate and 
experienced set of practices and a heritage that one could 
bring to communities that were under-served financially. So I 
just want to thank you for the tremendous work that you do, and 
I want to thank the chairman for his support and partnership in 
supporting the NCUA.
    I sometimes don't have the information that I need to on 
where credit unions fit in the universe of financial services 
in our country. And so I am going to ask you today, how many 
credit unions are there in the United States now? And also, I 
know when I was first elected to Congress we had 25,000, and 
then it went down to 13,000. I would like to know where it 
stands today. And I would also like to know the trend in what 
is happening. Are we seeing mergers? Are we seeing branching? 
If you could talk a little bit about that. And then also on the 
assets question side, the total assets in credit unions 
throughout the country, and what this represents in terms of 
the total financial system. It usedto be--if I remember 
correctly, under 5 percent. I think it was under 3 percent at one 
point. And could you tell us a little bit about that, what is happening 
in terms of the position of credit unions in our society?
    Mr. D'Amours. Starting backwards, Congresswoman, if I 
could, it is about 2 percent of financial assets. The number of 
credit unions today are under 11,000. Our latest numbers show 
about 10,628.
    The trends continue to be towards a diminution of total 
number of credit unions. There are a number of mergers 
occurring. We have changed in the past few years our expansion 
policies. Community-chartered credit unions are becoming very 
desired, chartered, where a credit union can take up to 
300,000, more than that, without the NCUA board even seeing it, 
up to 300,000 people in one county or 200,000 people over a 
two-county area. There is no question the trend seems to be 
towards consolidation in the credit union area.
    Ms. Kaptur. Could I ask you, are the number of share 
depositors going up or down, even though the institutions are? 
What is happening with our country and people's access to good 
consumer credit?
    Mr. D'Amours. The assets have risen to approximately $411 
billion, Congresswoman Kaptur. The numbers are up 
significantly. So, yes, despite the lower number of credit 
unions, there are still many more credit union members than 
there were.
    Ms. Kaptur. Do you know what that number is nationally?
    Mr. D'Amours. The number of credit union members?
    Ms. Kaptur. Members.
    Mr. D'Amours. Well, it has been in the 70 million range for 
some time. It is about 75 million. Somebody in back of me 
whispered ``Close enough for government work.''
    It was at the 70 million level just a few years ago, so we 
have gone up a few million.
    Ms. Kaptur. But you also--I remember when we used to do 
ratings, we used to look at the bad loans----
    I wanted to ask you, in terms of the bad loans and your 
institution's credit unions compared to banks and other 
financial intermediaries, there was a point where credit unions 
had the very best rating in the country. Do you maintain that 
now?
    Mr. D'Amours. I don't know what you mean by ``best 
ratings'', Congresswoman, but----
    Ms. Kaptur. In terms of----
    Mr. D'Amours. Chargeoffs, delinquencies?
    Ms. Kaptur. Chargeoffs.
    Mr. D'Amours. Our delinquencies--now, I don't have this in 
front of me, but they are running about .8 percent, and 
chargeoffs are running about a half a percent, which is 
probably lower than most other financial institutions.
    Ms. Kaptur. Absolutely. I am going to ask you for those 
numbers for the record, if I might. First is the commercial 
banks, and others that offer credit in our society.
    [The information follows:]

  Charge Off and Delinquency Ratios for FDIC-Insured Institutions and 
                             Credit Unions

    Credit unions and banks have similar trends for delinquency 
and charge offs. However, credit unions currently have slightly 
lower delinquency ratios and much lower charge off ratios.
    According to the FDIC's December, 1999 quarterly profile, 
FDIC-insured institutions noted a decline in delinquency (90 
days delinquent or more) during 1999. The delinquent loan to 
total loans ratio equated 0.94% in 1999, compared to 0.96% in 
1998. The report notes that this is the lowest level of 
delinquency in 18 years.
    Although overall delinquency for FDIC-insured institutions 
declined, increased delinquency was noted for commercial, 
industrial, and agricultural loans. Decreases in consumer loan 
delinquency more than offset the increases in the other 
categories, allowing the overall ratio to decline.
    Charge offs also declined for FDIC insured institutions. 
The net charge off to loans ratio declined from 0.67% in 1998 
to 0.61% in 1999 (1998's ratio was an increase over the 1994 
ratio of 0.5%). The FDIC quarterly profile notes that the 
decline is due to a large decrease in the amount of charged off 
credit card loans. As with delinquency, charged off commercial, 
industrial, and agricultural loans increased in 1999. In fact, 
the FDIC's quarterly profile states that charged off 
agricultural loans increased from 0.22% in 1998 to 0.32% in 
1999--the highest level since 1991.
    The delinquency ratio for all insured credit unions also 
declined in 1999 due to a decrease in delinquent loan dollars 
and strong loan growth. Delinquent loans to total loans 
decreased from 0.88% in 1998 to 0.75% in 1999. Credit unions' 
charge off ratio is also lower than that for banks, at 0.49% 
for 1999 (compared to 0.59% for 1998). Looking specifically at 
member business loans and agricultural loans, credit unions 
reported a decrease in the amount of agriculture loans 
delinquent more than 30 days, and an increase in the amount of 
Member Business Loans delinquent more than 30 days. Net charged 
off agricultural loans have increased from 1997 to 1999, while 
net charged off member business loans have decreased for the 
same period.

    Ms. Kaptur. I think there is really a lot to brag about in 
terms of credit unions and their management of their assets.
    Mr. D'Amours. I think it has a lot to do, Congresswoman, 
also with the loyalty of the credit union members. Credit union 
members tend to pay off their credit union loans sometimes 
before they pay off other loans because of the membership 
value, the camaraderie of credit unionism.
    Ms. Kaptur. What is really interesting about this is in 
view of the rising debt levels in our society and the number of 
bankruptcies and people's addiction to credit, your numbers are 
absolutely, to me, profound in view of what else is happening 
inside this country. The fact that you are not-for-profit and 
able to make this work is really a credit to the philosophy of 
the credit union movement and to all of you, and to those who 
manage these and participate across our country.
    I wanted to ask you--and I will submit other questions for 
the record--but we had the Secretary of HUD up before us about 
a week ago on this committee. And I have been at this now for 8 
or 9 years--actually, more than that--trying to get HUD, in the 
public housing developments across this country--millions of 
people residing in those, living under usurious conditions, no 
access to credit--getting HUD interested in credit unions. It 
has not been an easy road. I thought it was, as I said to the 
Secretary, a no-brainer. It should have happened long ago. So I 
am trying to get the beginnings of financial services in many 
of these communities. I know you have made some progress on 
that, and I am wondering what types of conversations you might 
have had with HUD to this point, and beyond HUD, how your 
technical assistance and community development union initiative 
can begin in many of our lower-income communities in particular 
to provide the beginning of a financial structure and access 
for citizens.
    I can remember back--I don't know if you were on the 
Banking Committee in those days--but when I first got to 
Congress, I will never forget, we tried to provide financial 
services, and I came up with this idea for people who were on 
welfare, that if they saved a dollar, there would be public 
money that would go into matching it, so they could end up 
getting enough for a down payment for a mortgage. It might take 
20 years, but the point was to get something out there. I can 
remember the answer that was given to me in those days, because 
it was so painful to listen to, ``Well, Congresswoman, you 
know, you can't save if you are on welfare.'' So there was no 
way out there. There was no set of incentives out there. Now we 
have changed with welfare reform, we have got the ability of 
people to save, but the whole philosophy was completely 
backwards I thought. Many of these communities are still 
denuded of financial services. I am very interested in hearing 
about your Community Development Credit Union Initiative or 
other initiatives that you have going with credit union in 
communities that are under-served, and frankly, exploited 
financially. I look at some of the senior buildings and all 
those social security checks coming in to public housing in my 
community or many of the public housing developments where 
people have zero banking services. They couldn't walk to one. 
They are nowhere near. How do we get financial services to 
these individuals? All of the welfare checks coming in, there 
are the veterans checks, the disability checks. There is an 
income stream there, and people could learn about how to run a 
financial institution. I am curious if you could tell us a 
little bit more about what you are doing in this area.
    Mr. D'Amours. This will be quite a long reply. I will try 
very briefly----
    Ms. Kaptur. My last question.
    Mr. D'Amours. We have been in touch with HUD. Joyce 
Jackson, who runs our Office of Community Development Credit 
Unions, has worked with them, trying to encourage them to get 
credit unions started specifically in HUD operations here and 
there across the country. I don't think we have an awful lot to 
show for that, quite frankly, to date, but we have made every 
effort. We have reached out to the Enterprise Initiatives, the 
administration's Enterprise Initiatives. Carolyn Jordan, our 
Executive Director, Joyce Jackson, who runs our office, and I 
went out to Texas to one of the meetings to try to plug in as 
best we could with them. But I think the answer is that the 
effort--if we continue to work along these lines with 
neighborhood rehabilitation services, with HUD, with enterprise 
communities and the like, I think the effort has to come from 
the credit union side of the book. I think the effort is going 
to have to be made by credit unions to reach out into these 
areas to get started.
    As you suggest, the idea behind credit unions was that 
people running their own financial institutions was the best 
way for them to learn about managing money and how the money 
system works, how the free enterprise system works, and become 
involved in it.
    Ms. Kaptur. That is how credit unions started, if I might 
just interject there.
    Mr. D'Amours. Right.
    Ms. Kaptur. And as I look at what is happening to our 
society today with a complete disjuncture between those who are 
extremely wealthy and those who are being driven in spite of 
this great economy, into greater poverty, we had better pay 
attention. If there is a problem with HUD or with some 
structure in this government, or if there is more authorizing 
legislation that is needed, I would hope that you would give us 
insight on that, because there are a whole lot of people that 
are being left out in this economy. I can tell you, our food 
banks in my community are crowded with people coming off of 
welfare and not having skills in the job market. I don't think 
Ohio is different than other places. Having access to people 
who have knowledge about consumer credit counseling and 
participating in the development of their own financial 
institutions is extremely important. Frankly, if I have to put 
money in the HUD budget to help this happen, I would do it. It 
isn't just urban; it is also rural, where there are under-
served areas across this country, and I can't understand, 
administratively, why this is so hard to launch.
    Mr. D'Amours. Well, the IDA, Individual Development 
Account, that Congress has worked on and is in use today is a 
good approach, a relatively new approach to incentivise savings 
through a matching fund program. Maybe the idea started with 
you, Congresswoman. I don't know. But the Office of Community 
Development Credit Unions encourages credit unions to explore 
the use of IDAs. And as I said, I think the effort is going to 
have to come--we will work with HUD and all other agencies to 
accept any help wecan get along the way, with this subcommittee 
or anyone, but I think the effort is going to have to come from the 
credit union community itself.
    Mr. Walsh. Mr. Goode.
    Mr. Goode. I am new and don't understand too much of this 
Central Liquidity Facility. How much is in the facility right 
now?
    Mr. D'Amours. The president of the facility has those 
numbers. He will give them to you, Congressman.
    Mr. Goode. All right.
    Mr. Yolles. Congressman, member credit unions of the 
facility have to purchase capital stock based on a prescribed 
formula. Today we have about $880 million in capital stock that 
has been purchased, and there is an equivalent amount on call. 
They actually have to pay in and buy at a quarter of a percent 
of their paid in and unimpaired capital.
    Mr. Goode. And how many credit unions are participating?
    Mr. Yolles. We believe over 10,000 credit unions, over 95 
percent of our federally insured credit unions today.
    Mr. Goode. Now, you want a million dollars from the federal 
government. What is that for?
    Mr. D'Amours. That is for a revolving loan program, 
Congressman, which is used to make loans to low-income credit 
unions at a below-market interest rate, and the----
    Mr. Goode. That is going to be----
    Mr. D'Amours [continuing]. Interest we earn on those loans 
goes into technical assistance grants.
    Mr. Goode. You have done some of these in the past, right?
    Mr. D'Amours. Yes, sir.
    Mr. Goode. Give me just two or three examples where you 
think the loans were helpful.
    Mr. D'Amours. The person who administers that fund is the 
Director of our Office of Community Development Credit Unions, 
Joyce Jackson, who is seated to my right. I would prefer she 
answer that.
    Ms. Jackson. Well, most of our requests come in from credit 
unions, and they are trying to do special lending programs.
    Mr. Goode. Give me an example, in Virginia.
    Ms. Jackson. For instance, they may have decided to do 
mortgage lending or home equity loans at a reduced rate, so 
they borrow the money from us at 2 percent. And then they are 
able to return those loans to their members at a much reduced 
rate, sometimes at 6, 7, 8 percent.
    Mr. Goode. Just tell me, say, for instance, a credit union 
in Virginia that has received it.
    Ms. Jackson. In Virginia?
    Mr. Goode. Yes.
    Ms. Jackson. Oh, you really made it hard. Virginia has our 
largest credit unions, because you know, most of them are 
associated with our armed services. But we do have a small 
credit union right here in Alexandria, Shiloh Baptist Church 
Credit Union, and they have borrowed money, and their members 
borrow from them to do--for instance, they had a taxicab driver 
that needed to repair his taxicab. They had one woman that was 
doing an in-home beauty shop, and she needed to buy equipment 
to do her basement so that she could provide that kind of 
service. Those are the kind of loans that a small credit union 
would make. They are personal loans that are basically for 
business purposes.
    Mr. Goode. Back to the National Credit Union Share 
Insurance Fund. How much is in that?
    Mr. D'Amours. It is 1 percent, Congressman, of the deposits 
of credit unions, so it is at the $4 billion level. There are 
about $400 billion in assets in the credit union community.
    Mr. Goode. Do you think that fund is right where it needs 
to be?
    Mr. D'Amours. Yes, sir. I think the fund, as I said in my 
testimony, is--it is self funded by credit unions, and we think 
it is at an amount that meets, in most cases, and usually 
exceeds, the bank insurance, comparable bank insurance fund 
equity ratios.
    Mr. Goode. How is that fund invested?
    Mr. D'Amours. Mostly----
    Mr. Goode. Short terms?
    Mr. D'Amours. Relatively short-term. We have staggered them 
out to maybe 5 years maximum.
    Mr. Goode. Is it bonds and----
    Mr. D'Amours. No, it is treasury.
    Mr. Goode. All treasury.
    Mr. D'Amours. Yes, sir.
    Mr. Goode. What return do you get on that?
    Mr. D'Amours. Well, it depends on the----
    Mr. Goode. I know, but you get to decide. You can buy a 
one-year treasury bill or you could buy a bond of two years. 
You get to decide on that.
    Mr. D'Amours. Yes. We have a committee that works on that, 
Congressman, and we go up to five years.
    Mr. Goode. Of course. But I just wonder what is your rate 
of return on that?
    Mr. D'Amours. We had an average rate of return of 5.8 
percent last year, Congressman.
    Mr. Goode. Now, what is that four-year government bond rate 
now locked in?
    Mr. D'Amours. I am told about 6\1/2\ percent currently, 
Congressman.
    Mr. Goode. So the social security fund does better than you 
do; is that right? That is a four-year long term--I mean the 
four-year bond rate is the interest paid on the social security 
fund.
    Mr. D'Amours. Because of the short maturity, because it is 
an insurance fund, not an investment fund, we are at a 
disadvantage.
    Mr. Goode. That is why it is 5.8. I am not saying it is 
bad. I am just getting it.
    Now, the CLF, you made 157 short-term loans to 39 members 
last year, right? That is what you said in your testimony, I 
believe.
    Mr. D'Amours. I believe that is correct. I would have to 
check. I have to go back and look at the testimony. I haven't 
memorized these numbers.
    Mr. Goode. I am not trying--I just wondered.
    Mr. D'Amours. I am told 37, somebody said that.
    Mr. Goode. Could you give me an example or two on the loans 
that you made, without naming anyone, and a situation that the 
credit unions find themselves in that needed that. Talking 
about Central Liquidity.
    Mr. D'Amours. The president of the fund, Mr. Yolles, would 
be the best person to answer that, Congressman.
    Mr. Yolles. Congressman, this lending activity was entirely 
preparatory in nature for the century date change. These----
    Mr. Goode. All 157?
    Mr. Yolles. Yes. These particular credit unions, and the 
loans actually went to 37 different credit unions during this 
period of time. These credit unions were all fairly illiquid in 
nature. We did an analysis on every one of the borrowers. While 
they did not experience any runs or other financial----
    Mr. Goode. They were very small ones.
    Mr. Yolles. No, it varies. We had small ones, medium and 
large, but it was anticipatory in nature, just to be prepared. 
There was a lot of discussion and conjecture about what people 
might do in reaction to concerns about the century date change.
    Mr. Goode. Let us go back one year then. Give me an example 
on the type of loan that you have done to a credit union, maybe 
one or two, where it was not in connection with Y2K. Now, I 
understand last year, all of your 157 loans to the 39 members 
were in anticipation of possible Y2K problems.
    Mr. Yolles. Well, without giving a long-winded answer, let 
me first explain that the primary liquidity providers for the 
credit union system today are known as corporate credit unions. 
There are 36 of them, wholesale financial institutions. Credit 
unions deposit their surplus liquidity in them, and that is 
where they go to borrow. The CLF basically stands today as a 
back-stop for the corporate credit union system. There is no 
other inlet or source of outside funds into the credit union 
system.
    The last notable occasion in which the CLF experienced 
quite a bit of activity was several years ago when there was a 
failure of one of the corporate credit unions, and the CLF had 
to step in as the backup liquidity provider. But typically, the 
first line of defense, if you will, is the corporate credit 
union. The CLF really stands there unless for some really 
unusual type of emergency.
    Mr. Goode. Several years ago, what was the limit? Did you 
have the $600 million limit then.
    Mr. Yolles. Yes, we did. And the limit, by the way, it is 
frequently misunderstood. It is actually a limitation on the 
amount the CLF can borrow and then re-lend to credit unions. 
The CLF has some capital of its own. We keep about $50 million 
in liquid funds, and actually, during the situation I just 
mentioned, the CLF was able to fund all lending activity out of 
its own funds, although it went on for quite a period of time. 
We never did quite exceed that $50 million in any one day. And 
that was typically the credit unions, just to cover overnight 
clearings.
    Mr. Goode. I will ask the gentlemanthat responded with 
regard to the rate of return that you get on your Credit Union Share 
Insurance Fund.
    If you were an investment fund--and this is a hypothetical 
really--if you were an investment fund and you had the ability, 
but you were investing all in US government interests, what do 
you think your rate could be, if you could go, say, from a one-
month instrument to a 20-year. Do you think you could beat 6.5?
    Mr. Winans. My name is Dennis Winans, CFO.
    We already talked about treasury, as to what would be the 
best in treasury notes, bills and bonds. The board has set a 
limit of 5 years. We are an insurance fund, we are not an 
investment fund. We are looking for liquidity purposes for the 
fund, and safety and yield.
    Mr. Goode. But I am assuming that you did not have those 
limits, and I am just wondering what you think you could get if 
you had a one-month to a 30-year limit, and any of those 
instruments you just named that were US treasury instruments.
    Mr. Winans. In the past we have seen an inverted yield 
curve over the years. Many times the 30-year bond is lower than 
what we get in short term. We made some investments in the last 
week. These were longer term notes, treasury notes. The yields 
were over 6.5 percent, which is very good. I think if we had no 
limitation, we could probably get an average yield around 6\1/
2\ percent.
    Mr. Goode. Thank you.
    Mr. Walsh. Are there any other questions of the witness?
    Ms. Kaptur. Mr. Chairman, I would just like to ask again, 
of the 75 million shareholders in--share depositors in credit 
unions, what percent of them would be minority?
    Mr. D'Amours. I don't think we keep any records to that 
effect, Congresswoman.
    Ms. Kaptur. Ms. Jackson, could you talk to me and the 
committee a little more about what your office is doing and 
what types of assistance are being rendered today to low-income 
communities compared to ten years ago, please?
    Ms. Jackson. Okay. Well, first of all, NCUA didn't have 
this office before 1994 so our efforts are relatively new, but 
what we have begun to do is bring a much brighter focus to 
community development credit unions. I think credit unions 
getting out and partnering with the other government agencies 
have strengthened our visibility, and so we have developed a 
much more conscious awareness of economic development and 
community development. Credit unions have always done this when 
they served their members. You know, those credit unions that 
were in these low-income communities, have always been involved 
in economic development. That is what they did. We didn't 
always call it by those nice catchwords, but that is what they 
were doing when they made those small $200 loans and that kind 
of thing. But my office has been able to pull together a lot of 
the energies that are out there and focus them so that we could 
pass the word along to those smaller credit unions that don't 
necessarily get outside of their communities to know what is 
going on. The CDCU Office also helps to use some of the 
agency's resources and activities to help focus more the 
advocacy role of our agency in helping those credit unions work 
through some of the problems that come up in new and small 
businesses.
    Ms. Kaptur. Do you find that many of the credit unions 
located in churches or minority communities are basically 
ignored by the broader credit union community in some of those 
regions, and so they are kind of left out there in their 
lifeboat all alone without technical assistance, without the 
kind of help to grow that could benefit their members and more 
members from those communities?
    Ms. Jackson. I don't think they have been ignored, but 
resources are scarce. We don't have a fund right now that can 
provide them the dollar amount that they need to attract the 
type of management and services that gets them off on a much 
more solid footing. They are the ones that need a manager that 
has all the skills, and therefore would cost more, but they 
have the least amount of resources to put in that arena, and 
that is why the technical assistance fund has been so important 
in trying to help them meet some of those initial operating 
expenses. But I think the credit union community as a whole has 
pulled together, as it normally does, to support each other in 
terms of mentoring and providing training and development to 
the degree that they have been able to do it and still run 
their own operations. I think we have had a solid base in that. 
But there is a need out there for them to become well trained, 
for the volunteers to have outlets for training, for the 
information to flow in that direction that I think our fund can 
help provide.
    Ms. Kaptur. Do you think that other government programs 
like the CDFI or the EDI, which also come before this 
subcommittee, do you think, and have you explored ways in which 
we might set aside or strengthen those in order that we can get 
the kind of talent and the development of talent, which is what 
we are talking about, in many of the managers and boards. Is 
there a way for us to begin to jump start this in a better way, 
through perhaps some demonstrations that we could do over the 
next year, engaging some of these other agencies? Could we pick 
the several regions of the country that you regulate, maybe one 
of each or five of each or whatever the number would be, to 
kind of give some momentum to this?
    Ms. Jackson. Well, that would be a good start. We have 
what's called our small credit union program, and we have 
economic development specialists in each of our regions, 
although we don't currently have enough to fulfill the need. I 
think those individuals would be a good core to start to work 
on those type of development projects where maybe we could tie 
into what some of the other funding is in other agencies and 
other programs to help us bring about this change.
    Ms. Kaptur. Thank you very much, Mr. Chairman.
    Mr. Walsh. Thank you. I would like to thank the members of 
the subcommittee for the thoughtful questions. I would like to 
thank the witnesses today for their testimony. Thank you very 
much.


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                                           Tuesday, March 21, 2000.

                 U.S. CONSUMER PRODUCT SAFETY DIVISION

                               WITNESSES

ANN BROWN, CHAIRMAN
MARY SHEILA GALL, VICE CHAIR
THOMAS H. MOORE, COMMISSIONER
PAMELA GILBERT, EXECUTIVE DIRECTOR
RONALD L. MEDFORD
EDWARD E. QUIST
    Mr. Walsh. Good morning. The hearing will come to order. I 
would like to welcome Chairperson Ann Brown and her fellow 
commissioners, Thomas Moore and Mary Sheila Gall. Good morning.
    Their budget request for fiscal year 2001 totals $52.5 
million, an increase of about $3.7 million when compared with 
fiscal year 2000. Even though it is a modest budget request, 
given our constrained fiscal environment of this subcommittee, 
I am not sure that we will be able to accommodate your request, 
but we will do the best we can.
    If you would like to summarize your statement, we will then 
move to questions.
    I would like to give Mrs. Meek an opportunity to make an 
opening statement if she would like.
    Mrs. Meek. I would just like to welcome you again. Mr. 
Chairman.
    Mr. Walsh. Thank you.
    Your entire statement will be included in the record.
    Ms. Brown. And I will just have a brief summary for the 
subcommittee.
    Mr. Walsh. Thank you.

                           Opening Statement

    Ms. Brown. I am pleased to have this opportunity to testify 
in support of our fiscal year 2001 appropriation request of 
$52.5 million.
    As you may know, I was confirmed by the Senate for another 
7-year term on the Commission, and I look forward to directing 
our strategic plan for reducing death and injuries from 
consumer products to a successful conclusion, and to continuing 
my efforts to forge an ever more effective partnership among 
business, consumers and government, so that all consumer 
products that we use in and around our homes will be safe for 
children and families in America.
    For fiscal year 2001, our request is $52.5 million. This is 
an increase of $3.5 million over the amount Congress 
appropriated in fiscal year 2000. However, due to the .38 
percent across the board budget reduction mandated by the final 
continuing resolution in 1999, the Commission is requesting 
$3.7 million over the amount we will actually receive in fiscal 
year 2000. This request will only allow us to maintain the 
agency's current safety effort at 2001 prices.
    The requested increase includes raises for staff salaries 
and benefits, $2.8 million; restoration of operating expenses 
cut in fiscal year 2000, that is $388,000; GSA space rent 
increase, that is $307,000; and inflation-only price increases 
for the non-salary costs of doing business, such as contract 
services, $196,000.
    I want to emphasize that this budget request will simply 
keep our successful safety program functioning at its current 
level. We are foregoing any of the critical investments that we 
want to make to improve our programs.
    Over the years CPSC has improved efficiency, reduced staff, 
and cut costs such as rent as much as possible. There is no fat 
in our budget. All that remains is bone and muscle. 
Accordingly, we urge the Subcommittee to appropriate the full 
$52.5 million requested.

                           three new efforts

    Now, I just want to briefly tell you about three new 
efforts that we are undertaking to protect the health and 
safety of American consumers. This year we are expanding our 
National Electronic Injury Surveillance System that is called 
affectionately, the NEISS, beyond consumer product related 
injuries to include all injuries treated in hospital emergency 
rooms. This expansion was recommended in the 1998 Institute of 
Medicine study on injury in America. The Centers for Disease 
Control, CDC, was given $2 million in its appropriation for FY 
2000 to fund the collection of this data at CPSC. The data will 
be available to all federal agencies, and will enable them to 
identify quickly emerging injury trends, and assist them in 
setting their priorities for future prevention and treatment 
programs. CDC's 2001 budget request includes another $2 million 
to keep this program going, and we expect that this funding 
will continue into the future. We believe that our NEISS system 
is the best in the nation, and this was confirmed by its 
selection for this important public safety task.
    Last December we launched Operation S-O-S, Safe Online 
Shopping. We have a highly-trained team of ten experts 
monitoring the Internet for unsafe and illegal consumer 
products. We have already found some violative products: 
flammable children's sleepwear, prescription drugs that can 
poison kids because they are not in child-resistant packaging, 
children's jackets with drawstrings that can catch and strangle 
a child, and novelty cigarette lighters that are designed to 
appeal to kids but are not child-resistant. Just this month we 
recalled thousands of non-child-resistant lighters that the 
task force found advertised on the Web. And we found unsafe 
toys on the Web that we have recalled also.
    The Internet is an increasing part of the information that 
we receive about unsafe consumer products. In just one year, 
from 1998 to 1999, the number of Internet reports more than 
doubled.
    For the past six years, as you know, I have made a special 
effort to protect the smallest and most vulnerable citizens, 
our children. As part of this effort I have focused on the 
prevention of sudden infant death syndrome, SIDS. Last year 
CPSC, together with the American Academy of Pediatrics and the 
National Institute for Child Health and Human Development, 
issued a safety alert warning the public about the hazards to 
young babies of suffocation from soft bedding. Since then our 
staff has worked with major retailers of soft bedding for 
babies to develop a plan that would communicate this safety 
information to consumers when they shop. I am pleased to say 
that just on March 15th, I announced that 7 major retailers, 
representing the majority of baby bedding sales, would 
cooperate with us in this effort, and I commend Ikea, J.C. 
Penney, Kmart, Lands' End, Sears, Target and Babies 'R Us, for 
insuring that their crib displays, catalog spreads and 
advertising will show only safe bedding practices. And a news 
flash, just yesterday we received a call from the Disney 
Company requesting information that the company could use so 
that they can bring their catalogs and infant bedding products 
into the same agreement. This is another example of my strong 
belief that voluntary cooperation between business and 
government is the best way to improve consumer product safety.
    Mr. Chairman, Mrs. Meek, despite all the progress that the 
Commission has made and is making in reducing death and 
injuries related to consumer products, they remain a major 
national problem. Each year there are about 22,000 deaths and 
29.5 million injuries resulting in total damage to the nation 
of over $500 billion. The CPSC is the only agency with the 
authority to prevent hazardous consumer products from killing 
and injuring people, and where necessary, toenforce the laws 
against them. Your investment of $52.5 million in the CPSC will be 
returned many times over in lives saved and injuries averted. We will 
use these funds effectively, efficiently and responsibly to safeguard 
the health and safety of the American people.
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    Mr. Walsh. Thank you very much. Do either Mr. Moore or Ms. 
Gall have an opening statement that you would like to give?
    Mr. Moore. I would like to present a statement for the 
record. I think the Chairman has well-stated the situation, and 
I work on this Commission to help protect the health and safety 
of our people, so I will just present a statement for the 
record if you don't mind, Mr. Chairman.
    Mr. Walsh. Without objection.
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    Mr. Walsh. Ms. Gall?
    Ms. Gall. I have a statement, a short one for the record, 
but I also have something short and sweet to say, just like me. 
[Laughter.]
    I am the conservative Republican member of the Commission, 
and while we do not always agree on policies, and we do not 
always agree on budget funding levels, I strongly support this 
budget level of $52.5 million, because it leaves us just with 
current services. There is no fat, as the Chairman said. She 
has highlighted a number of reasons why we should all get 
behind this budget and support it, and I will be so bold as to 
say that we need the 52.5, but we could use a little extra. And 
the reason we could use a little extra--and I never ask for 
this kind of thing, and I am dead serious, so you know----
    [Laughter.]
    Ms. Gall. You know--if you know me well enough, you know 
that I am not the type to go hat in hand and pass the cup. But 
I will say this: I do have some legitimate concerns that I 
share with my colleagues about hazard data collection. We need 
to integrate our hazard databases. We need to do some very 
serious work with our laboratory testing equipment and our 
facility at the lab. And if we are going to do a terrific job--
and I think we do a terrific job--then we need the money to 
make the improvements necessary because a lot of folks are 
counting on us in the government, with our new NEISS approach 
with CDC and other government agencies, as well as the American 
public we serve.
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    Mr. Walsh. Thank you very much.
    Ms. Gall. Thank you.
    Mr. Walsh. We have some questions that we would like to 
ask. Congressman Sununu, I understand, will not be here. He has 
a whole list of questions that he would like to present to you, 
and you can then respond back to him.
    Ms. Brown. We will respond, of course.

                               baby cribs

    Mr. Walsh. My first question is regarding baby cribs. 
Earlier this year I received a letter from the Danny 
Foundation, which requested that I support an allocation of 
250,000 of the Consumer Product Safety Commission's budget, for 
a national education program designed to better educate the 
public on the danger of cribs. I was under the impression that 
the Commission has an active program of identifying baby cribs 
which are not safe and issuing appropriate recalls of those 
unsafe cribs. But it appears that the Danny Foundation does not 
feel you are doing an effective job of warning the public about 
the dangers of some cribs.
    What is the Commission currently doing to evaluate the 
safety of baby cribs? And what is the extent of your public 
education effort? And finally, what effect on your overall 
operations would result if we were to direct $250,000 fromyour 
budget to publicize the dangers of this newborn product?
    Ms. Brown. Well, first of all, in a nutshell, we believe 
that we are spending the right amount of our resources on crib 
safety. And we think that we are doing a superior job of 
educating the public about crib safety.
    The Danny Foundation is a wonderful organization. I was 
delighted to receive an award from them several years ago, and 
very honored. We must understand that John Lineweaver, who is 
the head of Danny, had a terrible tragedy when his child died 
in a crib incident. And of course, this means that he thinks 
the only focus of the agency--and quite understandably; this is 
not critical--should be on cribs.
    What we have to do, I think, at the Consumer Product Safety 
Commission, is to balance our resources and balance what we do. 
We spend a tremendous amount of time and effort and resources 
already on crib safety. I have six pages, and single-spaced, on 
everything that we do, and I am not going to read this to you. 
I will submit it for the record, because it shows a very, very 
thorough plan.
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    Ms. Brown. We, of course, recall cribs that are hazardous. 
We have established mandatory and voluntary standards. We have 
a annual recall round-up campaign which highlights cribs. I 
have done over two dozen guest appearances on network TV shows, 
discussing crib safety, and on many of those I have gotten John 
Lineweaver on the show. We do numerous public education 
initiatives. Just last week I appeared on the CBS ``Early 
Show'' to announce a cooperative measure of safe bedding with 7 
major retailers.
    And we are seeing results. The number of crib deaths, 
entrapments, strangulation, has gone from 200 to 40; 40 is 
still too many, but you can see the downward trend. In the last 
two years the number of crib deaths have gone down from 50 to 
40. We want to get it down to zero, and we think we can do that 
without the additional earmarking.
    Mr. Walsh. Well, that is substantial progress.
    Ms. Brown. Thank you. It is something that we are extremely 
proud of.
    Mr. Walsh. The statistics would be probably affected by the 
bedding issue and the cribs, correct?
    Ms. Brown. Exactly. And we have done so much work on cribs, 
including crib round-ups, that kind of thing, on old cribs. But 
the work that we have done on soft bedding has really been new, 
and the work that we are able to do with the retailers has been 
astounding. And when we have companies like Disney calling us, 
wanting to hook on--that is real progress.
    Mr. Walsh. What percent would you say crib manufacturers, 
makers, designers are involved in your voluntary program; what 
percent of the market?
    Ms. Brown. Well, I think that 100 percent of the crib 
manufacturers are all involved with us. There is really no bad 
actor, no bad apple. The JPMA, Juvenile Products Manufacturers 
Association, of course has certification of cribs. The problem 
tends to be in old cribs, and that is why it needs to be 
education, what I advise people, is the best single investment 
that you can make for your child is a new crib. Don't get a lot 
of that other stuff. Get your family together and your friends. 
Let them buy you a new crib, because the new cribs all meet our 
safety standards.
    Mr. Walsh. All the new cribs?
    Ms. Brown. All. So old cribs is where our problem is.

                          database integration

    Mr. Walsh. Ms. Gall mentioned two issues, database 
integration and the laboratory development. So let me address 
those.
    Included in the original budget submission to OMB for a 
number of initiatives that were included in the budget 
submitted to Congress, this issue of database integration was 
one of those. What changes in the operation of the Commission 
would result if you were able to fully integrate your 
databases?
    Ms. Brown. CPSC has 7 separate databases with death and 
injury information, that we would want to integrate into one 
searchable database. You can imagine what happens with 7 that 
are not integrated. For instance, if one of our staff wants to 
find out about death and injury information, here is what we 
have to do. We have to search our epidemiology database. Then 
we have to search our consumer complaint database. Then we 
search our lab analysis database. Then we have to do separate 
searches of our compliance database. This is both inefficient 
and time consuming, and time at the CPSC is critical, because 
very often we are preventing death and injuries, and the 
quicker we can work, the more effective it is.
    Now, an integrated database would enable us to search all 
of our databases with a single inquiry, and we figure that 
could save an agency analyst between 50 and 100 hours annually. 
This could save us hundreds of hours. And then we could search 
and retrieve information that is currently contained in paper 
documents. I don't have to tell you how awkward that is.
    Mr. Walsh. Yes. How much would it cost you to integrate 
these databases?
    Ms. Gilbert. $500,000 in the first year, and then the 
second year would be another $300,000, for $800,000.
    Ms. Brown. This is Pamela Gilbert, who is our Executive 
Director.
    Mr. Walsh. Is that hardware and software?
    Ms. Gilbert. Yes.
    Mr. Walsh. Primarily is it a hardware or a software fix?
    Ms. Gilbert. It involves programming our databases, and 
document imaging, where we would take our paper files and put 
them into our database.
    Mr. Walsh. And have them read in?
    Ms. Gilbert. Have them scanned in.
    Mr. Walsh. Scanned in.
    Ms. Gilbert. Exactly.
    Ms. Gall. If I could just add one thing, sir, to that?
    Mr. Walsh. Sure.
    Ms. Gall. One of my concerns, in addition to the issues 
that the Chairman has raised, is that we have a field operation 
where we have cut back on the space, and a lot of our people, 
our investigators, are tele-commuting. And that is a good 
thing, because that saves us rent space, and it is an efficient 
use of their time. However, we need to integrate these 
databases to also include our field operations, so that they 
can do easy communication back and forth with headquarters in 
order to pass in the police reports, social worker reports, 
coroner reports, and all the other data that is required when 
we are doing an important investigation. It would make things 
much more efficient, because our people are out in the field, 
not in an office.
    Mr. Walsh. We will keep that in mind. On the laboratory, in 
your statement you make reference--you obviously hit it head 
on--that those facilities are housed in an old military 
installation. Obviously, your data is secure. [Laughter.]

                        laboratory modernization

    At least from attack. Your budget submission to the Office 
of Management and Budget included a million dollars for 
modernization of the Product Testing Laboratory, but that item 
was not included in the budget which came to Congress. In this 
current budget environment, it may not be possible to fund such 
an issue, but if it were, what would be the total cost of 
modernizing the labs and how many years would you need to 
complete the job?
    Ms. Brown. Well, GSA is currently conducting an assessment 
of our laboratory to determine precisely what needs to be done 
and how much it would cost. We are having to spend 50K to have 
this done by GSA.
    Mr. Walsh. Just to study it?
    Ms. Brown. Just the study of this. Although we will not 
know the exact answer until the assessment is finished, we 
anticipate that it will cost around $3 million, and would take 
two to three years to complete.
    Of course, the greatest thing that we could get from this 
would be improved efficiency, a more efficient site with modern 
equipment. We could do much more with the resources and staff 
hours that we have. Let me give you an example. We are spread 
out on this old military establishment over 8 acres.
    We have two test-fire facilities that are located at the 
opposite ends of our 8-acre site. And right now the same fire 
test personnel have to travel back and forth to conduct their 
fire test, because now it would be inappropriate to have those 
two fire sites put right together. Under the modernization 
plan, we could combine the facilities to improve efficiency, 
and be able to fit more up-to-date equipment into a new, larger 
facility. So both the database and the laboratory would really 
be critical improvements for us.
    Ms. Gall. Or new toys in the lab. This is very important to 
us because right now we have terrific engineers who sort of 
piece together old equipment to try and keep it going, but that 
is really the level we are at. We have some equipment that is 
very old and inefficient, and they are trying to keep it going 
one more year, then one more year, and it is really not the 
best way to conduct testing that is required by many different 
operations.

                            in-house testing

    Mr. Walsh. What percent of the testing that you budget for 
is done in-house as opposed to contracted out?
    Ms. Brown. What would you say?
    Mr. Quist. I don't have a specific number, but it is mostly 
in-house. Most of it we do in-house.
    Ms. Brown. We can figure that out and get back to you.
    Mr. Walsh. You do most of it in-house?
    Ms. Brown. We do most of our work in-house. We contract out 
some. We have limited contract funds. We have a highly educated 
technical staff and a laboratory so that we can do that work.
    Mr. Walsh. There are a number of testing labs around the 
country that do this sort of work. Have you weighed the 
benefits of contracting versus doing it yourself?
    Mr. Medford. The research work that--the research agenda 
that we have been asking for is all contract funds, where the 
work is highly specialized, and we really could benefit greatly 
by having the use of specialized contract resources. And we do 
that when we don't have the in-house capability, but because we 
have such limited contract funds, we do much of the routine 
testing in our own facility.
    Mr. Walsh. Okay. If you could get back to us in writing 
what the percentage is and maybe give us an idea of what you 
test by contract as opposed to in-house and why.
    Ms. Brown. We will get back to you on that, and we will 
give you a good overall view of it.
    [The information follows:]

    Almost all of CPSC's product testing is done by our own 
staff. Only about 15 percent of CPSC's testing is done by 
contractors.
    This is one reason we are seeking $1 million to begin the 
modernization of our laboratory facility. Our staff uses our 
lab for the vast majority of our product testing. This short-
term investment in the laboratory facility will provide long-
term savings by improving the efficiency of the lab. The CPSC 
must have up-to-date facilities for testing to ensure that 
products conform to our regulations.
    We do have a need to contract out research and testing at 
times. This occurs when our staff lacks a particular expertise 
needed in the area, or we do not have the necessary equipment 
or facilities to carry out the work. If we had an applied 
research budget, we would use those funds to contract out work 
of this type for more complex testing. Right now, in order to 
accomplish this type of complex and costly research, we 
contract out the work in small increments. This ends up being 
more costly in the long-term and is extremely inefficient.

    Mr. Walsh. Good. I need to excuse myself for just a minute. 
I will let Mrs. Meek take over, and I will be right back.

                           lead wick candles

    Mrs. Meek [presiding]. Okay. Thank you, Mr. Chairman.
    Good to see you, Ms. Brown, and the rest of the Commission. 
I have a question about the lead-based candles.
    Ms. Brown. The what? I am sorry.
    Mrs. Meek. The lead-based candles, lead wicks.
    Ms. Brown. Yes, of course.
    Mrs. Meek. I remember sometime ago, that you had an 
agreement, sort of involuntary agreement with the candle 
manufacturers and so on. And this agreement is not working out 
too well. Would you mind speaking to that, where the Commission 
is now and what stand you are taking?
    Ms. Brown. Yes, of course. You know, CPSC is always 
concerned with lead in consumer products, and our position on 
lead candle wicks is the same as it has been with toys and with 
mini-blinds. Lead should not be used in consumer products.
    Mrs. Meek. Are you going to ban? That is the question.
    Ms. Brown. Well, right now we have met with the National 
Candle Association, and again asked them to eliminate the use 
of lead-core wicks. The problem is not really with the National 
Candle Association of American Manufacturers. The problem has 
been with foreign manufacturers. The candle market, as you 
know, has just bloomed and blossomed, and we are having a 
tremendous number of imports. We have sent letters to the 
National Candle Association, the International Mass Retailers, 
and asked major retailers not to use lead-core wicks or sell 
candles with these wicks. We have sent a letter to the Chinese 
ambassador, asking for a meeting to ask for their help in 
eliminating the exportation of candles with lead-core wicks. We 
are reviewing a petition from public citizens, which requests a 
ban, as you mentioned, on lead-core wicks, and that is under 
consideration. I am not allowed by my statutes to say what we 
will do with it, but that will get very, very serious 
consideration.
    While we are considering that, we are continuing to monitor 
the marketplace and take action where appropriate while we work 
on these further actions.
    Mrs. Meek. Thank you. I really appreciate the information 
that you provide, and then which we provide to our 
constituents. It really, really performs a service. I am not 
sure you really realize the impact of those consumer reports 
that we send to our constituents.
    Ms. Brown. Thank you.

                             thrift stores

    Mrs. Meek. Thank you for that. I would like to know a 
little bit more about some of the things you are finding out as 
you look into thrift stores and the kinds of things that they 
are selling which may become injurious to children.
    Ms. Brown. Right. Well, we found, in a recent study that we 
did on thrift stores, we found that 69 percent of thrift stores 
were selling products that had either been recalled, banned or 
did not meet current CPSC safety standards. And these hazardous 
products are sold to people who cannot afford to go to other 
stores. That poses a danger of death or serious injury.
    Mrs. Meek. Can you do anything about it? It is such a big 
world out there, and----
    Ms. Brown. I know, and here is what we are doing. We have 
instituted a national campaign to alert the public and thrift 
stores to these hazards. We have a checklist for thrift stores 
published in English and Spanish, and this is for consumers and 
thrift stores to use, just to check. And we have had excellent 
cooperation from national thrift store chains and organizations 
like Goodwill and others. We have met with them. And they are 
taking steps to insure that these products are not sold in 
their stores. There is no way you can just ban thrift stores, 
but we are on top of this, and I think you are going to see a 
great improvement. We will be monitoring thrift stores again. 
They know that, and they have been extremely cooperative in 
getting this information out. They have sent us big posters 
that they are putting to all their employees and putting in 
their stores, making sure that they are not selling recalled, 
banned or dangerous products.
    Mrs. Meek. Thank you. Another member of our Committee, 
Representative Goode, sitting at the end of the table. Do you 
have any questions, Mr. Goode?

                     upholstered furniture project

    Mr. Goode. Yes, Madam Chair.
    I was looking here on your statement about upholstered 
furniture, and I believe you indicate in your written remarks, 
that the National Academy of Science will likely not have the 
reports due until April. Is that correct?
    Ms. Brown. They will not. They have informed us that they 
are a little behind schedule, and they will not have the report 
until April.
    Mrs. Meek. Is it the end of April?
    Ms. Brown. End of April.
    Mr. Goode. I go on to read that pending this report, you 
are going back and adopting--the Commission voted 2 to 1 to 
reaffirm the 1996 amendments. That means that you are trying to 
reinstate the old amendments?
    Ms. Brown. What report?
    Mr. Goode. That is just for----
    Ms. Brown. That is only for children's sleepwear. That has 
nothing to do with upholstered furniture.
    Mr. Goode. So you are not taking any action----
    Ms. Brown. We are prevented from taking any action until 
the NAS study is completed. We are continuing our research, 
which we are allowed to do, and we are continuing that, and 
bringing the industry in to see what we were doing. But we are 
not taking any action, and are forbidden from doing so.
    Mr. Goode. And you are just sitting tight until the study 
comes out?
    Ms. Brown. We are continuing our research, which we are 
allowed to do, but we are not taking any further action, not 
bringing anything forward, not any recommendation from the 
staff.
    Mr. Goode. And what type of research do you do?
    Ms. Brown. We are doing research on chairs, trying to work 
on flammability testing, other technical work to evaluate the 
technical feasibility of a flame retardant standard. We are 
evaluating the durability of treated fabrics. We are assessing 
the effects of cleaning solvents and other treatments on fabric 
performance, just the kind of background work that needs to be 
done.
    Mr. Goode. Now, is this fabric with sleepwear or is this 
fabric--on upholstered furniture?
    Ms. Brown. No, this is on upholstered furniture that I'm 
talking about now.
    Ms. Gall. We are also doing complete studies in our lab 
that are related to mouthing, that is, if young children or 
toddlers, for example, are mouthing fire-retardant treated 
fabric that might be on upholstered furniture, would they 
absorb some chemicals that may be harmful to them, and if so, 
how much would be a harmful level. So we are conducting those 
studies as well at the lab.
    Mr. Goode. Well, let me ask you this. Is the National 
Academy of Science looking at that situation too?
    Ms. Brown. Ron, are they looking at that?
    Mr. Medford. They are evaluating the toxicity of this, and 
we have asked them to also look at the exposure which could be 
either from mouthing the fabric when it has a chemical on it, 
or from actual skin contact or dermal penetration. We are 
expecting some information from them----
    Mr. Goode. Let me ask you this. Have you done any studies 
about toddlers mouthing clothing?
    Ms. Brown. Toddlers mouthing clothing?
    Mr. Goode. Yes. They are going to suck on clothing. It is 
just as likely as sucking on furniture.
    Ms. Brown. I don't know if we have any----
    Mr. Goode. Well, let me ask you, why aren't you checking on 
it with clothing? My experience with my daughter was she was 
more likely to suck on clothing than she was to suck on 
furniture.
    Ms. Brown. Go ahead, Ron.
    Mr. Medford. The reason that we are looking at the issue 
with furniture is because of the expected way in which 
companies would comply, if there was a flammability standard 
for upholstered furniture. Companies would likely use fire 
retardant chemicals on the back--generally on the back of the 
fabric, and the industry is----
    Mrs. Meek. Sir, would you mind identifying yourself and 
come to the table?
    Mr. Medford. Excuse me. I am Ron Medford.
    Mrs. Meek. Come on to the table.
    Ms. Brown. Thank you, Mrs. Meek. He is the head of this 
whole program, so I am going to let him answer.
    Mr. Medford. So the reason that we are looking at it for 
upholstered furniture specifically is the anticipation that if 
there were a standard, these fire retardant chemicals would be 
added to the fabric, and the question is, if that happens, 
could consumers be exposed to the chemicals and be at some 
risk?
    Mr. Goode. Yes, but I want to know why are you doing it on 
furniture and not on clothing? Because I think kids suck on 
clothing more than they suck on furniture.
    Mr. Medford. Yes. Well, because the fire retardant 
chemicals are not added to clothing.
    Mr. Goode. Well, I know there may not be fire-retardant 
chemicals, but there is a lot of other things in clothing.
    Ms. Brown. Well, that is an interesting thought.
    Ms. Gall. Well, also, we don't have any incidents of that--
--
    Mr. Goode. I just wonder why you are doing it on furniture 
and not doing it on an array of things.
    Mr. Medford. Well, the reason we are doing it on furniture 
specifically is because we want to insure that if the 
Commission were to issue a federal regulation, and if companies 
would add fire retardant chemicals, that these chemical would 
not inadvertently cause health problems.
    Mr. Goode. Yes, but why do you think furniture is more 
toxic than clothing?
    Mr. Medford. Well, the only toxicity issue that we are 
evaluating in any of these is the fire-retardant chemical 
issue. We aren't evaluating any existing clothing or other 
textiles for toxicity. It is only because of this rule that we 
are evaluating that, and we have no evidence----
    Mr. Goode. You know, if something is made in Mexico or 
China, it is more likely to have harmful toxicity substances in 
it than something made in this country. Why aren't you checking 
that out?
    Ms. Gall. I think one thing, sir, is that one of the things 
that we do with our various database that the Chairman 
discussed earlier, is that we look for emerging hazards. We 
don't have incident data that would indicate to us that there 
is a problem with chemicals in children's clothing. We don't 
have----
    Mr. Goode. I didn't say children's clothing. I said any 
clothing.
    Ms. Gall. Or any general wearing apparel. There is some 
sleepwear that is cotton and does not have fire-retardant 
chemicals. There is other sleepwear that does have it. But if 
you put all that aside and you talk about general wearing 
apparel, we don't have any incident data that would indicate to 
us that there is a need to pursue any particular research 
with----
    Mr. Goode. I wonder why you are so anxious in the furniture 
field, as opposed to some other field.
    Ms. Gall. Because when you--just the prospect of adding 
fire-retardant chemicals to upholstered furniture, which would 
be part of a proposed regulation, in that case many of the 
chemicals that you might consider that would be part of the 
fire-retardant coating on the upholstered furniture would have 
a potentially toxic base to them, and that is----
    Ms. Brown. You know, any time our statutes require that if 
we found anything that was toxic in either clothing or fabrics 
or anything, it would be automatically banned. So we haven't 
found that. The reason that we have been talking about 
upholstered furniture is because of the fire problem.
    Mr. Goode. But in airline accidents, there is some type of 
clothing that will just burn right into you, and other types 
that will not. And you just seem to be focusing on what is fire 
retardant, but it might be something else not fire retardant. I 
mean I just don't understand why you are just picking on 
furniture.
    Ms. Brown. Well, the furniture is because of the large 
number of deaths and injuries from smoke and flames.
    Mr. Goode. Well, the National Academy of Science is 
evaluating that; is that not true?
    Ms. Brown. The National Academy of Science is certainly 
helping us out. We know that there are 90 deaths and 420 
injuries and over $40 million in property damage from 
upholstered furniture, and we eagerly await the results of 
their study.
    Mr. Moore. I should say too that it's important for us to 
reiterate that we will not require the use of fire retardant 
chemicals in any of these products. We may wind up telling 
companies that there is a fire resistant standard that needs to 
be met, and the companies themselves will have to determine how 
to meet that fire resistant test. We just happen to know that 
chemicals are one of the ways to do it, and that is why we are 
looking at them closely. But we will not require the use of 
fire retardant chemicals.
    Ms. Brown. Yes, sir.

                           flammable fabrics

    Mr. Goode. In the clothing area, we ought to look at the 
fact that some synthetics burn a lot quicker than cloth made 
out of cotton or substantially----
    Ms. Brown. That is why we have a children's sleepwear 
standard. This is the area that we found the injuries. That is 
why we have a children's sleepwear standard that has fire 
retardants built in for those that are not cotton, not tight 
fitting cotton.
    Mr. Goode. You have looked at it for children, but you have 
not looked at it across the board.
    Mr. Medford. We also have a general wearing apparel 
flammability standard, which is one that has been on the books 
since about 1950.
    Ms. Brown. A little louder, Ron.
    Mr. Goode. Yes. But that flammability standard is a 
regulatory standard. It's not a statutory standard. Am I 
correct?
    Mr. Medford. That's right.
    Mr. Goode. So I mean, that is----
    Mr. Medford. Right. That standard existed for a long time, 
and it does discriminate against some highly flammable 
materials which we have recalled, like fleece garments and 
things like that, that do not meet the requirement.
    Mr. Goode. Now, how much increase are you seeking in your 
budget this year?
    Ms. Brown. $3.5 million.
    Mr. Goode. And I believe you indicated that most of that 
increase was going to be upgrades and pay for staff; is that 
correct?
    Ms. Brown. That is correct. It will just be enough money to 
keep our current safety program operating at 2001 prices. There 
are some important new initiatives that we mentioned before 
that we would not be able to do, this will keep us up to speed, 
even with inflation.
    Mr. Goode. Do I have time to go through another----
    Mrs. Meek. The Chairman is here now, Representative Goode.
    Mr. Walsh [presiding]. I don't see why not, unless there is 
objection cast on the questioning--I don't know how long you 
have been going, but there are not that many of us here.
    Mrs. Meek. You have been gone quite a while. [Laughter.]
    Mr. Goode. Mr. Chairman, following Mrs. Meek's observations 
about that, I will just end there. [Laughter.]
    Mr. Walsh. If we need to, we can come back around again. 
Thank you. Mr. Hobson.
    Mr. Hobson. Thank you, Mr. Chairman.
    We all listen to Carrie. We have all learned that the hard 
way.
    Welcome. It is nice to see you all again.
    Ms. Brown. It is nice to see you.
    Mr. Hobson. I have more grandchildren to worry about then--
--
    Ms. Brown. I have one on the way, so I am trying to catch 
up.
    Mr. Hobson. I have another one on the way too.
    Ms. Brown. He is always--we are all used to that.

                           child care centers

    Mr. Hobson. But I want to ask two questions. One is about 
child care centers. I know that one of the Commission's top 
priorities has been reducing children's hazards, consumer 
products, and your efforts have been very successful in 
preventing deaths, injuries and societal--certainly for 
children's hazards. As we know, we all worked some years ago on 
changing the way children's clothes are made today without the 
drawstrings, which we did without any--I did it with one letter 
to you, and you did it without any new laws or any new rules or 
regulations.
    Ms. Brown. You were very instrumental in that.
    Mr. Hobson. We were able to change drawstrings, so I 
appreciate your effort on that.
    One area of concern to me is child centers. My sister and 
my niece run 7 day care schools in the Greater Dayton/Miami 
Valley area. And I know they are incredibly careful about the 
products they use, and they keep their centers safe, and I am 
sure all responsible providers and services want to do that. 
But child care is becoming more and more prevalent. I wrote the 
licensing law in Ohio. We almost did not have Thanksgiving one 
time, because my sister did not agree with the way I was 
writing the law. [Laughter.]
    And I said, ``Well, I don't write the law for family 
members. I have to write it for everybody.'' My brother-in-law 
was screaming at me over the phone, but they got over it, and 
they are surviving. Well, I don't know if they got over it, but 
they are surviving.
    Ms. Brown. And they came back for Thanksgiving I bet.
    Mr. Hobson. Yes, it did work out. But with child care is 
growing, and we need to promote safety in those facilities. Are 
you working directly with child care centers or associations, 
or how are you getting the message out?
    Ms. Brown. We are acting to promote greater safety in child 
care centers. Not all the centers have people who work in them 
as your family does, with as great a care. So we conducted a 
study of child care centers across the country to see if they 
had any product safety hazards. We did this because our 
statistics showed that 31,000 children from ages 4 and younger 
were treated in hospital emergency rooms for injuries in child 
care centers in 1997, and that 56 children have died in child 
care centers since 1990.
    And we found that two-thirds of the centers we visited had 
one or more potentially serious hazards, either an unsafe crib, 
or playground surfacing that wasn't safe enough if children 
fell, or window blind cords with loops that could strangle a 
child.
    We were concerned that even the best parents or child care 
center directors might not be aware of these kinds of hidden 
hazards. So we developed a child care safety checklist, and I 
have one for each member here.
    Mr. Hobson. I will make sure she has it.
    Ms. Brown. That is right. And it is for both parents and 
child care providers. We have these for all of you in Spanish 
and English. And it has been just widely distributed to both 
care givers and child care centers throughout the country. We 
have had a very good response, and we also are encouraging 
child care center directors and personnel to be sure and get 
all of our recalls either through our hotline or if they don't 
have a computer, to go to a library and see it as well.
    Mr. Hobson. Could I ask--could I follow up on this?
    Ms. Brown. Yes.
    Mr. Hobson. I think we regulate centers pretty well. That 
is not where the problem lies. In my state, for example, and I 
think in most states, we have a lot of people who take care of 
children in their homes, and I think in our state it is up to 
5. But I think there is a lot of controversy over how many 
children can be taken care of in a person's home, and frankly, 
we cannot do away with that, because there are just certain 
people that cannot afford day care outside the home. It helps 
some people with an in-home industry, and certain parts of the 
community are under-served by day care centers.
    But these are areas where children, in my opinion, are the 
most vulnerable to a number of types of hazards. In Ohio we 
established a hotline that families could use. I would suspect 
that one of the places where we need to promote this type of 
program is to every one of these facilities where there are in-
home family provided day care.
    Ms. Brown. Well, we know----
    Mr. Hobson. I think, we need to figure out a way to get 
this kind of brochure, this kind of information into those 
facilities. I would encourage you not only to look at the 
established day care centers, but--because they do need it too. 
But I think children are particularly vulnerable in these--they 
are not--they are unlicensed facilities generally.
    Ms. Brown. Some local jurisdictions are coming to us, 
because they know about the work we have done. In Philadelphia 
there is a private child care organization, which is very, very 
helpful, both in home and in all Pennsylvania in helping home 
day care centers in addition to all other day care centers in 
the whole state of Pennsylvania. And they have come to us, 
gotten information from us. We are working with them, and in 
fact, I am honored to be receiving an award from them. I think 
it is called the Working Parent or Grandparent Award.
    But the point is that other states are coming to us. Also, 
we are working with all of the day care associations, and 
associations try to work on in-home ones as well.
    Mr. Hobson. Most people in the in-home, they do not 
belong----
    Ms. Brown. Very, very tough. Very tough.
    Mr. Hobson. They cannot afford----
    Ms. Brown. You have to work also with your local 
jurisdictions. You know in the City of Washington, we have had 
a terrible problem with in-home centers, and our mayor is, in 
fact, redoing that department so that they will be more 
efficient and effective.

                               rent cost

    Mr. Hobson. I have just one other question, Mr. Chairman.
    I used to come to every one of these meetings and ask about 
rent and what you are paying for rent. And you all remember the 
squabble we helped you with a couple of times.
    Ms. Brown. You were such a help.
    Mr. Hobson. And I want to bring it up, since you mentioned 
your justification, I understand, and I think you touched a 
little bit on this, that GSA has instituted an across-the-board 
increase on existing rent space, but that your Agency has taken 
steps to lower your space requirement through telecommunication 
programs.
    Ms. Brown. Right.
    Mr. Hobson. You cite these activities have lowered your 
total rent costs by 25 percent. Normally, we do not find people 
in these agencies that are reducing their rent. As a matter of 
fact, most of them never know what their cost per square foot 
is or anything. And I used to come in, and I think I raised the 
level of attention on that a few times over the years. You 
touched on this, but I would like you to tell a little bit more 
about it.
    Ms. Brown. Well, first of all, I would like to thank you 
for intervening last year with GSA on our behalf. You were 
enormously helpful in getting GSA to defer until 2001 a 
$250,000 rent increase originally scheduled for 2000, but they 
told us about it too late to put it into our budget, and so you 
were a huge help.
    Most of our $307,000-increase that you will see in this 
budget is made up of that $250,000 that was deferred from last 
year. We are not increasing or changing the space we occupy. In 
fact, as you say, we have continued to reduce our space by 
small amounts as a result of telecommuting. Our space has 
decreased from 190,000 square feet in 1995 to 147,000 square 
feet at present. That is a 23-percent decrease. But GSA still 
is increasing our rent, and they tell us the increase is a 
result of their nationwide reappraisal of leases based on the 
new cost system they now use to determine funding of their 
public building fund.
    How that translates into an increase for us, I am not 
exactly sure. But mine is only to do or die.
    Mr. Hobson. Well, I wish we had that committee under our 
jurisdiction. [Laughter.]
    Ms. Gall. Here! Here!
    Mr. Hobson. They probably wish that--they are glad that we 
do not. [Laughter.]
    But I have walked through some of their buildings, and the 
design in some of their buildings, some of their newer 
buildings, is part of the reason that their costs are so high. 
I know they do listen to this because I was visited a couple of 
years ago by the head of GSA.
    Ms. Brown. Anything you can do in this.
    Mr. Hobson. It was a friendly meeting. I just do not think 
that, and I sit on other committees where we look at rents and 
stuff, as the Military Construction Chairman, and we are 
forcing the military to look at more private-sector options. I 
think if we could get GSA to look at more private-sector rental 
programs, that we would do better for your rents. And I want to 
compliment you on at least making the effort to try to thwart 
this. It would be even worse if you were not attempting to do 
that.
    If every Agency would look at it the way same way you all 
have from the very beginning. When we first started talking 
about this, you were putting people into their homes, doing 
some work. I remember that.
    Ms. Brown. That is a voluntary program for our existing 
employees.
    Mr. Hobson. We would do a better job in Government if GSA 
got more private-sector oriented, but we cannot do that here, I 
guess, except to keep asking everybody as they come through 
about it and picking at them. So I hope you will keep up the 
good work on that.
    Ms. Brown. Thank you.
    Mr. Hobson. Thank you.
    Ms. Brown. We appreciate your help.
    Mr. Walsh. Thank you.
    Mr. Frelinghuysen.
    Mr. Frelinghuysen. Thank you, Mr. Chairman. Sorry to be a 
little late. Chairman Brown, nice to see you. It is always a 
pleasure to follow Mr. Hobson. The bulldog has become warm and 
cuddly over the years. [Laughter.]
    Mr. Hobson. As I say, at least we can save $250,000 for a 
year.
    Ms. Brown. Darn right. And we had the use of that money 
too.
    Mr. Frelinghuysen. You two work so well together. It is 
difficult to interrupt. [Laughter.]
    I am sure you would agree, right, Mr. Chairman?
    Mr. Walsh. Oh, without a doubt, and coming from another 
bulldog. [Laughter.]
    Mr. Frelinghuysen. It is nice to see you again. Thank you 
for the work you do.
    Ms. Brown. Thank you. We have had very successful efforts 
together, Congressman.

                             actions of ul

    Mr. Frelinghuysen. I have a few questions that relate to 
the Underwriter's Laboratory, the UL.
    Ms. Brown. Yes.
    Mr. Frelinghuysen. For many years, consumers have been 
buying with confidence with that label. It is, as I understand 
it, the world's largest independent testing service. The 
Washington Post reported last year, and I am an inveterate 
clipper, so we have all sorts of clippings ``that Federal and 
local safety officials are,'' and I quote, ``increasingly 
troubled that the gold standard of safety signified by the UL 
mark is falling short in an era when Americans increasingly put 
their faith in devices purporting to save time and lives.''
    It was a lengthy article which continued about specific 
complaints about the UL, such as, and these I am sure are 
familiar to you, but I put them into the record, ``Tests that 
do not reflect the real world''; that is, for instance, no food 
in the toaster. There may be toast in the toaster, but maybe 
not food in the toaster; to factors affecting long-term 
integrity that are not always considered--the reaction of 
chemicals that have been, let us say, in products for a long 
time; thirdly, slow to react, the issue of halogen bulbs; and, 
fourthly, decisions made in private with manufacturers having 
greater input. This relates to aluminum wiring, unsafe before 
the UL approved its use.
    I was just wondering what your reaction was to this 
situation and how much of a problem is it?
    Ms. Brown. Right. I think that the UL standard is still a 
very, very important safety standard. I think with everything 
there can be some improvement. And since that article, we have 
been working even better with UL. We work very, very closely 
with UL. And the head of UL and their general counsel came in 
and met with me and met with the other commissioners, and we 
have a very, very good working relationship with them. There 
were some things that we wanted from UL and that we are working 
on together that we can talk about. Sometimes the work was too 
slow, and that was something that we talked about, and they are 
speeding up some of the work that they are doing.
    Other times we felt that the process was too closed. CPSC 
has excellent technical people who should be put right into the 
process, and we had a lot of trouble with that. That has been 
changed now, and the CPSC has become more a part of that 
because we can bring a broader representation. We felt there 
should be more consumer representation, just as at ASTM and 
other labs, and they are beginning to do that, to have more 
consumer representation.
    There were a couple of issues that were a little troubling. 
For instance, they were endorsing certain sprinklers when we 
had told them about the problems with those sprinklers, and 
they now have backtracked on that and are working with us.
    Mr. Frelinghuysen. These are the Omega sprinklers?
    Ms. Brown. The Omega sprinklers, that is right, and that 
was something that we had to do.
    But I think that you are seeing a UL just kind of perking 
up and becoming even better. And this happens to organizations 
that are old sometimes. They can get set in their ways, and I 
think UL is now doing even better than they did before.

                            smoke detectors

    Mr. Frelinghuysen. You made some comments about the Omega 
sprinklers. Are there any comments about the smoke detector 
manufacturer?
    Ms. Brown. Alan, do you want to comment on that? Ron?
    Mr. Frelinghuysen. Just for the record, give your name.
    Ms. Brown. Ron, you are going to do it. This is Ron 
Medford. He has a very long title.
    Mr. Medford. The UL holds the Nation's standards for smoke 
alarms, and we have worked with them over the years to make 
some substantial improvements in the requirements that they 
have. For example, now they have an option to allow a hush 
button to deal with nuisance alarms. You can push a button, and 
it will go off for a couple of minutes and then come back on. 
We also have alarms with 10-year life batteries written into 
the standard. We have also gotten UL to require that there be a 
battery back-up for all AC-powered systems.
    But we are also concerned a little bit about whether it is 
not time for a second generation or another generation of smoke 
alarms. And one of the research project requests that we had 
before this committee was actually to do that research. That 
work is supported by the manufacturers, and supported by UL, 
and there is, we think, a need to continue to look at making 
improvements to get greater and more reliable alarm systems in 
people's homes.
    Mr. Frelinghuysen. What about the issue of whether the 
testing covered cold smoke?
    Mr. Medford. There is an issue about whether a certain type 
of alarm--there are two types that are sold in the United 
States, one is a photoelectric type and the other is an 
ionization. There is a question around whether or not the 
ionization detector is adequate with some--you call it cold 
smoke, we call it smoldering ignition fires. And there is a 
study out of Norway that has questioned that. And we have 
looked at that study. We have been discussing with UL the need 
to do some additional testing, and we will continue to pursue 
that.
    Ms. Brown. That would be, as Ron says, if we had a research 
budget, smoke detectors would be very important for us to be 
doing work on.
    Mr. Frelinghuysen. A lot of the tragedies often are a 
result of just people failing to put batteries in. And you 
cannot hand feed everybody. But in reality, the most tragic 
circumstances are when you have got the damn equipment----
    Ms. Brown. And you do not have the battery.
    Mr. Frelinghuysen. It either is not connected or, for some 
reason, somebody cannot afford the battery, they forget to put 
the--postpone buying batteries.
    Ms. Brown. But there is a new generation now of smoke 
detectors, as there is with everything.
    Mr. Frelinghuysen. Any comments on the carbon monoxide 
monitoring alarms? Certainly that took the public's imagination 
or seized it a couple of years ago. Where do we stand relative 
to technologies there and particularly UL?
    Mr. Medford. A very good question. The technologies have 
made some substantial leaps in this last revision to UL 
standard. And we think we finally have gotten some new 
technologies that are going to be much more reliable, less 
frequent nuisance alarming than we have had in the past. And I 
think we are glad to see that this current revision to the 
standard looks like it has taken substantial leaps in the 
technologies. So we are pleased about that.
    Ms. Brown. The companies have been active to work with us 
to have a new generation of carbon monoxide detectors that will 
not go off in nuisance ways so the people will not disable 
them.
    Mr. Frelinghuysen. Thank you for your response.
    Thank you, Mr. Chairman.
    Mr. Walsh. Does anyone else have questions of the 
witnesses?
    Mrs. Meek. This is a quicky, Mr. Chairman.
    Mr. Walsh. Go ahead.

                         information technology

    Mrs. Meek. You know, agencies and the Federal government 
have already been criticized as having very poor information in 
terms of information technology and keeping up with this new 
age. You have a very important agency. It is a very small 
agency. How do you keep up with this and how do you plan to 
really come out of this ``dinosaur'' age or universe we are in 
here, particularly in the Congress?
    Ms. Brown. Well, we, of course, would like to have some 
extra money to do even greater information technology 
improvements because it is extremely important to us to be on 
the cutting edge. And one of the things you can tell is the 
majority of our desk top personal computers are early versions 
of Pentium II, and they run on Windows '95 operating system, 
using Microsoft Office Suites '97. Now, you know that is not 
exactly cutting edge. The latest versions of Microsoft products 
are Windows 2000 and Office Suite 2000.
    We could use newer computers that would be faster, with 
greater memory, easier to use and that would handle graphics 
better and be more compatible with our existing software. And, 
in fact, if we cannot buy newer ones, newer computers, the 
warranties on our existing equipment will expire, which will 
impose additional maintenance costs.
    Mrs. Meek. Have you considered that in your budgetary 
plans?
    Ms. Brown. Have we considered it? We are here to say that 
that is something that we could really use some extra funding 
for. It is of critical importance to us.
    Mrs. Meek. And you sort of incorporate it, not only this 
fiscal year, but did you look forward to the future?
    Ms. Brown. Absolutely. What we are doing, quite honestly, 
Congresswoman, is playing catch up here.
    Mrs. Meek. Thank you.
    Thank you, Mr. Chairman.
    Mr. Walsh. Thank you. Anyone else? Virgil, do you have any 
follow-up?

                             ul designation

    Mr. Goode. Just one. UL listing, does that apply only to 
American products or does that apply--do you have to be made in 
America to get that?
    Mr. Medford. The UL program is a voluntary program 
worldwide. Many States and local jurisdictions require that 
certain kinds of products only be sold that are UL listed. And 
for those States, it becomes sort of a mandatory requirement. 
However, for the vast majority of all UL products, it is simply 
a voluntary program in which companies pay UL to test and list 
to their standard, and then they put the mark on it. So it is a 
worldwide program. They are expanding all over Asia. But it is 
not mandatory. It is a voluntary program.
    Mr. Goode. Thank you.
    Mr. Frelinghuysen. Just one follow-up. With so many goods 
coming in from the Pacific Rim, from the PRC, are they 
involved?
    Mr. Medford. Yes.
    Mr. Frelinghuysen. And are trade representatives well-
equipped to ask these types of questions?
    Mr. Medford. Yes. Actually, UL has a strong presence 
overseas in Asia, and they----
    Mr. Frelinghuysen. Specifically, in the People's Republic 
of China?
    Mr. Medford. I cannot speak specifically, but I believe so.
    Ms. Brown. We had a strong program with Customs, and this 
would, of course, be things imported from China, too, where we 
see a great many problems. One of my staff right now is over in 
China talking to manufacturers, and industry representatives 
trying to bring them up-to-speed on our regulations here. It is 
nearly an insurmountable problem. But we do work with Customs 
to stop or seize or detain products at the dock. That is a very 
important program, and I am pleased to say that Commissioner 
Gall has been working with Customs to improve that program even 
more.
    Mr. Frelinghuysen. Great. Thank you.
    Mr. Walsh. Thank you.
    If there are no further questions of the witnesses, we will 
take a short recess, and come back with the Federal Consumer 
Information Center.
    Ms. Brown. Thank you very much.
    Mr. Walsh. Thank you.
    [Recess.]

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                                           Tuesday, March 21, 2000.

                  FEDERAL CONSUMER INFORMATION CENTER

                               WITNESSES

TERESA N. NASIF, DIRECTOR
BETH NEWBURGER, ASSOCIATE ADMINISTRATOR FOR COMMUNICATIONS
DEBI SCHILLING, DIRECTOR OF BUDGET
    Mr. Walsh. The subcommittee will come to order. I would 
like to thank everyone for coming back. And we now hear from 
the Federal Consumer Information Center. Their appropriations 
request for fiscal year 2001 is $6,822,000. Presenting 
testimony before us today is Teresa Nasif, director of FCIC. 
Welcome back.
    I should note that beginning in just January of this year, 
the Consumer Information Center assumed responsibility for the 
Federal Information Center. The Federal Information Center was 
previously administered through the Policy and Operations 
account of GSA and was formerly under the jurisdiction of the 
Treasury and Postal Appropriations Subcommittee.
    The fiscal year 2001 budget request for the newly combined 
Federal Consumer Information Center represents an increase of 
$500,000 compared to the amount appropriated for the two 
separate accounts in fiscal year 2000.
    As the FIC portion of the budget is new to our 
jurisdiction, we will certainly have several questions for you 
after your testimony. I offer the opportunity to Mrs. Meek to 
make an opening statement.
    Mrs. Meek. Thank you very much. It is good to see you 
again, and that is the end of my statement.
    Mr. Walsh. Well, then why do we not proceed with your 
opening statement, and the entire statement will be included in 
the record. You can summarize, if you would like, and then we 
will ask questions when you have finished your statement.

                           Opening Statement

    Ms. Nasif. Thank you. Mr. Chairman and members of the 
subcommittee, thank you for the opportunity to be here today. 
With me today is Beth Newburger, Associate Administrator of 
Communications for the General Services Administration and Debi 
Schilling, our new Director of Budget at GSA.
    Today, I appear before you for the first time as the 
Director of the newly formed Federal Consumer Information 
Center. In keeping with GSA's strategic goal to excel at 
customer service, GSA Administrator Dave Barram signed an order 
on January 28th transferring the Federal Information Center to 
the Consumer Information Center. The merger brings together two 
very popular, highly visible consumer organizations. The 
Consumer Information Center was established by Executive Order 
in 1970 to work in partnership with Federal departments and 
agencies to inform the public about health and safety issues, 
developments in Federal programs, and the impact and effects of 
Federal research and regulatory actions. The Federal 
Information Center was established in 1966 and formalized by 
Public Law 95-491 in 1978 to provide the public with direct 
information about all aspects of Federal programs, regulations, 
and services. To accomplish this mission, the FIC uses 
contractual services to respond to public inquiries via a 
nationwide toll-free telephone call center. The calls cover a 
myriad of topics such as Federal benefits, passports, Federal 
taxes, housing, and consumer issues.
    The merger of these two programs will facilitate public use 
of Federal information by broadening both the variety of 
information available and the ways that consumers can obtain 
it. The new Federal Consumer Information Center combines the 
nationwide toll-free telephone assistance program and the 
database of the FIC with the CIC web site and publication 
distribution programs. Bringing together these two 
organizations will streamline and enhance the delivery of 
information services to the American public. The FCIC will 
become a one-stop source for citizens to get answers to 
questions about Government and consumer issues--the consumer's 
help desk for everyday life. FCIC will give the answer they can 
trust and in the way they want it: in print, on the web, or 
from a friendly voice on the phone.
    A cornerstone of the FCIC reference library, used by 
consumers and information professionals alike, is the Consumers 
Resource Handbook. During fiscal year 1999, we updated both the 
print and web version of the Handbook, recognized as one of the 
most helpful and popular Federal resources ever published, and 
work is underway to release the new 2000-2001 edition this 
summer. Earlier this year, we held a series of focus groups to 
obtain feedback on the design and to get suggestions for new 
content areas. Corporate, education, and government contacts, 
as well as consumers and congressional caseworkers, all praised 
the Handbook and encouraged FCIC to continue widespread 
promotion and distribution.
    These discussions led to a decision to rename the document 
the Consumer Action Handbook to reflect how the book gives 
people the information they need to take action. We think this 
book is so important that we are going to highlight it in our 
upcoming television public service advertising campaign and 
encourage consumers to call for a free copy or to use the 
electronic edition on our web site.
    Demand for consumer information continued to increase 
during fiscal year 1999. Since our web site went up in fiscal 
year 1995, FCIC has continuously expanded and improved its 
content and design, and page accesses have increased from 1 
million in fiscal year 1995 to 9.5 million in fiscal year 1999. 
Also in fiscal year 1999, the FIC program responded to over 2.7 
million telephone calls about Federal programs and services. In 
total, requests for printed publications, web site page 
accesses, and FIC calls are expected to exceed 20 million in 
fiscal year 2000.
    Not only has consumer demand increased, I am pleased to 
report there is a high level of satisfaction with our services. 
During fiscal year 1999, the National Partnership for 
Reinventing Government commissioned the first-ever 
comprehensive federal customer satisfaction survey. Customers 
of 29 high-visibility Federal agencies were surveyed to 
determine how well they felt they were being served. CIC earned 
a score of 77 out of a possible 100, ranking well above the 
average Federal agency score of 68.6 and the average private 
sector score of 72. With the addition of the FIC national call 
center, an expanded and enhanced web site, and the new edition 
of the Consumer Action Handbook, I am confident that citizens 
will be increasingly satisfied with FCIC services in the years 
ahead. Whether it is explaining government benefit programs, 
sharing the results of Federal research, or helping consumers 
solve their marketplace problems, FCIC will make it easier for 
citizens to find trustworthy answers to questions about 
everyday life.
    Mr. Chairman, again I thank you for the privilege of 
appearing on behalf of the Federal Consumer Information Center. 
I hope that the committee will agree thatFCIC is a valuable 
Federal program and that it will look favorably upon our request.
    [The information follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                         consolidation savings

    Mr. Walsh. Thank you. When we consolidate two Federal 
agencies or departments, one would expect some savings. Your 
budget goes up in this request. Obviously, I would like to get 
a response to that. But could you also, in that response, talk 
about consolidation, I believe, of the toll-free numbers down 
to one.
    Ms. Nasif. At some point in the future, we hope to do that.
    Mr. Walsh. And also the websites.
    Ms. Nasif. Yes, that is a future plan as well.
    Mr. Walsh. So can you tell us how this is going to maybe 
save us some money in the long run.
    Ms. Nasif. While both programs have been, as a fundamental 
mission, providing information to the public, their delivery 
systems are quite distinct. One is the national call center, 
which is run by a contractor and gives telephone assistance to 
the public. The Consumer Information Center primarily uses 
print distribution and also a web site to provide the 
information. Bringing the two programs together does not 
necessarily reduce the need for any of those delivery systems. 
They will still remain in place. The idea was that by bringing 
the programs together, we could better help each other. With 
the synergy of bringing the programs together, we could work 
together and better help each other to serve the public in a 
more comprehensive way. The goal of it was not cost reduction, 
but really improved service to the public.
    The increases in the budget have to do with increases in 
our operating costs and increases in the new 5-year contract to 
run the telephone center, which is about to be awarded. The new 
contract will provide even more enhancements and improved 
service, so we provided some money to cover those enhancements.

                   web site versus print publication

    Mr. Walsh. I would suspect that you have seen, like 
everyone else has with e-commerce, an increase in the number of 
electronic requests for information on your website, as opposed 
to the catalog?
    Ms. Nasif. Yes, we have seen a decline in demand for print 
materials, and this is because there is a faster, more 
efficient way of getting the information from our web site. We 
do not think it means that people need the information any 
less. They just have found a better way to get the information. 
As our web site accesses have increased tremendously, the 
demand for print materials has decreased.
    However, we remain committed to the print program because 
we feel that, even when there is 100-percent Internet access in 
this country, there will be individuals who will choose not to 
utilize Internet access to get their information.
    Mr. Walsh. But you are planning a transition to more of the 
Internet access.
    Ms. Nasif. Yes, and I must say it is not so much our plan, 
as it is our customers who are making the plan for us.
    Mr. Walsh. Right. The growth of the Internet is driving the 
change.
    Ms. Nasif. Right. They are changing our program very 
dramatically.

                            web site design

    Mr. Walsh. Have you thought about the differences, subtle 
or otherwise, in the way print material is presented, catalog 
versus website? When you initially designed your website, it 
was very similar to the catalog, but are you making it easier 
for people to download information and make the transition to a 
more download-friendly environment?
    Ms. Nasif. Yes, and as a matter of fact, we have just 
redesigned our website. We have been working on it since last 
summer, and our new look was unveiled in February. We went 
through an internal process where we looked at the best web 
sites there were. We know our mission is to provide important, 
vital information, but we realized, that if it is not an 
attractive design, and a design that is very easy to use, that 
we would not have very many repeat customers. And so we very 
deliberately set out to have a sense of humor and to make it 
light, to make it approachable, while providing the hard 
information. All of our material can, of course, be downloaded 
and also can be printed out.
    We have actually gone beyond just the publications 
available in print and now our website has taken on more of the 
flavor of a consumer newsletter. When we think there is an 
important topic that needs to be covered, we can get the 
information from the Federal agency. Whether or not there is a 
publication in existence, we can put the information up.
    Mr. Walsh. In the fiscal year 2001 budget justification, 
the amount requested for FIC telephone service is $3,692,000. 
Does this amount represent the entire cost of the FIC program? 
And could you please break down for the committee what the 
total cost of the FIC program covers.
    Ms. Nasif. The $3.692 million, which is represented on page 
11, is the cost of the national call center. It is $2.9 million 
for contractor expenses and an additional $700,000 in total 
communications costs that we pay for the Sprint lines. Over and 
above that, there is about $277,000 for the administrative 
expenses of the FIC, which covers two FTE, as well as travel, 
training, administrative support services, rent, and other 
administrative expenses.

                              fic contract

    Mr. Walsh. It is obvious that 95 percent of your budget is 
telephone----
    Ms. Nasif. Yes, 95 percent is correct.
    Mr. Walsh. And you recently bid that?
    Ms. Nasif. Yes, it is a 5-year contract. The new award 
should be made by April 1st, and we have our fingers crossed 
for an award this week. It is close to being awarded.

                       senior executive position

    Mr. Walsh. Lastly, for the first time, the FCIC budget 
detail has a senior executive service slot. The subcommittee 
was pleased that GSA has finally agreed that the director 
position of FCIC is executive level. We note that the CIC has 
served the American public well over the years, and are 
confident that the merged programs of FIC and CIC will continue 
to provide such exceptional service.
    Could you bring us up-to-date as to the status of this 
realignment of positions.
    Ms. Newburger. May I address that?
    Mr. Walsh. Yes.
    Ms. Newburger. We, at GSA, as we stated in our letter to 
this Committee, believe that the Director's position is 
executive level and that it is time, since the program 
functions as a small independent agency, that it is led by a 
senior executive service member.
    GSA, unfortunately, has yet to receive its biennial 
allocation of SES slots for fiscal year 2000 and 2001 from the 
Office of Personnel Management. We have requested an additional 
slot specifically for the FCIC. When it is received, and we are 
confident and hopeful that it will be, the process will move 
forward, and we will then compete the position. We are hoping 
that it happens very soon.
    Mr. Walsh. Would any of you like to comment any further on 
that?
    Ms. Schilling. I think Beth did a good job of describing 
the status, and we are all looking forward to getting the 
allocation and being able to compete the position.
    Mr. Walsh. Mrs. Meek?
    Mrs. Meek. I pass, Mr. Chairman.
    Mr. Walsh. Mr. Hobson?

                                catalogs

    Mr. Hobson. I have some questions.
    First of all, I have a dollar that I would like to give 
you, and I would like you to send me 19G. [Laughter.]
    Ms. Nasif. I will take your dollar.
    Mr. Walsh. Walking for Exercise and Pleasure.
    Mr. Hobson. Walking for Exercise and Pleasure, I need that 
one. [Laughter.]
    As a matter of fact, I was looking through your materials 
here, and this is really a neat little book. There are lots of 
things in here. I do not know what they say, but the titles 
here are very suggestive to getting a copy of these. And I just 
told my staff here I think we can save a lot of time in our 
offices on questions if we could just hand these booklets to 
some of the people that come into the office. But I am 
particularly interested in that one. I probably need the one on 
medical problems here on anxiety or something.
    Ms. Nasif. I would like to say that we are very delighted 
that your office does use our Catalog and actually imprints the 
cover with a message from you.
    Mr. Hobson. Yes.
    Ms. Nasif. I happen to have a copy.
    Mr. Hobson. This is unbelievable. [Laughter.]
    Ms. Nasif. We have one for Mr. Frelinghuysen and we have 
one for Mrs. Meek and Mr. Walsh. We really appreciate your 
support in doing this because Members have the opportunity to 
order our Catalog for distribution with our printed cover. But, 
if they prefer to have their photograph, we can do that for 
you, also.
    Mr. Goode. Do you have an extra one? [Laughter.]
    Mr. Hobson. But I think we need brochures, and we get a lot 
of people who ask for help in our offices and our district 
offices. I think all members do. And probably the most 
satisfaction you get is when you help somebody not with a 
statute particularly, but with a personal problem. So I think 
those are good. But I need the one on the walking there.
    Ms. Nasif. I will make sure that you get it, Mr. Hobson.
    Mr. Frelinghuysen. How about running?
    Mr. Hobson. No. [Laughter.]
    Mr. Walsh. He does that every two years. [Laughter.]
    Mr. Hobson. As you can tell by my physique, it is not done 
that often.
    Mr. Frelinghuysen. This is on the record you know.
    Mr. Hobson. Yeah, I know. Well, anybody who has seen me 
knows.
    Mr. Frelinghuysen. This record.

                     outreach to small communities

    Mr. Hobson. I want to talk about outreach to small 
communities because you talk about your outreach to magazines, 
newspapers, wire service, websites and consumer catalog. And 
while Parade Magazine, the Washington Post, the New York Times, 
the Miami Herald, the Los Angeles and other major newspapers 
have a large reach to Americans, I have got a district covered 
by small community newspapers. Frankly, a higher percentage of 
people in these towns read the newspaper in those little 
communities than in some of these major cities. And I think 
some of them would be interested in promoting your 
publications. Do you have any outreach to smaller rural and 
suburban communications systems? And how can we assist in this?
    Ms. Nasif. We have a press release service, which is a news 
information service that we offer continuously to the media. We 
purchase lists of 10,000 newspapers and magazines across the 
country, reaching communities of all sizes and we offer these 
to rural areas.
    Mr. Hobson. If we give you a list of the ones----
    Ms. Nasif. In your area, we would distribute to them.
    Mr. Hobson [continuing]. From our congressional offices, 
the smaller papers, to make sure they are on----
    Ms. Nasif. Yes.
    Mr. Hobson [continuing]. On your list?
    Ms. Nasif. Yes. An example of what we would send to them is 
this press release for consumers. This happens to be ``The Five 
Worst Mistakes a Consumer Can Make,'' and we send these out 
every month. We send four a month in print, and we also have a 
subscriber e-mail service. If papers prefer to receive it by e-
mail, we can send it tothem by e-mail because it is immediate. 
They do not have to wait for it to be printed and mailed. I would be 
delighted to add any newspapers that you have. We know that a lot of 
people will not necessarily send for the information and they do not 
come on the website, but we know they are reading their local 
newspapers and magazines.
    We have a similar service for radio and television 
stations. It is the hard news that is found in some of these 
publications, and that is the way we relay it to the public.
    Mr. Hobson. I noticed you were smart to have one here with 
the Chairman's picture on it.
    Mr. Walsh. Yes.
    Ms. Nasif. We offer that service to all Members. Each year 
Administrator Barram, of the General Services Administration, 
writes to all of the members and offers them the catalog, 
either with the imprinted cover or a specialized cover. As a 
matter of fact, next year we are going to be promoting the 
Federal Information Center services. We know sometimes 
caseworkers are stumped when they get some questions that are 
of a consumer nature or they are not exactly sure what Federal 
agency handles it. We think that by making sure they all have 
the FIC telephone number, they can call and find out exactly 
where to route the letter, or to get the answer to be able to 
help the constituent.
    Mr. Hobson. I think that when we go back home and you talk 
to our caseworkers, it is very important because they are on 
the line hearing from all of these people all of the time, and 
it is a little frustrating from time to time for them. But when 
they have a win, they are really excited about it. So it is 
kind of fun.

                          cooperative program

    In the conclusion of your justification, you state that the 
FCIC will focus on publishing ventures with private sector 
entities and Federal agencies to share the cost of publishing 
material. Can you kind of elaborate on this new initiative, and 
what agencies have you worked with in the past? And how much is 
contributed by the private sector compared to the amount of 
funding by the Federal agencies? That is an intriguing----
    Ms. Nasif. It is intriguing. It has been a very successful 
program for us. Through the years, we have had tremendous 
success. We have distributed actually 180 different titles 
since the mid-1980s. We match a private sector partner with a 
Federal agency who has an interest in the same topic so that 
they can develop the publication together. Most often, the 
private sector will pick up the cost of printing and 
distribution. In our budget, on page 11, we show that for 
fiscal year 2001, we will be expecting, from the private 
sector, $300,000 to cover the print distribution costs. That 
does not reflect the amount of money that they will contribute 
to the printing or to the development of it.
    It has been a very successful program. This year, for 
example, we worked with Knoll Pharmaceutical and the Federal 
Trade Commission on a campaign that they had on healthy weight 
loss. They also had a publication on weight loss management 
that was very popular.
    Last year, as you might remember, there was a cooperative 
publication done by the Consumer Product Safety Commission and 
Procter & Gamble, entitled ``The Grandparenting Guide''.
    Mr. Hobson. Right. I know that one well.
    Ms. Nasif. Procter & Gamble paid for the printing and 
distribution for that publication. We acted as a catalyst, 
getting the two together.
    Mr. Hobson. I hope that was not the reason their stock went 
down here recently. [Laughter.]
    Ms. Nasif. No, I do not think so.
    Mr. Hobson. I am just kidding.
    Ms. Nasif. We act as the broker, or the matchmaker, to try 
to find the private sector partner. It all started because we 
kept going to the Federal agencies suggesting that they do 
publications, and they often said, ``Well, we do not have the 
money.'' So we started a partnership with the private sector so 
these things could get developed and released.
    Mr. Hobson. Thank you very much.
    Mr. Walsh. Mr. Goode?

                              publications

    Mr. Goode. Let me ask you on the items that are 50 cents 
and a dollar. I will just pick Home Maintenance. Online, is 
that available without a charge?
    Ms. Nasif. Yes, it is. It reflects the fact that it is 
getting to be expensive to deal in the printed product. You can 
put it up online, and people can access it totally for free. If 
they would like a copy of some of the publications, there will 
be a charge.
    Mr. Goode. So David could have got his walking book----
    Mr. Hobson. And then I have got to figure out how to get 
online to do that. [Laughter.]

                          spanish publications

    Mr. Goode. One other question. You have a brochure in here 
written in Spanish.
    Ms. Nasif. Yes.
    Mr. Goode. Do you think that is an encouragement for 
persons that speak Spanish not to learn English?
    Ms. Nasif. It was not a deterrent for me. I spoke only 
Spanish the first six years of my life. I am Spanish. I think 
it is a tremendous help, until the point that someone learns to 
speak English, to have those resources available. We make a 
list of all of the publications Federal agencies are doing in 
Spanish to explain their programs to the public. We do not 
distribute those publications directly, but we do give the 
agency addresses. Each agency decides at what point it might 
not be necessary any more to have it in Spanish, Asian, or 
whatever the language is. We do it as a public service because, 
as we do our rounds with the agencies collecting the English 
publications, we often find the Spanish publications as well. 
Most people who come to this country are thrilled to be here 
and want to learn the language, and they want to become part of 
the mainstream. I do not personally, judging from my own 
experience, think it was a deterrent.
    Mr. Hobson. Can I ask a question along that line?
    Mr. Goode. Sure.
    Mr. Hobson. Because I am paying the other way. I am paying 
for my grandchildren to learn to speak Spanish. I think in the 
future there will be more people bilingual in thiscountry, and 
I am hoping they will take advantage of that.
    But along Virgil's line, is there any way that you have 
something out in those Spanish programs that would say, in 
Spanish, if you want to learn English, we will send you a 
program to teach you to help be bilingual or here is how you 
can get to learn English or something like that?
    Ms. Nasif. I think that is a great suggestion.
    Mr. Hobson. Because I think one of the problems is that 
sometimes people are shut in communities which only use say, 
Spanish. Maybe they do not have any opportunity to learn 
English at a young age. I think we are becoming more and more 
of a bilingual country, especially with Spanish, and other 
languages, but I think Spanish is one where we could probably 
open the door to people to have more bilingual education.
    Ms. Nasif. Yes, I think that is a great idea. It is 
something we could take up with the Office of Bilingual 
Education, at the Department of Education.
    Mr. Hobson. Yes. Excuse me.
    Mr. Goode. No, I think Mr. Hobson makes a good point. I 
certainly want to see everyone speak as many languages as 
possible. I think in the years ahead, the more different 
languages you can speak, the better off you are. But I think we 
need to encourage those that come from other countries to learn 
English as quickly as they can and I do not want us to get in 
any situation like Canada or some other nations where it 
creates problems. And I would concur with what Mr. Hobson said 
on this booklet and I would suggest including, ``This is in 
Spanish, but we hope you will learn English.''
    Ms. Nasif. I remember years ago, when I was appearing on a 
Spanish interview show in San Antonio, Texas, and I was talking 
about the information we had available. An interviewer asked me 
``what is the best consumer advice you could give to our 
audience?'' I said the best advice is that they learn to speak 
English because they are never going to be able to go through 
life and navigate in this country if they do not know the 
language. All the advice I can give them in Spanish will be of 
no good if they cannot read that contract and know what they 
are signing.
    So I concur with you that has to be the goal.
    Mr. Walsh. I think the Internet will do more than anything 
else to make English the global language. So it will just make 
sense to, and I am not trying to be culturally imperialistic 
here, I just think it just makes sense that everybody is going 
to have to learn English, whether they like it or not.
    Mr. Frelinghuysen?

                print material versus web page accesses

    Mr. Frelinghuysen. Thank you, Mr. Chairman, Director, your 
colleagues.
    Just to follow up on some of the initial questions from the 
Chairman, can you give us some specific statistics for the 
record what we are sending out these days in terms of printed 
material versus hits on your website?
    Ms. Nasif. Yes, absolutely.
    Mr. Frelinghuysen. I assume those statistics do exist.
    [The information follows:]

               Printed Material Versus Web Page Accesses

    Web site page accesses have steadily increased since going 
online in fiscal year 1995. At the same time, printed 
publication distribution has declined.

----------------------------------------------------------------------------------------------------------------
                                                                             Fiscal year--
                                                     -----------------------------------------------------------
                                                         1995        1996        1997        1998        1999
----------------------------------------------------------------------------------------------------------------
Web Page Accesses...................................   1,000,000   2,000,000   4,000,000   6,500,000   9,500,000
Printed Publication Distribution....................   9,500,000   7,000,000   8,300,000   7,600,000   6,600,000
----------------------------------------------------------------------------------------------------------------

    This trend is continuing in fiscal year 2000. Based upon 
the first five months of the fiscal year, we project 11.5 
million web page accesses and 6 million printed publications 
distributed.

                    topics of interest to consumers

    Mr. Frelinghuysen. And you made reference to the fact that 
when there is a topical issue that comes up, let us say some 
sort of a crisis, you often will pull up that topic or those 
materials from another Federal agency?
    Ms. Nasif. Yes.
    Mr. Frelinghuysen. And then you distribute information that 
relates to that topic; is that how that works?
    Ms. Nasif. Yes. Our new web site design allows us to not be 
limited simply to the publications in print, but to also talk 
about topics on which we might not have print publications 
available. If it is a topic that is of tremendous interest, we 
can put it up on the web site, something like a product recall 
or a scam that all of a sudden seems to becoming more prevalent 
in the Nation.
    Mr. Frelinghuysen. Is it product related or is it health 
related or can it be anything?
    Ms. Nasif. It can be product related, but it is often issue 
related. For example, we know that HHS now is collecting 
comments for privacy issues relating to medical records. Once 
any guidelines are put out, we can put them up right away for 
consumers and say these are the guidelines and these are the 
questions you should be asking about your medical records. We 
do not have to wait for a book to be printed before we 
disseminate the information.

                         medical privacy issues

    Mr. Frelinghuysen. Last year I did ask you to summarize the 
medical privacy issues.
    Ms. Nasif. Yes, you did. That is why I thought I would 
mention it.
    Mr. Frelinghuysen. Well, thank you. You have got a very 
good memory.
    Staff Person. Staff.
    Mr. Frelinghuysen. Now, do I have to give you a dollar to 
be quiet or what? [Laughter.]
    Are you promoting consumer awareness of the new age or just 
rules that relate to----
    Ms. Nasif. We are trying to put that up on our web site. I 
believe the comment period just ended in February, and they 
have approximately 60,000 comments they are going through, and 
they are going to be issuing some guidelines. Once they are 
available, we plan to put them up.

                  accuracy of government publications

    Mr. Frelinghuysen. And satisfy my curiosity relative to the 
general, and I compliment you for it, of making a topical 
information available from different Federal agencies. How do 
you know, other than your good faith in our Government, that 
the information that you are getting isactually accurate and 
verifiable?
    Ms. Nasif. We trust the Federal agencies. When FDA gives us 
information for food safety, or on any of the issues they 
regulate, we accept that they know what they are talking about, 
and we go with it. We trust the experts at the Federal 
agencies.
    Mr. Frelinghuysen. You have several different booklets: 
Social Security, Medicare. Those booklets are current, 
accurate, can we assume?
    Ms. Nasif. Yes, they are current and accurate. It is 
interesting because the topics that are most frequently asked 
on the Federal Information Center hotline have to do with 
Social Security, Medicare, veteran benefits, and the Federal 
benefit programs. We see the interest, not just in print, but 
also from the phone calls coming in as well.

                            targeted groups

    Mr. Frelinghuysen. As an individual member of Congress--I 
will speak for myself--the landscape seems to change. We may 
pass a law, but sometimes those who implement may have a 
different interpretation of what Congress intended. And certain 
things that relate to Medicare took effect in January of this 
year, an expanded program in a variety of different areas, and 
we obviously want to promote that because obviously we think it 
is an expanding benefit and people ought to know about it.
    Are you targeting any other age groups, baby boomers, 
generation Xers on other materials specifically?
    Ms. Nasif. Our material appeals to a very wide range of 
ages. We have information that appeals to everyone.
    Mr. Frelinghuysen. On everything.
    Ms. Nasif. On everything, that is, on many different 
topics. We have information on preparing for college, saving 
for college, preparing for college costs, and all the way to 
information that would appeal more to people planning for 
retirement or during the retirement years.

                             mailing lists

    Mr. Frelinghuysen. And my last question is the issue of 
mailing lists. We might offer you a mailing list. But one thing 
you do find out in public life is that mailing lists get stale. 
And I still receive things that I somehow got on the mailing 
list for the Department of Agriculture when I was at the State 
legislature, and they keep sending me lists.
    Do you participate in any sort of an annual review to see 
whether all of these publications that are sent out--I can see 
where a specific constituent might ask, but do lists continue 
to be used in perpetuity without a review? I am sort of getting 
to the cost aspect.
    Ms. Nasif. Yes. That is a good question because it gets 
very expensive to maintain mailing lists. We have a mailing 
list of national organizations and nonprofit organizations, 
that have asked to receive the Catalog in bulk every quarter. 
We have started a continuous purging and enhancement cycle. We 
used to do it every other year, but now every quarter we take 
the oldest part of the list, and we mail them a letter stating 
we are going to drop them unless they respond. We are doing a 
continuous purging now and enhancement of the mail list of the 
organizations that receive bulk copies of the Catalog.
    The media mailing list is also purged on a regular basis. 
As a matter of fact, we just purged and now we are going 
through an enhancement. There is a purge step, you drop people 
because they do not respond, and you buy new mailing lists to 
offer the product. Unless that person responds to you in a 
positive way, they are not added to the list.
    We are aware of the importance of doing that because it 
gets very expensive to keep a lot of names when the person is 
not ordering the product.
    Mr. Frelinghuysen. Thank you very much.
    Mr. Walsh. Are there any further questions for the 
witnesses?

                 updating the consumer action handbook

    Mr. Hobson. I request that we have people look at this book 
to make sure that it is up-to-date? Because I was looking at 
some of the Ohio ones, and I do not think the woman is that, 
who is head of the State Department of Aging is different than 
what you have in that. And this was changed in 1999, and I 
think----
    Ms. Nasif. Yes, it was the 1998-1999 edition. There is a 
new edition currently underway which is going to be released 
this summer. It reflects the limitations of print materials 
because we update the web site version continuously. As soon as 
we know that we receive a telephone number that has changed or 
a person has changed, we immediately change it on the web site. 
Our web site version is more up-to-date than the print version, 
which gets updated every other year. Hopefully, we will catch 
that change, and I will get with your staff person to make sure 
we get it for the addition to the updated version.
    Mr. Hobson. If you are online, you have got it. But it is 
just the----
    Ms. Nasif. Yes, but only if anyone told us about it. If we 
were told about it, it was changed.
    Mr. Hobson. Well, with any new Government, mostly cabinet 
positions change, and most of the States that have changes in 
1999----
    Ms. Nasif. Yes.
    Mr. Hobson. Well, I need to go walk, probably, or a run 
would help me. [Laughter.]
    Mr. Walsh. Mrs. Meek?
    Mrs. Meek. I think this book is a very valuable resource, 
and I note inside of it that you give one free copy of this 
book. And it looks like it is about to go out of date because I 
see President Clinton's picture in here. How much would it cost 
to get enough of these for some of my agencies in my district?
    Ms. Nasif. Bulk copies are available.
    Mrs. Meek. Yes.
    Ms. Nasif. We do make bulk copies available to consumer 
organizations, members of Congress, and nonprofit 
organizations. You certainly can--and I know that your district 
staff in Florida does use it.
    Mrs. Meek. We use it.
    Ms. Nasif. We have talked to them on the phone about it.
    Mrs. Meek. Absolutely. Yes.
    Ms. Nasif. As a matter of fact, when we were talking to 
congressional caseworkers to get their input, we spoke with 
someone in your Miami office who gave us some input on how to 
update it.
    Mrs. Meek. Yes.
    Ms. Nasif. I would be glad to provide bulk copies for 
distribution within your district.
    Mrs. Meek. Thank you.
    Mr. Walsh. Are there any other questions?
    Mr. Goode?
    Mr. Goode. Just one question. Do you have a short 
information sheet about your web site that I could give to all 
my local papers and let them know that they could get David's 
Diet free instead of having to pay a dollar for it? Do you have 
just----
    Ms. Nasif. Yes, a summary sheet.
    Mr. Goode. Can you give that to me?
    Ms. Nasif. I will give it to you. That is great. We are 
picking up a lot of business here today. I am thrilled.
    Mrs. Meek. Mr. Chairman?
    Mr. Walsh. Yes.
    Mrs. Meek. Dave and I go all the way back to the Government 
Printing Office in ordering this kind of stuff, right, David 
Hobson?
    Mr. Hobson. Right.
    Mr. Walsh. Well there is a lot of good information. That is 
the trouble with the Internet and these Government services. 
There is so much information you do not know where to go or how 
to organize it. But they keep getting better and better at 
helping people to find it. This is very helpful.
    Mrs. Meek. Very helpful.
    Ms. Nasif. Thank you.
    Mr. Walsh. Any other questions or comments?
    Mr. Hobson. My staff says you have a very good web site.
    Ms. Nasif. Thank you.
    Mr. Walsh. All right.
    Ms. Nasif. It is going to get even better once we add the 
FIC database, which has 120,000 names and addresses of contacts 
in Government and outside the Government to help consumers. We 
are going to bring all of that online this coming year. It is 
going to be even better.
    Mr. Walsh. Good. Thank you all.
    Mrs. Meek. Thank you.
    Mr. Walsh. The meeting is adjourned.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                           Tuesday, March 28, 2000.

                        SELECTIVE SERVICE SYSTEM

                               WITNESSES

GIL CORONADO, DIRECTOR
WILLIE L. BLANDING, JR., DEPUTY DIRECTOR
LEWIS BRODSKY, DIRECTOR, PUBLIC AND CONGRESSIONAL AFFAIRS
    Mr. Walsh. The subcommittee will come to order.
    I would just begin by welcoming all of you back before the 
subcommittee. Normally, my ranking member, Mr. Mollohan, is 
here. He is a steady guy and he just couldn't be here, for 
whatever reason, this morning.
    Mr. Cramer. He's challenged getting in this morning.
    Mr. Walsh. He is aptly replaced by Mr. Cramer.
    I would like to welcome Mr. Frelinghuysen, another one of 
our rock-solid members of the subcommittee. We will proceed.
    I will have an opening statement to make, and then I would 
like to ask Bud if he would like to say something from the 
minority side, and then you folks can make your statement. We 
will ask questions following your statement.

                            OPENING REMARKS

    Welcome, Mr. Coronado, Director of the Selective Service 
System, along with his colleagues who are here today to discuss 
the agency's fiscal year 2001 budget request.
    As many of you will remember, the committee reported a bill 
that zeroed out the Selective Service. We have worked 
diligently to find offsets to a restoring amendment from many 
other administrative accounts where the small cuts would be 
very negligible. I don't believe it's accurate to say that 
offsets were the reason for the amendment's defeat.
    When we went to the conference, the Senate had not held a 
hearing with the Selective Service in some time and felt it 
would not be fair to eliminate an agency without further 
investigation. Therefore, the House acceded to the Senate and 
agreed to a funding level of $24 million in fiscal year 2000.
    Selective Service is requesting $24.48 million for fiscal 
year 2001, and the agency is also proposing to assist DOD with 
mailing recruiting materials and create a new agency with 
elements of DOD.
    I look forward to your testimony, and I would ask Mr. 
Cramer if he has any opening statement.
    Mr. Cramer. Just briefly, Mr. Chairman. Thank you, and 
welcome back to the committee.
    As you know, a lot of our colleagues are very confused 
about today's Selective Service system. I have talked with my 
Selective Service System board members back in the district, 
and a few members of the local VFW, so we're anxious to hear 
what you're doing and how you intend to justify your budget 
request.
    Thank you, Mr. Chairman.
    Mr. Walsh. Thank you, Bud.
    I would add that I also had a visit from my local Selective 
Service boards from my district and they gave a good 
presentation.
    All right, Mr. Coronado, please proceed. We will include 
all your statement in its entirety in the record.
    Mr. Coronado. Thank you, Mr. Chairman. I am pleased to 
appear before you and the other distinguished members of this 
subcommittee. I have a written statement that I would like to 
submit for the record, if that meets with your approval.
    Mr. Walsh. Without objection.
    Mr. Coronado. Seated with me are two key members of the 
Selective Service leadership. Mr. Willie L. Blanding, Jr., on 
my right, is the agency's Deputy Director. On my left is Lew 
Brodsky, Director of Public and Congressional Affairs.
    Mr. Chairman, the President's budget request for fiscal 
year 2001 proposes funding the Selective Service at 
$24,480,000. This is a small increase from last year's 
appropriation, which will permit continued operations at the 
current level and partially cover pay raises.
    Last year, I reported that we faced increasing difficulty 
in maintaining high levels of registration compliance. I 
mentioned that the national compliance statistics for all men 
18 to 25 years old stood at 89 percent. Measured last month, 
that statistic has eroded further to 88 percent.
    Our goal is to reach and maintain at least 90 percent 
compliance for the sake of fairness and equity in a future 
draft. Likewise, the estimated compliance rate for 20 to 25 
year old men, which last year was 94 percent, is now 93 
percent.
    The agency is attempting to counter these declines with 
outreach programs, application of new technology, and 
partnerships with other government organizations. My written 
testimony outlines examples of the many things we are doing.
    But perhaps the most promising innovation is our new 
partnership arrangement with the Immigration and Naturalization 
Service. It was put in place last month after lengthy 
negotiation. Now, immigrant men completing an INS Form 485 for 
residency status are notified on the form that they will 
automatically be registered with Selective Service if they are 
18 through 25 years old. This has the potential over time to 
cause significant improvements in compliance areas, because we 
believe that immigrant men form the largest segment of the male 
population that is failing to register.
    I am also delighted to report that the Selective Service 
System is proving its peacetime relevance through two new, 
exciting and timely initiatives which were briefed by members 
of my staff to the subcommittee staff and to member staffs in 
February and March. Please allow me to summarize them.
    First, as you know, the U.S. Armed Forces are currently 
experiencing great challenges in recruiting qualified 
individuals for military service. In fact, during fiscal 1999, 
the Army, Navy and Air Force missed their recruiting goals.
    May I submit for the record this newly signed Memorandum of 
Agreement between the Department of Defense and the Selective 
Service System. It establishes a cooperative interagency 
partnership for the purpose of encouraging young men to 
register and volunteer to serve America through military 
enlistments.
    Beginning this summer, this acknowledgement postcard we 
currently mail to new registrants, which provides a man with 
his proof of registration and official Selective Service 
number, will be replaced by an envelope like this one, 
containing this similar but larger acknowledgement card. 
Conversion to the envelope allows us to insert this new 
promotional recruiting brochure produced by the Department of 
Defense. It contains a mail-back postcard for new registrants 
to request more information about voluntary service 
opportunities in today's armed forces. These are the prototypes 
being developed by the Ted Bates ad agency in New York.
    We are not asking this subcommittee for any additional 
funding to do this. The Department of Defense believes this 
initiative is so important to its recruiting efforts that the 
higher costs of these expanded acknowledgement mailings will be 
fully reimbursed to the Selective Service System by DOD.
    Currently, two million men reach age 18 in America every 
year, so approximately 40,000 pieces of mail from the Selective 
Service System will be mailed to young men each and every week. 
This should generate a continuous flow of new leads for follow 
up by military recruiters.
    The second initiative is an even more ambitious partnership 
between the Selective Service System and the Department of 
Defense. It could result in a major realignment of several 
organizations involved in the armed forces accession process. 
The DOD and Selective Service have developed a concept which, 
if implemented, will merge the resources and missions of the 
Selective Service System, the United States Military Entrance 
Processing Command, and the DOD Medical Evaluation Review 
Board, into one entity over a period of three years. This 
concept, under which the Selective Service System would cease 
to exist as a stand-alone organization, continues to evolve at 
the highest levels of the Defense Department. A paper 
describing the concept in detail is provided as an attachment 
to my written testimony.
    Mr. Chairman and members of the subcommittee, I am proud of 
what Selective Service does for America. I hope you share in 
that pride, and thank you for your support as I answer your 
questions about our fiscal year 2001 budget request.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                               compliance

    Mr. Walsh. Thank you very much for your opening statement.
    On this issue of compliance, last year when you came in we 
heard basically the same story that the compliance rate was 
down, you had a goal to move it up, and actually it has dropped 
another percent.
    What is causing this compliance problem, and what specific 
actions have you taken this year to gauge which actions are 
effective and which ones aren't?
    Mr. Coronado. What's causing it is a lack of awareness 
across our Nation, about the need to register with Selective 
Service, the loss of benefits by young men between 18 and 25, 
particularly in certain pockets of our country.
    Where we have people who are recent arrivals, immigrants, 
where we have a large high school drop-out rate, where they 
don't get the word, this is where the problem areas are. In 
fact, we have identified 21 to 25, perhaps, Zip Code centers 
across the Nation where the registration is very, very low.
    So the problem is awareness. We are working very hard at 
awareness through concentrated efforts in those pockets of low 
registration.
    What initiatives have we taken? When we went on on-line 
registration the 2nd of December, 1998, it has really taken off 
now, and I am proud to report to you that we have averaged 
about 30,000 that register on-line every month.
    Mr. Walsh. It would seem to me that the internet is 
important but the people that are going to be using the 
internet are not the people that you're trying to target, I 
would presume. Is that a wrong presumption?
    Mr. Coronado. No, it's not.
    Mr. Walsh. For example, of the kids that go to college, 
they need to register if they're interested in getting 
financial aid. What percent of the kids that are college-bound 
are you getting compliance from?
    Mr. Coronado. It depends at what level, sir. For example, 
21 percent of our registrations come in through the Department 
of Education, which is where they reach a point of: ``Do you 
want a student aid loan? I'm not registered. Sign me up.'' So 
this is 21 percent, roughly.
    Mr. Walsh. Of that group that are going to college, what's 
their compliance rate? Do you have that figure?
    Mr. Brodsky. It's pretty high. We don't have an exact 
figure.
    We don't ask, you know, if they're going to college or not 
on the registration form. But certainly, if they are college-
bound, and they are thinking of financial aid for college, 
obviously there's a direct connection.
    Mr. Walsh. There is some incentive there.
    Mr. Brodsky. Right. It's the high school drop-out that 
we're missing, frankly.
    Mr. Walsh. Now, the kids that are coming in as immigrants, 
are they part of this non-compliance statistic now? Are you 
targeting them by requiring them to fill out this form when 
they come into the United States?
    Mr. Coronado. That's what happened basically, yes. It is 
something new. What happened basically, sir, is that the INS 
keeps them an average of five years in their system. The last 
question being asked is, ``Are you registered with Selective 
Service?'' There were so many who were 21, 22, while they were 
in the system, who turned 26 and 27, and were then directed to 
come to us, who were overage and could not qualify for 
registration with Selective Service. They would go back to INS, 
who would put them in a hold status for five years, and then 
allow them citizenship later.
    We missed a lot of those because they did not know. I asked 
the Commissioner of the INS to move that question forward 
instead of at the back. She agreed. I further asked that there 
be some new form designed where the person could sign with the 
INS and then be automatically registered with Selective 
Service. That's the initiative that we have----
    Mr. Walsh. That's sort of closing the barn door after the 
horses have left, isn't it?
    Mr. Coronado. There's a lot of ``horses'' coming in, sir. 
[Laughter.]
    Mr. Walsh. I know. But the ones that are already here, that 
got out of the barn door without complying, how do you get at 
them?
    Mr. Brodsky. Sir, if I could jump in on that.
    Once they're 26, it's too late We can't accept the 
registration by law. So the idea is to try to get to them 
before they turn 26. INS is helping us with that.
    Certainly any change of status that's applied for on the I-
485 form will automatically generate the registration, if the 
man is between 18 through 25 years old. In addition to that, 
INS is working with us to put up posters in all INS offices, 
and we're doing those in five languages. This is a sample, 
obviously, of Vietnamese, here it is in Spanish. This will 
remind men, as they go through the INS offices, that they do 
have a requirement, especially if they're seeking eventual U.S. 
citizenship.
    In terms of the internet being the best way to register----
    Mr. Walsh. Just a bit of clarification. You said 
``especially if they're seeking future citizenship?''
    Mr. Brodsky. Correct, because citizenship is linked to the 
registration requirement.
    Mr. Walsh. So if they register for the draft, then that's 
one of the things that they need to do to become a citizen.
    Mr. Brodsky. Absolutely.
    Mr. Walsh. And if they don't register for the draft, they 
can't become a citizen?
    Mr. Brodsky. It is one of the things that INS views before 
determining whether the man should be awarded citizenship. If 
he has not registered, they will deny him citizenship.
    Mr. Walsh. Is that message clear to everyone who comes into 
the country?
    Mr. Brodsky. It's becoming much more clear, with our 
affiliation with INS through these posters, and they are 
supposed to notify the men.
    Mr. Walsh. Do you ever go to state public assistance rolls 
to determine whether or not individuals have complied with 
registration?
    Mr. Brodsky. No.
    Mr. Walsh. Is that legal?

                              LIST SHARING

    Mr. Brodsky. We do list sharing with many government 
agencies, but they are primarily drivers license lists, social 
security lists, lists of that nature.
    Mr. Walsh. It would seem to me, if someone is receiving 
public assistance, that they would be a prime candidate for 
registration, because they're getting the benefits of 
citizenship without the responsibilities.
    Mr. Brodsky. We would have to look into that with each 
individual state, since it's not a Federal requirement.
    Mr. Coronado. What we have done in New York, in fact, is 
work with the public housing authority, who said, although they 
will not give us their names, we give them the information and 
they will pass the information on to their tenants so that they 
are encouraged to register if they're not registered.
    Mr. Walsh. There's no prohibition, as far as you know, 
then. Say you asked the New York State Department of Social 
Services for all males between 18 and 26 years old who are 
receiving public assistance, could you do that?
    Mr. Coronado. We did, and they said no.
    Mr. Walsh. They wouldn't give it to you?
    Mr. Coronado. No, sir.
    Mr. Brodsky. There is some sensitivity about releasing 
welfare rolls.
    Mr. Walsh. Is that in specific states, or all states?
    Mr. Coronado. That was in New York, the place where I 
asked, because the numbers were so huge that we anticipated----
    Mr. Walsh. It seems to me that you could expand your 
targeted compliance area substantially. You may not get big 
numbers, but you may. It would seem to me that this would be a 
good place to go look.
    Mr. Coronado. We're convinced that INS does have big 
numbers, and this is why we're excited about this new 
partnership, so that they don't stay in the system and then 
turn too old to register with us.
    Mr. Walsh. I have a question on this idea of combining 
Selective Service and the Department of Defense. My 
understanding is that the authorization letters creating the 
Selective Service and reauthorized Selective Service intended 
that you should be at arm's length from the Department of 
Defense meaning that the Selective Service System is supposed 
to be nonpartisan, bipartisan, in terms of the services, in 
terms of its citizenship, in terms of its political support, 
and that it should not be an extension of the military.
    Now, does this move you are proposing go against that 
intent of Congress?
    Mr. Coronado. I don't believe so. The intent here is not to 
have the Army drafting the young men of America but, rather, an 
independent agency.
    Mr. Walsh. When you ended up with this merger, unless I 
missed my mark, you've got Selective Service listing the 
availables, registering the availables, and then the same 
organization will then be training those folks, or get those 
folks processed for military service. So how do you say you're 
at arm's length?
    Mr. Coronado. The same organization if it's a civilian 
organization, would be simply processing the new accessions 
through this process for the All-Volunteer Force, and then, in 
a draft or mobilization, would be doing basically the same 
thing, because part of that organization is to maintain the 
readiness of our Nation, the registration, the compliance.
    Mr. Walsh. But traditionally, the role of processing those 
recruits or those enlistees is the role of the military.
    Mr. Brodsky. The accessions process is a five-step process: 
register, call, classify, examine and induct. In a draft, 
that's how it works. In peacetime, you have recruit, examine, 
and enlist.
    What we're saying is that whole process, either the five 
step or the three step, can be better served by having it under 
one agency.

                            dod initiatives

    To meet your concerns about whether or not it should be at 
arm's length from DOD, the concept, as proposed--and a copy is 
in the record--envisions it as an independent civilian agency, 
not as a part of the Department of Defense.
    Mr. Walsh. It's funded by DOD, isn't it?
    Mr. Brodsky. No, it would be funded, theoretically, under 
the DOD appropriation, but it would maintain independent status 
because--as envisioned its director would report to the 
President, not to the Secretary of Defense.
    Now, DOD is still working that issue. We have some 
negotiations to do with them to determine if that's the final 
outcome that we'll see three years from now. But, nonetheless, 
that was the original concept, to keep it independent.
    Mr. Walsh. Well, Yes. You can see the melding of roles 
there, once you're under their skirts. You're going to be 
competing with them for funds in that appropriation, correct?
    Mr. Brodsky. Correct.
    Mr. Walsh. They're going to be looking to download maybe 
some other services to you. This is something I would be 
cautious about.
    Mr. Brodsky. It is possible, and considering all of that, 
we think it's a good way to go because it does flatten the 
organization, it reduces overhead, it will eventuallysave some 
money, and it will put everything under one roof in terms of being able 
to serve the Nation in both peace and war.
    Mr. Walsh. Mr. Cramer.
    Mr. Cramer. Thank you, Mr. Chairman. I'm going to attempt 
to pick up right where I think you were. I was absorbing your 
statements and I may have lost something there.
    We're you just talking about FEPS?
    Mr. Coronado. Yes.
    Mr. Brodsky. That's a working title. There is no real name 
for the agency yet. But for working purposes, that's the name.
    Mr. Cramer. As I understand it, peacetime is a challenging 
time, obviously, and that's good. Nevertheless, you're looking 
at two initiatives with DOD, right?
    Mr. Coronado. Yes, sir.
    Mr. Cramer. In your statement you refer to a cooperative 
agreement, and that's with DOD.
    Which arm or which division of DOD is that with?
    Mr. Coronado. The recruiting effort or the----
    Mr. Cramer. Maybe you could tell me about both.
    Mr. Coronado. Both, through the accessions branch, really, 
it's the Under Secretary of Defense for----
    Mr. Brodsky. Force Management Policy.
    Mr. Coronado. Right.
    Mr. Cramer. All right. That's one partnership, right?
    Mr. Brodsky. Yes.
    Mr. Cramer. And what's the other one?
    Mr. Coronado. Well, they basically are working the same 
channels. One has already--the memo of understanding was 
written by the Deputy Assistant Secretary for Force Management 
Policy. But nevertheless, they're both following the same thing 
because the ultimate result is the process and the accessions, 
the getting of more numbers through the system, to meet the 
needs of the military.
    Mr. Cramer. And that would result in this independent 
Federal agency with a mission that includes registering men 
when they reach the age of 18?
    Mr. Coronado. That's exactly right.
    Mr. Cramer. Then why would we need the Selective Service 
System? That's the point.
    Mr. Coronado. You would not have a Selective Service System 
as a system, yes, sir.

                          the rostker proposal

    Mr. Cramer. Now, the Rostker proposal, is that a bit of 
joint study?
    Mr. Coronado. Dr. Rostker is the one that, in discussions 
with us at our agency, said that this would be one way to look 
at it, because the Army is very much in need of bringing in the 
support troops that they have for MEPCOM. They need to go back 
to the Army.
    We're talking about 1,500 military, perhaps 1,400, and 
about 50 percent of those are Army.
    Mr. Cramer. Was it out of that study that the initiatives 
were born?
    Mr. Coronado. It was out of that discussion that led to a 
follow-up. We were invited to participate in a more in-depth 
discussion with the Department of Defense, the MEPCOM. 
Therefore, we all met at the Pentagon. We sent three of our 
people over there, and then they came out with this concept 
paper and the study.
    Mr. Cramer. How long ago did this take place?
    Mr. Coronado. November of last year.
    Mr. Cramer. Let me switch a little bit.
    Your funds to operate the national headquarters and data 
center versus what your field operations do; how does your 
budget reflect funding for both of those? Isn't most of your 
money spent on the national headquarters and data center rather 
than spending money on the field operations?
    Mr. Blanding. Let me try to answer that.
    Mr. Cramer. What I'm looking for is this, what amount of 
your annual appropriation is devoted to the field structure 
operation rather than data collection.
    Mr. Blanding. Okay. I don't know that right now. Let me 
submit that for the record, the reason being is that we have 
our moneys divided up in several accounts, and the field 
structure makes up the DMC and three regional headquarters. I 
don't know the budget amount that supports those three regional 
headquarters off the top of my head.
    Mr. Cramer. It seems to me that much of the value of 
maintaining the Selective Service as an emergency preparedness 
agency is hidden in your field structure. You have 400 unpaid 
volunteers who serve on local boards. Of course, a lot of that 
will turn over. I'm concerned--and you can give me the 
information later, as to how----
    Mr. Brodsky. Actually, there's 10,600 volunteers, and about 
400 Reserve and Guard officers who are also serving with us 
part-time, and their salaries and expenses are reimbursed by us 
to the Services.
    Mr. Cramer. I'm interested in how you support that, with 
what part of your budget, versus your national headquarters and 
data center.
    Mr. Blanding. Okay. But for the record, please keep in mind 
Mr. Brodsky is trying to make a very important point here. That 
point is that there are almost a total of 11,000 uncompensated 
volunteers. They won't impact on the budget.
    Mr. Cramer. Okay. But field operations is their support 
arm, right?
    Mr. Blanding. Yes, sir.
    Mr. Brodsky. But the money that's spent on those unpaid 
volunteers merely reflects the training that they receive. They 
are trained one day per year. So there is money going out there 
to support that structure, but since they are volunteers, there 
is no real solid cost.
    Mr. Cramer. Thank you.
    Thank you, Mr. Chairman.
    Mr. Walsh. Thank you, Bud.
    Mr. Frelinghuysen.
    Mr. Frelinghuysen. Thank you, Mr. Chairman. Gentlemen, good 
morning.
    Mr. Coronado. Good morning, sir.
    Mr. Frelinghuysen. I'm a little bit confused. Last year you 
were almost down and out, on the ropes, potentially went out of 
business, and there were some of us who felt we needed the 
Selective Service System--and I'm supportive of what you do.
    You have sort of had a reawakening or a rebirth here, with 
a new mission. Is this how we might characterize it?
    Mr. Coronado. I don't think so, sir. I think the basic 
problem lies in America doesn't know about Selective Service. 
Our elected officials don't know that much about Selective 
Service. So we've had a problem in the past. This is why we 
need to educate the leadership of our Nation on the value of 
our Nation's third tier of defense.
    We recognize that, from your eyes--and perhaps, if we were 
sitting in your chair, we would feel the same way. But from 
your eyes, if you have a system that is prepared to do 
something for our country in the event of an emergency, what is 
it doing every single day? What functions does it have that 
merits your attention and your support?
    Three years ago I came before this same committee. Three 
years ago I came to this committee asking for $580,000 so that 
we could, in fact, support the All-Volunteer Force. We have a 
plan. We have a card. The response from this committee was 
``we're not going to give you the money, but if DOD thinks it's 
such a good idea, let them pay for it.''
    Well, it takes a long time to get people to turn around. I 
never gave up on the idea, so now we have it. This is why we 
have the memo or understanding, the memo of agreement with the 
Department of Defense----
    Mr. Frelinghuysen. Whoa, whoa here. Are you now talking 
about the Federal Entrance Processing Service?
    Mr. Coronado. The recruiting effort, sir.
    Mr. Brodsky. Direct support to recruiting.
    Mr. Frelinghuysen. But in reality, who gave you that 
authority?
    Mr. Coronado. The recruiting authority?
    Mr. Frelinghuysen. Yeah. You see, I read your statement 
here and I'm a little--and I'm a ally of yours.
    Mr. Coronado. Yes, sir, I know you are.
    Mr. Frelinghuysen. In your statement on page 3 here, under 
Immediate Peacetime Relevance--and I quote from the first 
paragraph. ``The first of these is an approved program in which 
SSS will directly support military recruiting.''
    Who approved what? I mean, Congress didn't approve this. I 
mean, has this sort of taken off on its own? I'm a little bit 
confused.
    Mr. Coronado. First of all, we are, in fact, required to 
share our list with the Department of Defense, the list of 
registrants. We are required to do that.
    Mr. Brodsky. Under the Military Selective Service Act.
    Mr. Frelinghuysen. I understand that, but when you use the 
term here ``approved,'' approved by whom here? ``The first of 
these is an approved program  .  .  .'' Congress didn't approve 
it, did it?
    Mr. Coronado. When I sat here three years ago, I was told 
that if the Department of Defense thought it was a good idea, 
let them pay for it. So I continued that effort. Now that 
they're paying for it, it's the way we're going into it.
    Mr. Frelinghuysen. It hasn't been approved by any 
legislative authority.
    Mr. Coronado. Oh, no.
    Mr. Frelinghuysen. It's just sort of memorandums of 
understanding, written by people----
    Mr. Brodsky. Mr. Frelinghuysen, I think the use of the term 
``approved'' refers to the fact that the Department of Defense 
has approved the joint partnership effort.
    Mr. Frelinghuysen. By the Deputy Assistant Secretary, who 
is?
    Mr. Blanding. Mr. Maldon, Alphonso Maldon.
    Mr. Frelinghuysen. He's approving this?
    Mr. Coronado. The partnership between us to help the 
recruiting.
    Mr. Frelinghuysen. Under what authority does he approve it?
    Mr. Brodsky. This is a natural extension of what we're 
already required to do.
    Mr. Frelinghuysen. Congress thinks it's a good idea, I 
assume. I'm your ally here. I don't understand why you go do 
things and make these arrangements without having some sort of 
authority.
    Mr. Brodsky. I don't believe specific statutory authority 
is needed to do this particular project. However, we have 
briefed members of the authorizing committees on this 
initiative, and we received full support.
    Mr. Frelinghuysen. So we're operating on the basis of 
verbal support from the authorizing committees?
    Mr. Brodsky. Again, because no statutory authority was 
needed for us to make this extension of what is already in the 
Military Selective Service Act.
    Mr. Frelinghuysen. I have some problems. I'm one of these 
people who actually feels the intent of Congress has always 
been to separate induction, which is what the individual 
services have been doing, I guess, since time began, from 
registration, which is what you do.
    I think the intent of Congress, whenever that was 
established, was a good intent. Somehow we're having an 
intermingling and meshing here. I'm somewhat disturbed by it.
    Mr. Brodsky. Except, sir, that the Director of Selective 
Service, under the Military Selective Service Act, is directed 
to share his list with the Secretary of Defense----
    Mr. Frelinghuysen I understand the sharing of the list.
    Mr. Brodsky [continuing]. For the purpose of recruiting. So 
this is a natural extension of that directive.
    Mr. Frelinghuysen. I see it, not to be any more 
argumentative, as a change of policy. I won't say that as a 
former draftee. But it does seem to me that you go to basically 
where it's civilians in your community, do x, y and z. Of 
course, I was conscripted. And now, all of a sudden, there is 
sort of an intermingling of what the chairman sort of talked 
about earlier, of military and civilian. I have some unease 
about it. So, for the record, I register that unease and leave 
it at that.
    Mr. Brodsky. One more thing, sir. I obviously understand 
your concern, but I also will point out to you that the 
carrying of a Department of Defense brochure in a Selective 
Service acknowledgement mailing occurs after the registration 
process. The man has already registered. All that's being done 
here is the envelope is being used to give him an additional 
piece of information after he has----

                    consequences for not registering

    Mr. Frelinghuysen. Just to sum up here, I am disturbed by 
the notion that we haven't had any talk about penalty here. But 
in reality, as I go out to high schools on a regular basis, I 
often will say, ``When I was your age, one of the things that 
occurred when you were 18 was you had to be registered by the 
Selective Service System.''
    It seems to me there are quite a few people--and you've 
told us why they aren't registered. I mean, are these young 
people subject to penalties for not registering?
    Mr. Coronado. Yes, sir.
    Mr. Frelinghuysen. This is disturbing, a disturbing 
situation. Even though we're not at war, it seems to me that we 
don't appear to be vigorously pursuing. There used to be some 
consequences for actually not registering. What are the 
consequences?
    Mr. Coronado. Potentially, it is a felony. It still would 
be five years and/or up to $250,000 fine. Those are the names 
that we provide to the Department of Justice.

                joint recruiting and advertising program

    Mr. Frelinghuysen. Well, if this is coming out of the DOD 
budget, I'm very glad I serve on that committee, because it's 
news to me. We have enough problems funding military programs.
    So this is coming out of DOD now?
    Mr. Coronado. We're talking about the recruiting?
    Mr. Frelinghuysen. Yes.
    Mr. Coronado. Yes, sir.
    Mr. Brodsky. It's part of the Joint Recruiting and 
Advertising Program appropriation.
    Mr. Frelinghuysen. Well, I'm not happy about what I see at 
first blush.
    Thank you, Mr. Chairman.
    Mr. Coronado. Sir, may I make one statement? I will assume 
full responsibility for this, because the statutory 
requirements of Selective Service, once they register, we give 
the list to the Department of Defense. This is a faster way to 
communicate individually with them. That, coupled with the fact 
that this very committee told me, if the Department of Defense 
thinks it's a good idea, then let them pay for it. I assumed 
that I had your blessings to go ahead and press.
    Thank you.
    Mr. Walsh. Thank you.
    Mrs. Meek.

                                outreach

    Mrs. Meek. Thank you, Mr. Chairman.
    I have listened intently to the dialogue here this morning. 
It appears that one of your major problems is communication. If 
that can be intensified, I don't think you're going to have 
some of the problems in communicating what you're all about. 
Registration isn't getting to the people in an outreach 
fashion.
    My question is, you do have local boards--and I know about 
Selective Service, and I'm one of your advocates as well on 
this committee. I did vote for you, and will continue to do so. 
I think there is a reason for you to exist.
    However, you do have local boards. They should be 
instrumental in getting this message communicated, about the 
Selective Service. It doesn't appear that they've been doing 
that strong a job. So now I understand you're going to have to 
retrain them for this new millennium effort you have.
    What do have in mind to make them, now after more than 20 
years, to bring new life into this agency, to this system?
    Mr. Coronado. As you know, these are all volunteers across 
the Nation, 10,600 volunteers, whatever the figure is.
    We have been asking, since I have been on board, for them 
to do more and more. They have adopted high schools. They have 
gone out to the post offices to replace the material in post 
offices. They have been asked to go to Rotary Clubs and the 
Lions Club, whatever media they have, to get the word out, 
because America needs to know. This is our theme, that America 
doesn't know. You're absolutely right. We have gone around and 
just asked them to do more and more.
    Now, we only train them once a year. There is going to be a 
major retraining because the 20 years are coming up very soon 
and, by law, they can only serve for 20 years.
    Mrs. Meek. Right.
    Mr. Coronado. So they have to drop out and we have to 
replace them, if that's what you meant.
    Mrs. Meek. I believe my question is, to what extent are you 
designing that training so that they will become more effective 
in terms of your recruitment now?
    Mr. Coronado. The recruitment is where I think we--if we 
have that many board members out there, they ought to be 
promoting the All-Volunteer Force. This is our America; these 
are our citizens. It's our way of doing it.
    Mrs. Meek. So you're designing that in your training models 
and this will----
    Mr. Coronado. The concept is there, because the concept 
would be, if we were to enter into the FEPS concept, this is a 
resource that would be invaluable to getting the word out in 
all the local communities about the need for the volunteer 
force, to stay strong and healthy.
    Mr. Blanding. May I add to that?
    Mrs. Meek. Yes.
    Mr. Blanding. Ma'am, what we have done is we have stretched 
our volunteer board members to the limit right now. For the 
record, to be honest, we are getting complaints from some of 
the board members, that we're asking them to do too much. These 
are volunteer board members, to the tune of 11,000, and they 
are people in the communities, ministers, teachers, nurses, et 
cetera.
    To ask them to do more than what we are asking them to do 
now will probably, theoretically, severely impact on our 
budget. Because we train them one day a year, and to bring them 
in to do more than that will impact on the moneys that we have 
allocated for other areas.
    What we are doing is implementing a new training program, 
but to bring folks in for more than the amount of time we have 
them to do would impact on other fiscal constraints. But we're 
doing the best we can, honestly.
    Mrs. Meek. I understand.
    I don't blame you for taking advantage of the nexus that 
exists between Defense and Selective Service, and hopefully you 
will be able to accomplish that if it's authorized. If not, 
you'll be right back looking at me.
    That's it, Mr. Chairman.
    Mr. Coronado. We're trying to serve America as best we can.
    Mr. Walsh. Thank you.
    Mr. Sununu.
    Mr. Sununu. Thank you, Mr. Chairman. Good morning.
    I want to begin by clarifying a question that Mr. Cramer 
had asked. Bud, correct me if I'm wrong. It was how much of 
your appropriation, which was $24 million last year, how much 
is spent in national office activities and how much is spent 
outside the national office? Was that it?
    Mr. Cramer. Yes. You asked it better than I did.
    Mr. Sununu. Well, I've had five minutes to think about it.
    And you didn't have an answer to that question.
    Mr. Coronado. It's not that we don't have an answer. We 
certainly have ballpark figures. We want to provide accurate 
figures and so on.
    For example, if registration itself is eight million, and 
then we have the salaries, the fixed costs for everything we 
do, then those figures can be easily provided.
    Mr. Sununu. I appreciate the fact they can be easily 
provided, and I'm sure you'll provide those numbers.
    But just as a general comment, this is an appropriations 
subcommittee. You get an allocation of $24 million. We're 
reviewing the impact, the benefits of the program, and 
obviously there was a fair amount of controversy last year 
about what the long-term opportunities are for Selective 
Service.
    I am very surprised, and disappointed, you know, in my 
capacity, in the time I've come and spent here to take your 
testimony, that you don't have with you a detailed summary of 
exactly where every penny of that $24 million went. I don't 
think it serves you very well, especially coming before a 
subcommittee where some of your strongest supporters are, to 
not be able to provide that information.
    I don't even consider this to be detailed information--how 
much was spent here in Washington, D.C. and how much wasn't. I 
mean, this is a division of the number, $24 million. Is it 32 
percent, 33 percent? I know you could probably guess. But I 
think that's just stunning. That's just a comment, not a 
question.
    It was stated that you're tapping the volunteers, and 
you're beginning to hear complaints from the volunteers about 
the degree to which you're placing burdens on them. I recognize 
the importance of the volunteers and that's one of the 
strengths of the organization. I know a lot of the volunteers 
back in New Hampshire personally, and they're strong, eloquent 
supporters of the value of Selective Service.
    What is it that you're asking the volunteers to do today 
that you weren't asking them to do five years ago?
    Mr. Coronado. What I did is ask them to be more involved in 
adopting schools, where they could monitor whether we had a 
representative of Selective Service in a particular school, 
asking them to visit post offices to make sure we have the 
current posters or the forms available.
    We are asking them to be ambassadors for the agency, in 
local civic groups and other involvement that they might have.
    Mr. Sununu. Is that really a level of involvement in the 
community, though, that they weren't expected to present five 
or ten years ago?
    Mr. Coronado. That's exactly right.
    Mr. Sununu. So we had volunteers ten years ago, but they 
weren't expected to communicate in the same way the values and 
importance of registration?
    Mr. Coronado. That's correct.
    Now, on the other side, Mr. Sununu, if I may, when I first 
got there, these board volunteers were being trained every 
other year. I said that's not right because they're going to 
lose interest and forget all about us. We need to bring them 
back in, so we will train them every year instead of every 
other year.
    They were not receiving our publication, except one, 
whatever it was. I wanted every publication to go to them so 
they can stay current. They need to be full-fledged members and 
valued members of our system.
    Mr. Sununu. I certainly agree very much with you there, and 
if they're participating now on a yearly basis and they have 
more material to keep current, clearly that's going to take 
more of their time.

                            reform proposal

    The last area of questions is on the reform proposal. 
Clarify for me, one, that even if you were to be incorporated 
into, I guess, a DOD organization, you would retain the same 
civilian structure, volunteer structure, is that correct?
    Mr. Coronado. That's correct.
    Mr. Sununu. Would there be an increase in the number of 
volunteers, for the civilian participants.
    Mr. Coronado. No.
    Mr. Sununu. Lastly, can you talk a little bit about 
jurisdictional issues that might arise, and how you would deal 
with those? Could you talk a little bit about where objections 
to this sort of a reorganization might come from?
    Mr. Coronado. Jurisdictional?
    Mr. Sununu. Well, perhaps the Department of Defense not 
being comfortable with the civilian nature of your 
participation with them, not being comfortable with the funding 
coming through DOD, appropriations, just other issues or 
natural conflicts that might arise because of the 
reorganization and what you're doing to address them.
    Mr. Coronado. There are ongoing discussions right now, and 
we don't expect really to reach any type of agreement until 
June or July of this year. At that time we will be all 
formulated as to which way to go.
    Certainly there are elements of DOD wanting to keep it 
military, and others feel it might necessarily be a civilian 
agency. I have no answers, nor any specific molding of this 
agency that I'm looking at. What we are looking at, all minds 
combined, is how can you create an agency that will best serve 
America and knock off all the hierarchy, release the military 
to go back to do military work, and to hire civilians to be 
able to process the new accessions.
    Mr. Sununu. Has anyone within DOD expressed formal 
endorsement or approval, or lack of support, for the reform 
proposal?
    Mr. Coronado. I have certainly received a lot of, not 
formal, but approval on the concept itself.
    Mr. Sununu. Has there been any public comment?
    Mr. Coronado. No.
    Mr. Sununu. Thank you very much.
    Mr. Walsh. Thank you.
    Mr. Hobson?
    Mr. Hobson. I have no questions.
    Mr. Walsh. Mr. Goode.
    Mr. Goode. Thank you, Mr. Chairman. I apologize for being 
late.
    Do you know how many employees you've got nationally in 
Selective Service? How many?
    Mr. Coronado. We have 165 civilians that are authorized, 
and 13 military, and we have the part-timers----
    Mr. Goode. How many are getting checks?
    Mr. Coronado. How many are getting checks for the full 
time?
    Mr. Goode. Yes.
    Mr. Coronado. One hundred fifty seven.
    Mr. Goode. How many are in Virginia, just a ballpark 
figure?
    Mr. Brodsky. At our headquarters in Arlington?
    Mr. Goode. No, not at your headquarters in Arlington. You 
have a Selective Service board in each state?
    Mr. Brodsky. Right.
    Mr. Goode. How many persons do you have, say, like in the 
State of North Carolina and the State of Virginia?
    Mr. Brodsky. Board members?
    Mr. Goode. No, not board members, but employees, of the 
hundred and----
    Mr. Coronado. These are not employees, sir. They're 
uncompensated.
    Mr. Goode. The state director that came and visited with 
me, is he not compensated?
    Mr. Coronado. He's compensated an average of 12 days a 
year.
    Mr. Brodsky. He's an occasional worker.
    Mr. Coronado. Part time.
    Mr. Goode. And that's the case with each state director, 
part time?
    Mr. Coronado. Yes.
    Mr. Goode. How many part-time employees do you have?
    Mr. Coronado. We have 56 state directors, part time, and we 
have 450 Reserve officers that are also part-timers.
    Mr. Goode. Going along in the direction that Congressman 
Sununu was moving, do you feel that another agency like DOD, 
could they just do everything that you're doing if you were 
with them?
    Mr. Coronado. If I was with them?
    Mr. Goode. Yes. When I said ``you,'' I meant the Selective 
Service. I don't see why that couldn't be done easily.
    Mr. Coronado. Selective Service does provide a service to 
our Nation, and is recognized by the Department of Defense and, 
in fact, by a majority of the Congress. It's recognized that 
there is something there about the link to the All-Volunteer 
Force, about that one gesture that a young man does when he 
says ``I am a citizen and, if needed, I will.'' That's 
important to our country. It's important to this generation and 
future generations.
    So what we do there, under FEPS, the concept would be that 
we would operate a mobilization and maintain the registration, 
the compliance, the board membership, the reserve officers.
    Mr. Goode. That could be done just as easily under the 
Department of Defense as an independent agency, could it not?
    Mr. Coronado. It's against the intent of Congress, sir, for 
us as an entity to belong to Defense.
    Mr. Brodsky. There was some discussion here earlier, sir, 
that if this combined agency is a branch of the Department of 
Defense, it might violate the historic intent of Congress in 
passing the Military Selective Service Act and the bills that 
preceded it, where Congress has always wanted to keep the draft 
mechanism separate and distinct from the armed forces that it 
serves.
    So the FEPS concept, as proposed, establishes this new 
agency which absorbs the functions of Selective Service, the 
Military Entrance Processing Command and the Evaluation Review 
Board, into one new organization which, as proposed right now, 
would be an independent civilian agency.
    Mr. Goode. Let me ask you this, to jump to another area. 
Are there any suits pending against Selective Service requiring 
the registration of females?
    Mr. Coronado. I heard just yesterday that there is a person 
who is in some correctional institution that has filed a $5 
million lawsuit because he is a prisoner and cannot get tuition 
assistance because he never registered for the Selective 
Service. I just heard that yesterday. I had no--the answer is 
no, as of up until yesterday, when I heard this.
    Mr. Goode. So you're not spending any funds to fight any 
lawsuits at this time?
    Mr. Coronado. Oh, no, sir. No, sir.
    Mr. Brodsky. The last time that issue was really visited, 
it went all the way up to the Supreme Court, and that was 
Rostker v. Goldberg, back in 1981. The Supreme Court upheld the 
male-only registration, if that's what Congress wanted to do.
    Mr. Hobson. In fiscal year 1999, in looking at your budget, 
you've got claims of $33,000.
    Mr. Blanding. Claims?
    Mr. Hobson. I'm just reading out of the book, sir. It says 
claims, $33,000.
    Mr. Coronado. What we do have--I don't know if that's 
separate from our legal representation for the EEO----
    Mr. Hobson. All I know is this is your annual report, not 
mine.
    Mr. Coronado. We have an attorney that we hire for the EEO 
cases, on an ``as needed'' basis, and that's what that probably 
represents. But I can certainly find out and document that for 
you.
    Mr. Goode. I'm through. Thank you, Mr. Chairman.
    Mr. Blanding. Sir, I believe that is to pay our attorney 
for interfacing our EEO complaints. That's the attorney's 
annual salary.
    Mr. Hobson. Do you usually have an outside attorney?
    Mr. Blanding. Yes, sir.
    Mr. Hobson. You've only got 165 people and you spent 
$33,000 on EEO claims.
    Mr. Coronado. We thought it would be wise to have an 
outside attorney and have a paralegal in-house, versus a 
$100,000 full-time attorney on the rolls.
    Mr. Hobson. I was just responding to his question about 
claims.
    Mr. Walsh. Did you want to pursue that?

                               rent costs

    Mr. Hobson. Well, no. I guess it's here, but I would come 
back to this same thing. I was kind of interested in rentals, 
your rents. You have $1,113,000 on office and miscellaneous 
rentals. How many offices do you rent around the country?
    Mr. Coronado. We have three regional offices, plus the data 
management center that we rent. We have the national 
headquarters in Arlington that we have three floors that we 
rent.
    Mr. Hobson. So most of your rent probably goes where, for 
the national headquarters?
    Mr. Coronado. Yes, sir.
    Mr. Hobson. Well, you know, you did a good job. Three or 
four guys came to see me out in the district, and most of them 
were volunteers. I would suggest to the Chairman maybe putting 
this over to Defense or in AmeriCorps, someplace like that. 
Maybe we could get more votes for AmeriCorps. [Laughter.]
    And maybe we would register more people, I don't know.
    I have to tell you, when I registered--and I don't knowhow 
many years ago, but a long time ago--this idea that this isn't the 
military is kind of crazy, because the only reason I registered was 
because, if I didn't, they were going to come and get me. I was going 
to wind up getting drafted. So this is somehow here a fiction in 
somebody's mind, because the only reason I signed up was, if I didn't, 
in those days there were dire consequences. I didn't want to get 
drafted, so I went out and joined the Air Guard. I wound up on active 
duty anyway some years later.
    You know, I think everybody is just looking at cost today--
--
    Mr. Coronado. Yes, sir.
    Mr. Hobson [continuing]. And times have changed. If I had 
my way, everybody would go to basic training and we would have 
a lot less problems with our youth in this country, but I don't 
think I'm going to be able to do that.
    That's all I have, Mr. Chairman.
    Mr. Walsh. Thank you.
    Ms. Kaptur.
    Ms. Kaptur. Thank you, Mr. Chairman. I'm sorry to be late.
    I wanted to ask a couple of questions I've been asked in my 
district. I have a rather consistent record on the Selective 
Service administration in terms of my voting. But I was in a 
high school class recently--actually, it was the whole school--
and one young man raised his hand and said, ``Hey, I got one of 
these cards from the Selective Service administration. Do I 
have to answer it?'' And then he said, ``How come the girls 
don't get one?''
    I started thinking about that. You know, why do they get a 
card if we have a volunteer military? In other words, we 
recruit, we don't draft people, as Dave was saying.
    How would you answer that young man? (a), does he have to 
respond, and (b), why don't the girls get one?
    Mr. Coronado. Well, I would answer it this way, that the 
law of the United States says, when you're 18, you must 
register with Selective Service. It's a civic, a moral 
responsibility. Further, there are benefits tied to the 
registration that the person would lose out on--citizenship, 
job training, government jobs, working at the post office, and 
citizenship if they're not citizens. There's a bunch of 
benefits they would miss out on if they failed to register. So 
it is something that they must do.
    Now, women--in 1980, President Carter, when he started the 
registration process, he asked the Congress if they would 
consider women registration. He wanted them to vote on it. The 
House never took it up for discussion, but the Senate did. And 
then the Senate, after debate, in 1980, the Senate defeated 
women's registration by 51 to 40. It was a very close vote. 
That is the one that was then challenged to the Supreme Court 
and upheld to be constitutional because the Congress wills that 
men only register, because of the nature of combat and so 
forth.
    Now, I might say this, that there was a preliminary look-
see initiated by Senator Robb to ask the question, if you were 
to register women, how much more would it cost to register 
women, and whatever that figure was was provided to him.
    We suspect that there may be some possible public debate on 
that issue in the future. I don't know.
    Ms. Kaptur. Maybe because we're both from Ohio, Dave, but 
this whole idea about our youth and the skills that we give 
them for living, I'm not sure those skills only come from 
military training, but I'll tell you what I would love every 
young person to have in this country, and that is survival 
training.
    I very much favor--I know that I favor change in the 
current system, number one, in talking to the services. They 
tell me that in northern Ohio they have to interview now over a 
hundred people to get one maybe interested in going into the 
military. Sometimes they have had to take people who didn't 
have their high school education provide them with equivalency. 
So there is a question in my mind about the way in which we are 
recruiting now.
    I also have some concerns about our youth and what 
practical lessons of life are they actually being taught by the 
time they are 24 years old.
    I also have a concern which has nothing to do with this 
committee, and that is, when our kids graduate from college 
now, they are so debt-ridden that they--this is terrible what 
we're doing in a time of such great plenty, that we would do 
this to the next generation. We would cripple them with debt 
for 10 to 15 years. I seriously thought about a program 
offering service to relieve debt, whether that be military 
service or, as Dave mentioned, AmeriCorps, whatever.
    If you're interested in that bill, Dave, let's work on it, 
because I would love to find a way to get our kids practical 
training, both men and women, and also help these college 
students relieve their debt.
    Yes, Dave.
    Mr. Hobson. If the gentlelady would yield, in the State of 
Ohio we have a program that, if anybody will join the Ohio Air 
National Guard or the Army National Guard, we'll pay 100 
percent of their way to college, with no debt. I think there 
are 18 states that have that program. The problem we have is 
that a lot of families want you to give it to them rather than 
the kids going in the service.
    I have been to Camp Atterberry, where I've actually seen 
young women driving trucks and tanks. I asked them why they 
were there, and they would say ``this is the way I get my 
college tuition.'' You don't have to be a straight A student. 
All you have to do is go to a state school. I think it's a 
program we ought to encourage.
    I don't know if you all have talked about that or not, but 
I think it's a good----
    Mr. Coronado. It is. I think you're right about the 18 
states or so, because that's really bringing in a lot more 
people to the Guard or to the Reserves to get those benefits. 
But they must serve our country. They must do something.
    We spend a lot of time in high schools, a lot of time in 
correctional facilities, for the youth. People that are away 
for just a few years, but have the brights and the smarts and 
the ability. America needs to give them a second shot at life. 
That's what we work on, to try and get them on the right path, 
whether it's through education, through military discipline. It 
would go a long ways in shaping up some of these people.
    Ms. Kaptur. It's interesting, in reclaiming my time here, 
in Ohio our Guard base--this is something I think about, even 
though I'm not are the Armed Services Committee, or National 
Defense Committee, I think it's called now--even at our Guard 
base, we have problems because the employers, if they're not 
full time but half-time civilian employees at the Guard base, 
for example, or if they have to go for training, their 
employers don't even understand what the military isabout 
because the new employers have never served in the military, either.
    So within this whole society you've had an erosion of what 
I call patriotic service to the country, and it pervades all 
income groups, it pervades occupational groups. I think we're 
in a period of reformation here, we really are. I'm one of 
those members that really open to thinking about how to 
restructure this system so that we recruit fine people to our 
military, that we expect both young men and women to give 
service to this country in some way. I know that's not popular 
with some parents, but it's popular with at least half the 
parents. That we look at ways for our youth not to have to 
amass these gigantic debt burdens in college.
    Again, you can't do anything about that directly, but I 
just wanted to put myself on the record as favoring an 
alteration of our current system to give our youth more 
responsibility and training to go along with that, whether it's 
in the military or whether it's serving the country in some 
other way.
    I had a situation back in the district over the weekend, 
where another family lost a child to drugs, a talented young 
man. In many ways, this society is becoming too soft. I serve 
on the Agriculture Committee and we have a third of our youth 
now physically obese. They're eating the wrong stuff, they're 
not exercising. If you look at the future and what's coming up, 
somebody had better be concerned about this. That starts with 
each of us who has a public responsibility.
    So I really do favor national service in some form, whether 
that come at the state level, or whether that come at the 
national level.
    I thank you very much for your testimony this morning, 
Director Coronado, and all those you have brought with you. 
Thank you for serving our country.
    Mr. Coronado. May I make a comment?
    Ms. Kaptur. Yes.
    Mr. Coronado. I was in Toledo, OH, going back six or eight 
months ago, where one of the most patriotic settings--and I 
have been to all corners of our Nation and the territories. 
It's a park, with God and country, with a fly-over, with flags 
all over. There's a high school group from Toledo called 
``America's Pride.''
    Ms. Kaptur. Yes.
    Mr. Coronado. We were so taken with those that we have an 
organization of volunteers here in Washington, D.C. where we 
honor the Hispanic contribution to America's defense, called 
``Heroes and Heritage,'' that I founded five years ago. I was 
so impressed that we're bringing in the Toledo America's Pride 
to perform that night, because they are good. These are high 
school boys and girls, but singing the songs that mean 
something to our country.
    Ms. Kaptur. Thank you so much. They have been trying to 
fight against drugs in the high schools, on an inter-ethic, 
racial basis, and they're really a wonderful group of people. 
Ken Newberry is their director----
    Mr. Coronado. That's right. He's who I talked to. He said 
that we would pay only part of it because they would raise 
their own funds and come on over to Washington.
    Ms. Kaptur. And thank you for coming to Toledo and not just 
Cleveland. [Laughter.]
    We appreciate it.
    Mr. Coronado. And the VFW in Toledo, I must say, is very 
active, very patriotic.
    Ms. Kaptur. Yes, they are.
    Mr. Coronado. So we need more spots like that across the 
Nation.
    Ms. Kaptur. Thank you.

                           agency performance

    Mr. Walsh. That concludes the subcommittee members' 
questions. I would like to conclude by sort of recapping my 
view; that is, your primary role is to register young men for 
military service.
    I have a chart that you can see here, that is trending 
downward. In 1995, 95 percent compliance. In 1998, less than 89 
percent compliance, projecting. The newest figures would be 88 
percent.
    That's a fairly dramatic drop. Since that's your primary 
mission, there is a real problem. You have identified the 
problem, or at least the problem areas.
    If you're going to enjoy the support of the Congress, the 
philosophical concept of Selective Service is one thing, 
performance is another. If you're not performing, it's going to 
be that much more difficult for you to pass the rigors of the 
funding process that we have here, and potentially votes on the 
floor where you're competing with other areas of the budget for 
funds.
    So I think it's incumbent upon you to do something about 
this compliance issue. We can't just wring our hands and say 
we're just not getting the message out there. I think you need 
to be more aggressive about it. I think you need to look at 
things like drivers licenses and public assistance and job 
training, financial aid, and target these young people. If you 
can't, I think Congress would be interested in finding someone 
else who can, or we go to a number of totally different 
concepts that people philosophied about here today.
    Ms. Kaptur. Would the gentleman yield on that?
    Mr. Walsh. Sure.
    Ms. Kaptur. Where is the shortfall? Is it happening in 
certain parts of the country? Is it more than others?
    Mr. Walsh. We talked about 20-some odd ZIP Codes in the 
country.
    Ms. Kaptur. What do those ZIP Codes tell you?
    Mr. Coronado. It tells you two things. There is a large 
high high school dropout rate, and there's a large recent 
arrival of immigrants or other people that migrate, and the 
inner city kids, the high school dropouts, the gang members, 
the people that are outside mainstream America, the ones that 
we have to go on Spanish radio to reach, the ones where we have 
to go to the basement of Baptist Churches, to talk to the 
parents.
    You're right on target about performance. But there is 
another measurement tool, and that is resources, resources and 
the way it's going match up perfectly. We have 40 percent less 
of people, full-timers, than we did from the days you just 
cited. That's just one example, Mr. Chairman. So we are working 
very, very hard. I am very proud of the people out in the 
field----
    Mr. Walsh. If I could just interrupt for a second, the 
chart that staff provided me shows that in '83 dollars you have 
gone from about $15 million to about $13 million. That's not a 
40 percent drop.
    In 1995, we were at just under $15million. Now we're at 
$12.8 million in '83 dollars. That's not a 40 percent drop.
    Mr. Brodsky. We're talking a reduction in FTEs as well----
    Mr. Coronado. The full-time people.
    Mr. Brodsky. We have lost people. We have lost resources 
because of inflation and a fairly straight-line budget. So what 
we would like to do to cure the problem, of course, is to apply 
more resources in the way of TV public service announcements, 
radio high school campaigns. We have to go with what our 
President's budget calls for.
    All we're saying is, given this current resource structure, 
it is very difficult to achieve the goals that we're striving 
for. But we're going to try harder to do it.
    Mr. Walsh. All right. Thank you very much.
    Mr. Brodsky. Thank you, sir.
    Ms. Kaptur. Thank you very much.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                                           Thursday, March 9, 2000.

           COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS FUND

                               WITNESSES

ELLEN W. LAZAR, DIRECTOR
MAURICE JONES, DEPUTY DIRECTOR FOR POLICY AND PROGRAMS
    Mr. Walsh. I call the meeting to order. This morning it is 
my pleasure to welcome the Community Development Financial 
Institutions agency led by Executive Director Ellen Lazar. We 
are glad to have you back.
    Ms. Lazar. Thank you.
    Mr. Walsh. You have been doing a great job.
    This year's CDFI budget request increases from last year's 
appropriation of $95 million to $125 million. The majority of 
funds are going to CDFI Core program and to the Bank Enterprise 
Award program. A $5 million set-aside for technical assistance 
and training programs for Native American communities is 
requested. Staff increases from 50 to 60 employees.
    The mission of CDFI is to promote access to capital and 
local economic growth by directly investing in and supporting 
community development financial institutions and expanding the 
lending capacity of financial service organizations.
    It seems the fund has been doing quite well in meeting 
their mission. The justification you provided notes that first-
round awardees, those that were awarded in 1996, generated 
significant community development over the last 3 years. They 
made $565 million in community development loans and 
investments, 12,400 jobs were created or retained, 8,600 units 
of affordable housing were developed, 98 children centers 
served 7,000-plus children, 17 health care facilities served 
32,000 clients. Business training, credit counseling, home 
buyer training, and other redevelopment services were provided 
to 10,600 individuals.
    These feats were accomplished with a Federal investment of 
merely $34 million. Remarkable.
    The study goes on to show that 70 percent of the clients 
are low-income, 60 percent minority, 50 percent women, 53 
percent live in inner cities, 36 percent live in suburban 
areas--this should make Mr. Frelinghuysen happy--11 percent 
live in rural areas. For those of us who have rural areas, we 
would like to see them do better.
    These are impressive facts and we are grateful to know the 
results. Ms. Lazar, we are glad to have you here this morning. 
After Mr. Mollohan offers his opening remarks, we would ask you 
to introduce your associates and make your statement. Your 
entire statement will be included in the record.
    Ms. Lazar. Thank you.
    Mr. Walsh. Thank you.
    Mr. Mollohan. Mr. Chairman, I would just like to join you 
in welcoming the witnesses to the hearing. I look forward to 
their testimony.
    Mr. Walsh. Ms. Lazar?

                              Introduction

    Ms. Lazar. Let me get started. Thank you, Chairman Walsh, 
Ranking Member Mollohan, Mr. Frelinghuysen. I am Ellen Lazar, 
the Director of the CDFI Fund. At the table with me is our 
Deputy Director for Policy and Programs, Maurice Jones; Owen 
Jones, our Deputy for Management and CFO; and other members of 
the staff are with me as well.
    For the purpose of time, I will keep my testimony brief, 
and I would ask that the Chair submit my complete written 
statement for the record.
    Mr. Walsh. Without objection.
    Ms. Lazar. Thank you.

                          managing for results

    Today I would like to highlight CDFI Fund programs and 
management, the impact of the fund's awards on CDFIs in 
distressed communities, the demand for awards in fiscal year 
2000, and the fund's priorities for fiscal year 2001.
    The fund's vision is an America in which all people have 
access to capital and financial services. The fund's mission is 
to promote access to capital and local economic growth by 
directly investing in and supporting CDFIs and by expanding 
financial service organizations' lending, investment, and 
services within underserved markets.
    I am delighted to report that for the third consecutive 
year in a row the fund received an unqualified audit opinion. 
Our independent audit, prepared by KPMG, contained no material 
weaknesses nor reportable conditions. Our commitment to strong 
management has resulted in high levels of productivity for the 
fund.

                         cdfi fund initiatives

    The fund has certified over 380 CDFIs in 47 States, the 
District of Columbia, and the Virgin Islands and Puerto Rico. 
Our funding has helped promote access to capital and local 
economic growth through the development of community-based 
lenders and incentives for traditional financial institutions 
to increase their activities in low-income communities.
    To date, the CDFI Fund has provided approximately 375 
awards totaling $215 million directly to CDFIs. These award 
dollars are significantly leveraged by other public and private 
resources. Most notably, Core awardees are required to provide 
a dollar-for-dollar match of non-Federal funds before they 
receive their award.
    The fund has also provided 274 awards totaling $89 million 
to banks and thrifts for increasing their investments in CDFIs 
in distressed communities. The $89 million in awards reflect 
roughly $1.8 billion in investments that banks and thrifts have 
made in CDFIs in distressed communities, or over 20 times the 
amount of the fund's awards.
    Even more impressive is the impact that our investments 
have had on CDFIs in the communities that they serve. We 
recently administered another survey to all of our 1996 and 
1997 Core awardees, a total of 74 organizations, to determine 
the impact of the fund's investments. These numbers are new 
numbers that we have to augment the numbers that the chairman 
discussed earlier.
    To date, we have received and analyzed responses from 44 
awardees. Together these 44 organizations received $45 million 
in assistance from the fund. Preliminary data indicates that 
these organizations made $1.4 billion in community development 
loans and investments, supported over 5,900 microenterprises 
and businesses, created or maintained roughly 35,000 jobs, 
developed or rehabilitated over 27,000 units of affordable 
housing, developed or supported close to 700 community 
facilities, including child-care centers, health care centers, 
charter schools, and job training centers, and provided 
business training, credit counseling, home buyer training, and 
other development services to over 31,000 individuals and 
organizations.
    These CDFIs have also strengthened their own capacity to 
deliver services. Assets have grown by 113 percent, from $643 
million in the aggregate before receiving an award, to nearly 
$1.4 billion in the aggregate in 1999. Seventy-one percent of 
the clients they serve are low-income; 55 percent of the 
clients served are minorities; 51 percent of the clients served 
are women; 48 percent of the clients they serve live in the 
inner city; 42 percent of clients they serve live in rural 
areas; 10 percent of the clients they serve live in suburban 
areas. We are clearly enthusiastic about these results.
    In fiscal year 2000, we are experiencing the greatest 
demand since the inception of the fund. To help meet this 
demand, we were able to use a small carryover of $10 million 
from fiscal year 1999 to add to the $95 million that you 
appropriated to us last year, bringing our total funds 
available to $105 million in fiscal year 2000. This $105 
million is well below the demand for our programs.
    In fiscal year 2000, the fund announced that we would make 
available $50 million for our Core program. The fund received 
$264 million in requests. We announced that we would make $6 
million available for our intermediary program and received $9 
million in requests.
    We announced that $25 million would be available for the 
Bank Enterprise Award program. Our preliminary review of the 
applications received shows that if the banks complete all of 
their projected activities, they would qualify for a total of 
$113 million in awards.
    We also expect our technical assistance program to be 
oversubscribed this year. Each year we have more and more 
demand for our programs. We expect this trend to continue as 
the industry continues to grow and strengthen through training, 
technical assistance, and private sector investment, which 
brings us to our 2001 request.

                    fiscal year 2001 budget request

    Because we did not anticipate having a carryover into 
fiscal year 2001 and because we expect the demand for our 
programs to continue to grow, it is important that the fund 
receives the President's full request of $125 million for 
fiscal year 2001. These funds will be used to continue to meet 
the high demand for our programs and to cover our related 
administrative expenses.
    Within our 2001 budget, we have also included some 
initiatives to reach populations that we want to serve more 
effectively. Our budget request for 2001 includes a $5 million 
set-aside to establish training and technical assistance 
programs that serve Native American, Alaskan Native, and Native 
Hawaiian communities. This has evolved from the Native American 
Lending Study work Congress asked us to undertake.
    Furthermore, in fiscal year 2001, we intend to continue our 
outreach to rural areas that are not adequately served by 
CDFIs. Already in fiscal year 2000 we have conducted, either 
live or by satellite, information sessions in 55 rural 
communities, two and a half times the number reached in fiscal 
year 1999.
    Finally, we plan on making additional innovations in our 
programs that will enable us to better serve small and emerging 
CDFIs and respond to last year's conference report encouraging 
us to develop programmatic initiatives that serve this market.

                               conclusion

    In conclusion, the fund is being managed effectively, as 
evidenced by clean audits and by marked improvements in the 
disbursement of funds. The fund is committed to supporting 
CDFIs in the distressed communities that they serve and is 
demonstrating a significant effect upon their operations.
    Fund programs are oversubscribed to the extent that we 
cannot fully support the needs of many qualified organizations. 
I am hopeful that the subcommittee will approve the President's 
$125 million budget request for the fund so that we may 
continue to work on creating jobs, affordable housing, child-
care facilities, small businesses, and economic revitalization 
across America.
    Thank you for your time this morning, and I am happy to 
entertain any questions.
    [Statement of Ellen Lazar on page 1109.]

                               carryover

    Mr. Walsh. Thank you. That is a great report, and thank you 
for the very sound management that you have brought to the 
program.
    The carryover is down from $45 million 2 years ago. You 
will not have any carryover this year?
    Ms. Lazar. We expect to have none.
    Mr. Walsh. The request is the same as it has been for the 
last 3 years, but given the fact that the carryover is down, I 
think that probably bodes well. We can't make any promises at 
this point. We don't know what our allocation is, but it would 
seem that the return on the fund is substantial and that if 
there are additional funds, I think this is probably a good 
place to make the investment.
    Ms. Lazar. Thank you.

         training and technical assistance for native americans

    Mr. Walsh. The budget proposes a $5 million earmark for 
training and technical assistance in Native American 
communities. How many CDFIs are on reservations, and what are 
some of the barriers that prescribe the creation of CDFIs?
    Mr. Maurice Jones. If you don't mind, Mr. Chairman, I will 
try to answer that. The question of how many CDFIs are on 
reservations is an unknown one to us and the answer to it is 
unknown. I can tell you what we have done with respect to 
funding CDFIs that serve Native American populations.
    We have provided funds to 29 organizations that serveNative 
American Communities. A total of $21 million has gone to those 
institutions. However, there is great interest among Native American 
populations to actually create new CDFIs, and part of this TA money 
would actually be used to help Native Americans actually create new 
CDFIs. Part of this money would be used to help the institutions who 
are currently serving Native American communities to do it better.
    So, in a nutshell, I think right now the number that are 
actually present there are small, but the interest in actually 
creating additional ones is pretty great, and we have seen that 
as a result of our Native American Lending Study where we have 
gone to about 13 sites across the country, and the interest is 
tremendous.
    Mr. Walsh. Obviously, there is a tremendous need. These are 
very rural areas, for the most part, with very basic services.
    Mr. Maurice Jones. That is correct.
    Mr. Walsh. High unemployment.
    Mr. Maurice Jones. That is correct.
    Mr. Walsh. Poverty.
    Mr. Maurice Jones. Yes, sir.

                       potential funds from apic

    Mr. Walsh. It would be a good place to get to work.
    As part of our agreement last year with the administration 
of our budget, we provided $20 million for HUD for APIC. And as 
I am sure you are aware, that is subject to the authorization. 
Now, if they are not authorized by June 30th this year, the 
funds are transferred to CDFI.
    Ms. Lazar. That is right.
    Mr. Walsh. Are you prepared to handle that?
    Ms. Lazar. Yes. We have applications to our Core program 
asking for in excess of $264 million. We had $50 million set 
aside from our fiscal year 2000 pool to support that Core 
program. The APIC money would augment that considerably and 
give us an opportunity to serve that many more qualified 
institutions.
    We have also gotten a much greater subscription for our 
Bank Enterprise Award program as well this year. We went from 
139 applications last year to 228 applications this year. We 
have only set aside $25 million to support that program.
    As I recounted earlier, we expect up to about $113 million 
in demand for that program, so my sense is that we will be able 
to easily absorb the $20 million.

                        microenterprise funding

    Mr. Walsh. You talked about microenterprises a bit. What 
sorts of activities are you supporting?
    Ms. Lazar. We do a number of different things in the 
microenterprise area.
    Mr. Walsh. Would APIC take that away from you, that 
activity?
    Ms. Lazar. No. It would continue to be part of our 
portfolio of CDFIs that we serve.
    First, we support microenterprise organizations through our 
Core Award program where we provide funds to capitalize those 
organizations and also our technical assistance program where 
we provide funding for small microenterprise organizations, 
particularly start-ups, to provide them with technical 
assistance as they grow.
    I actually have some data on how many we have funded last 
year, I believe. Do you have it?
    Mr. Maurice Jones. We have provided $11.5 million to 
microenterprise organizations.
    Mr. Walsh. In what increments?
    Mr. Maurice Jones. How much money?
    Mr. Walsh. Well, what is the average size of those loans?
    Mr. Maurice Jones. The average size of the money that we 
provide or the loans that they provide?
    Mr. Walsh. Well, maybe you could explain both aspects.
    Mr. Maurice Jones. Okay. The average size of what we have 
been providing--I am just glancing down at the numbers--is 
about $250,000 in grant funds. The average size of micro loans, 
they range from anything around $500 to about $25,000. I would 
say the average size, though of the awardees that we have 
funded is $3,000 or $4,000.
    Ms. Lazar. That is the amount of money that they need to 
get their businesses going.
    Mr. Walsh. Do you track the repayment of those, or is that 
somebody else's responsibility?
    Mr. Maurice Jones. We track their delinquent--the portfolio 
delinquent----
    Mr. Walsh. What percent would you say are----
    Mr. Maurice Jones. For the good micros, you are talking 
about 2 percent delinquencies. We have seen numbers from 2 
percent to 10 percent.
    Mr. Walsh. And the 10 percent areas, are they in 
geographical areas where you have more of that, or is just the 
management in that specific area?
    Mr. Maurice Jones. You know, again, I want to be careful 
because we haven't done an extensive analysis in that sense.
    Mr. Walsh. Okay.
    Mr. Maurice Jones. But my sense of it is it is not 
particular to geographic area, although markets certainly play 
a role. But there are a number of other things that play a 
role.
    Mr. Walsh. Right.
    Mr. Maurice Jones. The strategy that the micro group is 
employing, some micro groups employ what they call peer 
lending, where you are part of a lending group and each one of 
the borrowers is actually an enforcer of other borrowers' 
paying back their loans. In other words, if we were all in one 
group, if one of us were delinquent, then none of us could get 
an additional loan until that other person or other 
organization came in line. Those tend to have, as you can 
imagine, lower, I think----
    Mr. Walsh. That is sort of the Grameen Bank model.
    Ms. Lazar. Yes.
    Mr. Maurice Jones. That is the Grameen Bank model.
    Ms. Lazar. The peer lending model.
    Mr. Maurice Jones. That is right. So it depends on--the 
strategy has a lot to do with the delinquency and certainly the 
market does as well, but there are various factors.
    Ms. Lazar. We also support micro through a non-monetary 
award called the Presidential Awards for Excellence in 
Microenterprise where we select a number of different 
microenterprise organizations for recognition and to be able to 
disseminate their best practices around the country and to 
feature them. We have six organizations who will receive that 
award this year. That is a non-monetary award, though.
    We have also been active--I serve as the co-chair of the 
interagency work group on microenterprise. I co-chair that with 
a senior official at the SBA, and we work to really coordinate 
the work that is being done around the Federal Government in 
microenterprise. So we have our hands in a lot of different 
pots.
    Mr. Walsh. I have a meeting with Chairman Young, so I will 
ask Rodney, can you take over?
    Mr. Frelinghuysen. Yes.
    Mr. Walsh. Thank you very much.
    Ms. Lazar. Thank you.
    Mr. Walsh. Sorry to run, but it is one of those days.
    Mr. Frelinghuysen [presiding]. Mr. Mollohan?
    Mr. Mollohan. Welcome again, Ms. Lazar.
    Ms. Lazar. Thank you.

                             funding cycles

    Mr. Mollohan. I heard you say in your testimony that you 
had only one application cycle per year. Is that right?
    Ms. Lazar. Yes.
    Mr. Mollohan. And when is that?
    Ms. Lazar. We put out our Bank Enterprise Awards in early 
September. We ask for applications then. We ask for 
applications for our Core Awards later in the fall, October. We 
are hoping we will be able to get the applications out a little 
bit earlier this year to allow core applicants a little bit 
longer period of time. Traditionally, we have been looking at a 
12-week period to get the applications in. We are going to try 
to expand that to 16 weeks.
    The applications come back to us in January. We review them 
over the course of the spring and make our award decisions in 
the late summer.
    For our TA, our technical assistance applications, we make 
our announcements in January, and this year we instituted a 
rolling cycle. So we take applications every month, the end of 
February, end of March, end of April, end of May, and evaluate 
them as we go along for that program.
    Mr. Maurice Jones. Just to add to that, it depends on what 
you mean by one cycle. We have different programs, and we run 
only one round of each program per year. But we have going at 
one time--one, two, three, four--about four cycles or four 
rounds of the program.
    Mr. Mollohan. What I mean was each program. There is one 
application opportunity per year.
    Mr. Maurice Jones. Yes.
    Ms. Lazar. Per program.
    Mr. Mollohan. For what you are calling the Core Program, 
you are soliciting in September for the next fiscal year? Is 
that the idea?
    Ms. Lazar. We would do the applications in September, and 
we have traditionally done them in October.
    Mr. Mollohan. When you say ``do applications''----
    Ms. Lazar. We issue the notice of funds availability.
    Mr. Mollohan. You invite applications.
    Ms. Lazar. Yes, we invite applications.
    Mr. Mollohan. In September, for the next fiscal year.
    Ms. Lazar. That is right.
    Mr. Maurice Jones. For that current fiscal year. For the 
fiscal year that we are in, we invite--this year, for 
instance----
    Mr. Mollohan. So you are one fiscal year behind, then.
    Mr. Maurice Jones. No.
    Ms. Lazar. No.
    Mr. Maurice Jones. Right now we are evaluating 2000 
applications, fiscal year 2000 applications.
    Mr. Mollohan. Okay. If you invite in September, that was 
for fiscal year 1999.
    Ms. Lazar. Actually, we didn't get--the applications didn't 
go out this year until September.
    Mr. Mollohan. I understand. I just wanted to confirm that 
you invite applications once a year.
    Ms. Lazar. Yes.
    Mr. Mollohan. And for this year, for 2000, that invitation 
was issued in September of 1999.
    Mr. Maurice Jones. In November.
    Mr. Mollohan. In November of 1999.
    Mr. Maurice Jones. Yes.
    Mr. Mollohan. Okay. So the closing date for being 
responsive to that invitation was?
    Mr. Maurice Jones. January of this year, of 2000.
    Mr. Mollohan. All right. So you were looking at a 2001 
application cycle being the next available opportunity.
    Mr. Maurice Jones. That is right.
    Ms. Lazar. That is right.
    Mr. Mollohan. And that would start in----
    Mr. Maurice Jones. That would start--we are going to try to 
push it up to August of this year.
    Mr. Mollohan. Okay.
    Mr. Maurice Jones. We will invite applications in August. 
We will ask for them to be due in December.

                          monitoring awardees

    Mr. Mollohan. Okay. I note that you have monitoring 
requirements.
    Ms. Lazar. Yes.
    Mr. Mollohan. I was interested in your talking a little bit 
about those. As you get larger, they are becoming increasingly 
sophisticated. What do they involve and what is your experience 
with them, just briefly?
    Ms. Lazar. We actually have a fairly formal procedure. We 
get reports from our awardees on a regular basis. On a semi-
annual basis, we get audited financials from them. Once a year 
we get a report from them on how they are doing based on their 
performance goals in their assistance agreements with us. We 
enter into assistance agreements with them, and we set forth 
performance goals based on their business plan that they need 
to work towards over the course of 5 years subsequent to their 
award.
    We look at those reports fairly carefully to make sure the 
organizations are meeting their performance goals.
    Mr. Mollohan. You review them in-house?
    Ms. Lazar. We review them in-house.
    Mr. Mollohan. These are documents that are forwarded up 
by----
    Ms. Lazar. Yes.
    Mr. Mollohan. Do you do audits in any way?
    Ms. Lazar. We get financial audits from the organizations.
    Mr. Mollohan. The audits that they do?
    Ms. Lazar. That they do, and we----
    Mr. Mollohan. You haven't done any audits yourself?
    Ms. Lazar. We haven't gone out and done audits yet. We have 
done some site visits, and we do do visits when we note some 
problems. We try to make sure we nip them in the bud.

                         rural vs. urban cdfis

    Mr. Mollohan. Rural versus urban, how is this program 
characterized in those terms at this time?
    Ms. Lazar. I just in my earlier testimony noted that in the 
44 organizations we surveyed, 48 percent of them serve inner-
city areas, 42 percent of them serve rural areas, 10 percent of 
them serve suburban areas.
    Mr. Maurice Jones. I think that is accurate. We certainly 
are attempting to engage in extra efforts to reach out in the 
rural areas to help groups that are interested in starting 
CDFIs and then to give them information about how much of a 
resource we could potentially be for them.
    Mr. Mollohan. If you've got 48 percent urban, 42 percent 
rural, and 10 percent suburban, it sounds to me like you are 
pretty well balanced in those terms.
    Ms. Lazar. We are getting there.
    Mr. Maurice Jones. We hope so. You will find that there are 
more CDFIs located in urban areas than there are----
    Mr. Mollohan. Well, what do these percentages break down 
to?
    Mr. Maurice Jones. That is the population served. So that 
you may be headquartered in Louisville, but you may be serving 
rural Kentucky.
    Mr. Mollohan. Okay. Let me rephrase my question. In terms 
of the location of these organizations, how would they break 
down between urban and rural areas?
    Mr. Maurice Jones. There would definitely be more----
    Mr. Mollohan. An urban bias.
    Ms. Lazar. In urban areas.
    Mr. Maurice Jones. There would definitely be more in urban 
areas.
    Mr. Mollohan. And do you think that is something that needs 
to be addressed? I guess by your previous comments you do.
    Mr. Maurice Jones. Yes, and we have made efforts in an 
attempt to address it. It is a complicated issue. One of the 
reasons why there are fewer CDFIs in urban areas as opposed to 
rural areas----
    Mr. Mollohan. You mean more.
    Mr. Maurice Jones. More. I am sorry. More in urban as 
opposed to rural. One of our requirements to be a CDFI is you 
cannot be controlled by the government. Well, in some rural 
areas it means that the government is the only political or, I 
should say, economic development factor in that area, and it 
can't qualify.
    Mr. Mollohan. Yes, that is a real problem. We are working 
on that, creating non-profits that have the capability of 
participating in these kinds of programs.
    Ms. Lazar. We went out this year to many more rural places 
than we had been before with the outreach sessions that we do 
to announce our awards in each place, and we spent time going 
to rural areas where we have been invited by State bankers 
associations and others.

                       native american initiative

    Mr. Mollohan. And I think that is good, and I don't mean to 
interrupt you, but I don't want to take a whole lot of time 
here.
    I noticed your Native American initiative, which I applaud. 
I would think some of the same issues associated with 
connecting with the Native American community would be similar 
to the ones of connecting with rural America.
    Mr. Maurice Jones. Absolutely.
    Mr. Mollohan. And you are doing a Native American study to 
identify the factors that make it difficult for them to develop 
these kind of things?
    Mr. Maurice Jones. Well, the study is to identify factors 
that make it difficult to get private investment on Native 
American reservations, which would include the difficulty of 
creating and sustaining a CDFI. It would certainly include 
that, but it is part of it.

                            secondary market

    Mr. Mollohan. I really applaud that initiative.
    One more question, if I might, Mr. Chairman.
    On page 13 you talk about developing a secondary market for 
these lots.
    Ms. Lazar. Yes.
    Mr. Mollohan. Where is that, and what will that do for you?
    Ms. Lazar. We have begun--what we will do will be a 
feasibility study to determine whether there really is--we 
think there is a market for it, and we want to see how that 
market should be crafted and created. So our plan is to do a 
study to look at that issue and perhaps develop a pilot program 
to effectuate any of the results of that----
    Mr. Mollohan. What would that do for you if you found out 
that it was----
    Ms. Lazar. I think it would provide more liquidity to the 
institutions that we serve. That would be our hope. That is 
what we would want to get----
    Mr. Mollohan. They would be able to participate better and 
get dollars back.
    Ms. Lazar. They would be able to sell their loans, and then 
have more money to recycle for the lending activity.
    Mr. Maurice Jones. It would basically give them a more 
diverse--CDFIs a more diverse fund-raising strategy.
    Mr. Mollohan. Typically are these organizations financial 
institutions or are they associated in partnership with a 
financial institution?
    Mr. Maurice Jones. Well, they are all financial 
institutions. I am not sure whether you mean banks or regulated 
financial institutions, but they all have as their predominant 
business activity, providing finance.
    Mr. Mollohan. I did not realize that.
    Mr. Maurice Jones. They have to. To be designated as a CDFI 
you have to have as your predominant business activity, 
finance.
    Mr. Mollohan. All right. Let me ask you this: could you be 
associated with a community development or a housing non-profit 
that had as its focus physicially redoing communities, along 
with economic development?
    Mr. Maurice Jones. If you mean can you be a program within 
such an institution and can that institution still be a CDFI? 
Was that your question? Or whether you associate yourself with 
a partner institution that is developing?
    Mr. Mollohan. Yes, that is what I mean.
    Mr. Maurice Jones. Oh, yes, you typically see these 
institutions partnered with housing developers, other economic 
developers, training providers.
    Mr. Mollohan. Thank you very much. Thank you, Mr. Chairman.

                         rural vs. urban cdfis

    Mr. Frelinghuysen. Thank you, Mr. Mollohan.
    I have a few questions, following up on one of Mr. 
Mollohan's questions about rural versus urban. The physical 
location of administration tends to be in urban areas. I assume 
that there is some additional cost?
    Mr. Maurice Jones. Of the CDFIs?
    Mr. Frelinghuysen. Yes.
    Mr. Maurice Jones. Again, since we have more in urban 
areas, the physical location of most of those----
    Mr. Frelinghuysen. You are desirous though of having some 
administrative capacity out in rural areas, but you find some 
roadblocks there.
    Mr. Maurice Jones. We certainly have found some challenges 
in educating people about what CDFIs are doing, and we also 
found challenges in organizing boards for these institutions, 
finding sources. They have to match our funds, for instance. 
Matching fund sources----
    Mr. Frelinghuysen. So it is easier in an urban center to 
locate your administrative----
    Mr. Maurice Jones. It seems that ways. I am not sure that 
it is easier, but our numbers would suggest that there is some 
advantage to locating in an urban area as opposed to a rural 
area, yes.
    Mr. Frelinghuysen. But if the people in the rural area feel 
that they have a stake in what they are doing, surely it would 
be better to have it in their back yard rather than in an urban 
setting.
    Ms. Lazar. Absolutely.
    Mr. Maurice Jones. Absolutely, absolutely.
    Mr. Frelinghuysen. So this is an issue--and these are 
questions you ask all the time.
    Ms. Lazar. Oh, yes. And we really do look at seeing where 
there are strong rural activities and try to build on what is 
going on in those rural communities if we can help.

                         native american study

    Mr. Frelinghuysen. Shifting gears here, your Native 
American lending study, it says in your statement, is intended 
to stimulate private investment on Native American reservations 
and other lands held in trust by the United States. Has there 
been any contact with any of those tribes that have been 
enormously successful?
    Ms. Lazar. Oh, yes.
    Mr. Frelinghuysen. Are they in any way partnering with you?
    Ms. Lazar. Yes.
    Mr. Maurice Jones. Yes.
    Mr. Frelinghuysen. I mean, one has to assume that there 
have been plenty of studies over the last 20 years as to how to 
stimulate private sector activities on tribal reservations, so 
I assume those studies are available. But what have some of the 
more affluent, successful tribes done? Do they participate with 
you in any way?
    Mr. Maurice Jones. Yes, absolutely. They are our partners 
in actually conducting the study. The way we have gone about 
the study essentially is we have located tribal partners, and 
we have put on workshops near or on reservations at which the 
tribal partners are actually inviting the participants or at 
least helping us to invite the right participants. Yes, there 
have been studies.
    Mr. Frelinghuysen. Well, I am interested if there have been 
some tribes that have been enormously successful like in 
Connecticut. Are they doing things to help other Native 
American reservations?
    Mr. Maurice Jones. Yes, they are.
    Mr. Frelinghuysen. And you work with them?
    Mr. Maurice Jones. Yes.
    Mr. Frelinghuysen. So they are at the table.
    Mr. Maurice Jones. Yes, absolutely.

                        increase in applications

    Mr. Frelinghuysen. I just have a few questions relative to 
the applications. You had some very positive statistics. When 
you talk about oversubscribing, in other words, how many 
applications--what percentage of increase in applications have 
you seen?
    Ms. Lazar. I have some statistics that----
    Mr. Frelinghuysen. And for instance, in following up, of 
the applications that the CDFI fund received last year, how 
many went unfunded?
    Mr. Maurice Jones. Do you want me to answer the latter?
    Ms. Lazar. Why don't you go ahead with the latter.
    Mr. Frelinghuysen. Maybe you can provide those----
    Mr. Maurice Jones. We can provide those for the record.
    Mr. Frelinghuysen. But those are the sort of things that 
the committee would like to know.
    Mr. Maurice Jones. I will give you one example. Under the 
Core, we had 153 applications. We ended up funding 66 of them.

                            grants vs. loans

    Mr. Frelinghuysen. I think the committee would like to know 
what the needs are out there as well as what you have done, 
which is--grants and loans, how much was spent last year on 
grants versus loans to Community Development Financial 
Institutions.
    Mr. Maurice Jones. Two-thirds of what we have done have 
been grants.
    Mr. Frelinghuysen. Is that similar to previous years?
    Mr. Maurice Jones. That is similar to previous years.

                               award caps

    Mr. Frelinghuysen. Relative to caps at the end of fiscal 
year 1998, two CDFI awardees had reached the $5,000,000 cap 
last year when you answered us. You said, quote, ``The fund is 
currently considering the merits of revisiting the cap, and 
would be happy to discuss the pros and cons with Congress.'' I 
assume that since last year the pros and cons have probably 
been discussed somewhere. Have they and where do we stand?
    Ms. Lazar. We are still at a point now where we are holding 
steady to the cap that we have of $5,000,000. I think we feel 
comfortable with that. I think it allows us to continue to 
serve a wider range of organizations.
    Mr. Frelinghuysen. So the answer to my question is the cap 
is staying at $5 million?
    Ms. Lazar. For the moment, yes.
    Mr. Frelinghuysen. Have any additional awardees reached the 
cap?
    Ms. Lazar. Yes.
    Mr. Maurice Jones. Yes.
    Mr. Frelinghuysen. How many?
    Mr. Maurice Jones. We have----
    Ms. Lazar. We would have to get you that.

           trenton, nj neighborhood reinvestment corporation

    Mr. Frelinghuysen. And lastly, before I turn to Ms. Meek, 
Trenton, New Jersey, their neighborhood reinvestment 
corporation received an award. Is everything working out?
    Mr. Maurice Jones. As far as we know. I do not know any bad 
news.
    Mr. Frelinghuysen. Well, good.
    Ms. Lazar. We will keep you posted.
    Mr. Frelinghuysen. It is always good to know when you come 
before the committee, how----
    Mr. Maurice Jones. So far, so good.
    Mr. Frelinghuysen. So far, so good.
    Mrs. Meek.
    Mrs. Meek. Thank you, Mr. Chairman.
    Welcome back this year.
    Ms. Lazar. Thank you.

                     accessibility of cdfi programs

    Mrs. Meek. You may remember last year I introduced the 
amendment that developed SECAP. Glad to see that you have begun 
it. I am sorry to be late, but I had another committee meeting, 
but I did want to get in and hear about CDFI.
    Now, I am hoping--you told us that your research grant is 
going to help you be accessible to people. Many of the 
complaints I get about things we do here in Washington, that it 
is very difficult to get the money on the street. And the forms 
are many times prohibitive to getting people to fill them out 
and to get them back. My question to you is: have you been able 
to do this, and the kinds of forms that are necessary to apply 
to CDFI and for SECAP funding.
    Ms. Lazar. Why don't we start with CDFI. We have been 
working pretty diligently to get out into the field and to do a 
substantial number of sessions around the country. We not only 
go directly out to talk about the programs as we announce them, 
but we have also been working closely with HUD and with their 
satellite facility to be able to reach people in all the HUD 
offices around the country. So we can do a video broadcast 
where we are reaching 81 offices. We also have been working 
with USDA, and have been putting together satellite hookups 
with them. So we are reaching more broadly than we ever had 
before.
    This year, to announce our awards, we visited 52 states.
    Mrs. Meek. How can it be 52 states? There are only 50 
states.
    Ms. Lazar. And the Virgin Islands and Puerto Rico, the 
Virgin Islands and Puerto Rico. We conducted 188 information 
sessions, and 55 of those information sessions had a specific 
rural focus.
    We also--both Maurice and I and the staff go to lots of 
meetings that we are invited to, meetings that are convened by 
government officials, meetings convened by bankers and other 
business people in the communities, by trade associations. We 
go when we are asked, and we try to make sure that we get the 
word out about the work that we are doing and about the 
programs we have. We have a very strong, energetic staff who 
are very happy to take telephone calls and work with 
individuals who call in, to help them get through their 
questions and concerns when they are trying to apply to us for 
funding. We try to be as customer service oriented as we can.
    Mr. Maurice Jones. And on your question of paperwork 
reduction, that is a very dear subject to us, and we have 
revised our applications since the last time we spoke, in an 
effort to reduce or make more transparent our application 
requirements. We are going to incorporate the SECAP component, 
and what it will hopefully do is provide, again, a more 
streamlined application so that more smaller institutions, 
younger institutions, can actually apply and be successful and 
actually receive the funds. So we will constantly be doing what 
you just spoke of.

                             secap program

    Mrs. Meek. What is your timetable for SECAP?
    Mr. Maurice Jones. Our hope is, and our plans are to launch 
SECAP in January of 2000----
    Mr. Frelinghuysen. 2001?
    Mr. Maurice Jones. 2001, yes, sir.
    Mr. Frelinghuysen. 2001 and 52 states. [Laughter.]
    Mrs. Meek. Are you going to pull in some of the 
practitioners that are now in CDFI to assist you in formulating 
your regulations; will there be any input from them?
    Mr. Maurice Jones. I think we do not have a choice on that 
one. They will give us input voluntarily or involuntarily, but 
we will definitely--and we have already been actually working 
with these organizations in trying to craft this program.
    Mrs. Meek. Thank you.
    Mr. Frelinghuysen. Thank you, Ms. Meek.
    Mr. Mollohan, anything additional?
    Mr. Mollohan. Just a couple.
    Mrs. Meek. I forgot one thing. May I----
    Mr. Mollohan. Certainly.
    Mrs. Meek. I forgot the major question. What is the maximum 
amount you expect to make available through SECAP?
    Mr. Maurice Jones. I think we are looking at about 
$10,000,000 or $15,000,000 for SECAP.
    Mrs. Meek. Thank you.

                    reauthorization of the cdfi fund

    Mr. Mollohan. When I was asking about your rural program, 
let me follow-up a little bit. Staff has told me that you have 
some authorization issues associated with that. What is the 
status of this issue?
    Ms. Lazar. Right now our authorization bill was reported 
out by the House Banking Committee last spring. There are still 
discussions between the Banking Committee staff and the House 
leadership about bringing that bill to the floor. We have had 
some discussions with the Senate Banking Committee staff. They 
asked some questions, but no bill has been introduced thus far.
    Mr. Mollohan. So there is no action in the Senate.
    Ms. Lazar. No action in the Senate. The House bill is 
really where----
    Mr. Mollohan. What about this issue of you being able to 
service rural areas versus urban areas; how is that dealt with 
in the authorizations?
    Mr. Maurice Jones. I think the big obstacle has been how 
the--how distressed community is defined under our statute. And 
under the CDFI programs, the way that distressed community is 
defined, it allows us the flexibility to define distressed 
community a number of different ways, so we can define in ways 
that are applicable to both rural and urban areas.
    Mr. Mollohan. So you do not have a prohibition in your 
expired authorization that would prohibit your going into rural 
areas?
    Mr. Maurice Jones. Not in the CDFI, but let me continue. 
Under the CDFI program I think we are really going pretty good. 
Under the Bank Enterprise Award Program, the way that 
distressed community is defined, it is defined very 
restrictively and has to be one and a half times the 
unemployment rate in that area, and the poverty rate has to be 
30 percent. We have no flexibility on that, and that actually 
is a disincentive for banks attempting to get awards from us 
for BEA activity, because many rural areas in the country, 
though they are impoverished, they do not meet those particular 
definitions of poverty, and so they do not qualify as 
distressed.
    Mr. Mollohan. What was the idea of defining it that way?
    Mr. Maurice Jones. You know, this was in our enabling 
legislation. I am not sure why it was defined that way.
    Mr. Mollohan. Who was the sponsor of your enabling 
legislation?
    Mr. Maurice Jones. There were lots of sponsors.
    Mr. Mollohan. Who was the chief sponsor?
    Mr. Maurice Jones. Senator Riegel would have been a chief 
sponsor in the Senate, and then actually in the House, with 
respect to the Banking Enterprise Award Program, it would have 
been Congressman Flake from New York at that time. I am not 
sure that----
    Mr. Mollohan. They had focused on that.
    Mr. Maurice Jones. Right. What we have seen in practice--
and I have got two stacks of paper right here that break down 
distressed areas under CDFI and distressed areas under BEA, and 
you can see that there are far more areas of the country that 
qualify under CDFI than under BEA.
    Mr. Mollohan. Does the pending authorizing legislation 
address this issue?
    Mr. Maurice Jones. Yes.
    Ms. Lazar. Yes.
    Mr. Maurice Jones. It gives us the flexibility to craft 
``distressed community'' in various ways.
    Mr. Mollohan. And do you anticipate that authorization 
moving on the House side this year?
    Ms. Lazar. We are hopeful.
    Mr. Mollohan. To the floor.
    Mr. Maurice Jones. Good question.
    Mr. Mollohan. You do not know?
    Mr. Maurice Jones. We do not know.
    Mr. Mollohan. And on the Senate side nothing is happening?
    Mr. Maurice Jones. That is right.
    Mr. Mollohan. Thank you.
    Mr. Frelinghuysen. Thank you both for your testimony.
    We stand adjourned.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                           Thursday, March 2, 2000.

                  AMERICAN BATTLE MONUMENTS COMMISSION

                               WITNESSES

GENERAL FRED WOERNER, USA (RET.), CHAIRMAN
MAJOR GENERAL JOHN HERRLING, SECRETARY
KEN POND, EXECUTIVE DIRECTOR
JIM AYLWARD, DIRECTOR OF THE WORLD WAR II MEMORIAL PROJECT

                                Welcome

    Mr. Walsh. The hearing will come to order. I thank the two 
members who join us today, Rodney Frelinghuysen and Carrie Meek 
from Florida. Mr. Mollohan, the ranking member, has a conflict 
so we may proceed.
    Today, we will take testimony on the fiscal year 2001 
budgets requests of the American Battle Monument Commission and 
the U.S. Chemical Safety Hazard Investigation Board. We will 
begin with the American Battle Monument Commission for its 
fiscal year 2001 request of $26,196,000 represents a decrease 
of $2,271,000 below the fiscal year 2000 funding level. 
Testifying this morning on behalf of the commission once again 
will be its chairman, General Fred Woerner, retired.
    Welcome, General. I should mention at this point that there 
was some question of whether you would be able to testify due 
to a recent hearing date change by the subcommittee. We 
appreciate your willingness to work with us to get you back 
into the schedule, and I apologize for any inconvenience this 
may have caused you.
    Following my remarks, I would ask Mrs. Meek if she has any 
opening remarks as the ranking Democrat now on the 
subcommittee.
    Mrs. Meek. No, Mr. Chairman, just to welcome everybody.
    Mr. Walsh. Thank you. And if you would, please begin. Your 
entire statement will be included in the record, and if there 
is anyone you would like to introduce, please do so.

                           Opening Statement

    General Woerner. Thank you, Mr. Chairman. Mr. Chairman and 
members of the committee, on behalf of the commissioners of the 
American Battle Monuments Commission, I am very pleased to 
appear before you today, and I thank you most sincerely for the 
support you have provided our committee over the past years. 
With me today are General John Herrling, on my right, Secretary 
of the American Battle Monuments Commission; Mr. Ken Pond, 
Executive Director; Mr. Jim Aylward, Director of the World War 
II Memorial Project; and behind me, members of our staff.
    As you know, the American Battle Monuments Commission 
administers, operates and maintains 24 permanent memorial 
cemeteries and 27 memorials, monuments and markers located in 
15 countries around the world. We have eight World War I and 14 
World War II cemeteries located in Europe, the Mediterranean, 
North Africa and the Philippines. In addition, we are 
responsible for the American cemeteries in Mexico City and 
Panama.
    The maintenance of these facilities is labor intensive, and 
therefore, personnel costs account for 61 percent of our budget 
for fiscal year 2001. The remaining 39 percent of our budget is 
required to fund our operations in areas of engineering, 
maintenance, utilities, horticultural supplies, equipment and 
administrative costs.
    We have now established an American Battle Monuments 
Commission Website through which our customers can access 
information on each of our memorial cemeteries, the Korean War 
Veterans Memorial Honor Roll, and we recently brought on-line 
the 174,000 names registered in the World War II cemetery 
database. We will soon have the World War I database on-line 
also.
    During fiscal years 1998 and 1999, we conducted a 
comprehensive manpower survey. Based on the survey results and 
with the concurrence of OMB, we began the adjustments last year 
and will complete the process next year. Funding for the 
upgrades in the fiscal year 2001 plus the adjustment to the 
personnel baseline is included in our request.
    In an attempt to avoid personnel increases, this year the 
commission and OMB undertook a study to determine if 
technology, outsourcing and automation improvements could 
reduce the growing cost of foreign employment. We will now look 
at the best way to implement the labor saving measures 
identified.
    During this fiscal year we will begin an infrastructure 
modernization program. Our cemeteries range in age from 50 to 
70 years. With the help of Congress and OMB, over the last 
three years we have made excellent progress in reducing our 
backlog of maintenance and engineering projects. We must now 
begin to examine the infrastructure of these aging facilities 
and develop a plan to modernize outdated systems.
    This committee has been instrumental in our success in 
maintaining a high standard of excellence by providing the 
funds required. The additional funding that you gave us of $3.0 
million in fiscal year 1998, $2.5 million in fiscal year 1999 
and $2.0 million this fiscal year for the engineering and 
maintenance projects in our backlog has helped us to enhance 
our safety, improve security, make needed infrastructural 
repairs and comply with environmental laws.
    In fiscal year 2001 we are requesting $2.2 million for 
engineering and maintenance projects. This level of funding 
hopefully will allow us to stay even with our backlog of 
projects. I say hopefully because during this past December 
severe windstorms swept through Europe causing damage estimated 
at approximately $1 million. We do have photographs with us of 
some of that damage. Unfortunately, the cost of cleanup will 
impact significantly the pace of catching up on our essential 
engineering and maintenance projects in our backlog.
    In addition, we are requesting $1 million for our 
infrastructure modernization program and $1 million more for 
operational efficiency improvements.
    With regard to fiscal responsibility, the GAO gave us an 
unqualified opinion on our financial audits for fiscal year 
1997 and 1998, and I am very pleased to report to you, sir, 
that recently completed fiscal year 1999 audit also received an 
unqualified opinion.
    As you are all aware, in 1993 Congress directed our 
commission to establish the World War II Memorial. It will be 
the first national memorial dedicated to the 16 million who 
served in uniform during World War II, the 407,000 who gave 
their lives, and the millions who support the war effort on the 
home front.
    The World War II Memorial fund drive is chaired by Senator 
Bob Dole and Mr. Fred Smith of the Federal Express Corporation 
and is supported by a national public service ad campaign 
through the Ad Council that features actor Tom Hanks.
    To date the campaign has been led by corporate and 
foundation giving and we project continued positive response. 
Tens of thousands of veterans are involved in the campaign 
through their respective organizations. Civic groups are 
stepping forward with fund-raising goals for their respective 
memberships.
    An initiative to have each State contribute $1 for each and 
every person from that State that served in uniform during the 
war has also been successful. To date, 26 States have either 
contributed or pledged their support. The remaining 24 States 
have committed to introduce legislation this year.
    Direct mail has helped us educate the giving public and 
indeed provide a source of income. More than 355,000 
individuals have participated in the direct mail program.
    As of January 31, 2000, we have netted $65.6 million of the 
$100 million needed to build the World War II Memorial. We hope 
to break ground for the memorial by Veterans' Day of this year.
    In summary, sir, since 1923 the American Battle Monuments 
Commission, cemeteries and memorials have been held in a high 
standard that reflects America's continuing commitment to its 
honored war dead, their families and the U.S. national image. 
The commission intends to continue to fulfill this sacred trust 
while seeking ways to improve overall management and 
operational efficiency.
    Our appropriation request for fiscal year 2001 is 
$26,196,000. Mr. Chairman, we are pleased to respond to your 
questions.
    [Statement of General Fred Woerner on page 1122.]
    Mr. Walsh. Thank you, General. Mr. Frelinghuysen has 
advised me that he has to leave. He has a conflict at 11:00 
a.m. If there is no objection, I would like to go ahead and let 
him ask his questions and then go to Mrs. Meek.

                       wwii memorial fund raising

    Mr. Frelinghuysen. Thank you, Mr. Chairman. That is most 
unusual. I appreciate it. Thank you, gentlemen, for your 
service, active service at one point and certainly your service 
on the commission. It is very important that these remarkable 
shrines be well preserved and cared for. Congratulations, I am 
sure all of us feel a lot of pride in the amount of money that 
has been raised for the World War II monument. Our governor was 
down here yesterday I think with a fairly large check, and I 
guess Senator Dole was there, too. I didn't have an opportunity 
to get there, but there was a tremendous amount of excitement 
among the veterans of every conceivable veterans organization 
and a lot of pride in what they are doing to assist you.
    You are still raising money?
    General Woerner. Yes, we are, sir.
    Mr. Frelinghuysen. The projections are positive?
    General Woerner. Yes, sir.

                           wwii memorial cost

    Mr. Frelinghuysen. What is the total cost of the project?
    General Woerner. The total cost of the project will be $100 
million. This includes a fee of 10 percent of the construction 
cost that goes to the Park Service for perpetual maintenance.

                   wwii memorial borrowing authority

    Mr. Frelinghuysen. In 1999 the Congress authorized $65 
million in borrowing authority; is that right?
    General Woerner. Yes, sir.
    Mr. Frelinghuysen. Have you used any of it so far? Do you 
anticipate using it?
    Mr. Aylward. We anticipate perhaps having to use it 
sometime.
    Mr. Frelinghuysen. Maybe you can identify yourself.
    Mr. Aylward. I am Jim Aylward, Executive Director of the 
World War II Memorial. Borrowing authority gives us the ability 
to meet the requirement to have sufficient funds per the 
Commemorative Works Act to begin construction. If we are going 
to access the borrowing authority at all, it will be in year 
2002 and best estimates at this time it will be for 
approximately $11 million. That depends currently on our 
cashflow of gifts coming into the campaign, and some very nice 
things have happened over the last few months; namely, what we 
have done with Wal-Mart. In stores throughout the country you 
can see a major campaign that they have kicked off. This drive 
will end in March. However, that was not factored in some of 
our original projections, and it just came about very quickly 
and they have already raised nearly $10 million.
    Mr. Frelinghuysen. We are excited for you. Thank you, Mr. 
Chairman.
    Mr. Walsh. You are welcome. Mrs. Meek.

                       wwii memorial fund raising

    Mrs. Meek. Thank you, Mr. Chairman. I have some questions 
submitted by Congresswoman Kaptur and Congressman, who is the 
second, Mr. Mollohan, and I will go ahead with those and the 
rest I will submit for the record. This is from Marcy Kaptur. 
She certainly applauds the progress that has been made toward 
the memorial. She has long been a supporter of the memorial, 
and her question is, in your written testimony you report that 
the World War II Memorial Capital Campaign has raised 94.1 
million and had an account balance of 65.6 million as of 
January 31st. Last year you told us that you raised 42 million 
by January 31, 1999.
    Was that 42 million figure the total amount raised to that 
date or the amount on hand in the account? Detail for the 
subcommittee on what the 28.5 million difference between the 
amount raised and the amount on hand was spent.
    General Woerner. Jim, would you please respond.
    Mr. Aylward. 42 million was what we actually raised for 
that particular year. There was a carryover of funds, too, from 
the previous year, and I am sorry, she also mentioned?
    Mrs. Meek. She mentions that there was a 42 million figure, 
the total amount raised, to that date or the amount on hand all 
in the account?
    Mr. Aylward. No, it was the total amount raised.
    Mrs. Meek. And she wants you to detail on what the 28.5 
million difference between the amount raised and the amount on 
hand was spent. Her question talks about you raised 94 million 
and had an account balance of 65.6 million as of January 31st.
    Mr. Aylward. Of 2000, that is right.
    Mrs. Meek. Then last year you told us, according to her 
question, that you had raised 42 million by January 1999. Then 
naturally that is a difference between what you indicated. Her 
question is, was that 42 million figure the total amount raised 
to that date or the amount on hand in the account at that date?
    Mr. Aylward. It was the total amount raised to that date.
    Mrs. Meek. All right. And she wants to know--give detail 
for the subcommittee on what the 28.5 million between the 
amount raised and the amount on hand was spent.
    General Herrling. That explanation might take a little bit 
of time so why don't we provide the answer for the record.
    [The information follows:]

    The WW II Memorial Project operating expenses cover the 
broad areas of management, administration, and fund raising. 
The project's operating expenses during the period FY 93 
through January 31, 2000 total approximately $28.5M.
    It should be noted that a significant percentage of our 
fund-raising expenses, $15.25M, were associated with the WW II 
Memorial Project's donor marketing program which helped create 
national awareness and has grossed over $27.3M for the 
campaign.
    A detail of the $28.5M in expenses incurred during the 
period FY 93 through January 31, 2000, follows:

                         [Dollars in millions]

Management/administration.....................................     $8.47
Donor Marketing...............................................     15.25
Fund-raising..................................................      4.74
                    --------------------------------------------------------------
                    ____________________________________________________

      Total...................................................     28.46

                      wwii memorial state support

    Mrs. Meek. Okay. Then her second question is a simpler one. 
You report that some 46 States have committed or are expected 
to commit to contributing a dollar for every person who served 
in the war. You mentioned this in your testimony. Can you 
provide the subcommittee with a State by State breakout of 
those veterans?
    General Woerner. Yes, we can, and we will submit that in 
both what it would have been on a dollar per individual basis 
and what the actual donation was.
    Mrs. Meek. I will submit these other questions for the 
record. With that, Mr. Chairman, I didn't have any questions.
    [The information follows:]


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                           wwii memorial cost

    Mr. Walsh. All right. Well, thank you very much. I would 
like to follow up on those questions pertaining to the dollar 
amount raised. By the way, it is a remarkable amount of money 
that you have raised, and you are to be applauded for that 
effort. Obviously these are large amounts of money, and my 
question is, as of January 31, 2000, 94.1 million had been 
raised from all sources resulting in an account balance of 65.6 
million. Obviously there is $29 million that has either been 
spent or otherwise not in the bank.
    Mr. Aylward. That is correct. It is broken into--separated 
into--administration, about $8 million. The campaign costs, 
which are really fundraisers of about $4.7 million. Donor 
marketing which accounts for--and this is our direct mail, 1-
800, Internet and our fulfillment of various certificates and 
membership cards for 355,000 donors, that accounts for almost 
one-half of our budget up to that point of $15 million.
    Then we have the project costs of the expended funds for 
the design competition and the design to date which would add 
up to a little bit over $6.7 million.
    Mr. Walsh. So in order to build the monument, what is the 
cost of that?
    Mr. Aylward. $88.270 million.
    Mr. Walsh. $88.270 million and your goal is?
    Mr. Aylward. I am sorry, $88.570 million.
    Mr. Walsh. What is your fund-raising goal?
    Mr. Aylward. One hundred million. That $88.570 million does 
not include groundbreaking and dedication. We estimate that it 
will cost about $750,000 to groundbreak and based on the 
previous history of the Korean War Veterans Memorial and the 
Women in Military Service for America Memorial, we estimate it 
will cost about $5 million for dedication. The other two items 
are indirect costs that we apply for a project officer and 
various people working at ABMC on the World War II Memorial 
Project and the potential interest costs on any future 
borrowing.
    Mr. Walsh. Does that mean you need to raise another 6 
million or another 35 million?
    Mr. Aylward. We need about $139 million to cover the full 
cost of the project and campaign.
    Mr. Walsh. Why would your goal be a hundred million?
    Mr. Aylward. The goal originally, the $100 million was 
established to design, construct and maintain the memorial. 
What was never factored in there was that we had to go out and 
raise money.
    General Woerner. A few observations, sir. When we 
established the $100 million, as we looked at other 
construction projects, that seemed to be a reasonable figure.
    Mr. Walsh. That is a lot of money.
    General Woerner. As you know, once you say something like 
that in a very round number, it takes on a life of its own. It 
actually turned out to be very accurate. That is one 
observation.
    The second observation I would like to make, sir, is that 
incorporated into the audit of ABMC was a separate audit, which 
we go through annually, of the World War II Memorial Project, 
that came out absolutely clean.

                              direct mail

    Our direct mail program has been very successful. The 
professionals in the field have said they have never seen a 
direct mail program as successful as ours has been.
    Mr. Walsh. What sort of response are you getting from the 
direct mail program? We in politics do know something about 
those percentages.
    Mr. Aylward. In direct mail, our house file is returning 
about--costing us about 16 cents on the dollar. If we take a 
step back to late 1996, 1997 when the ABMC, a small agency of 
about 13 people, had to create a campaign when many of the 
folks around the country thought there was already a World War 
II Memorial in Washington and were surprised that there wasn't 
one, the ABMC had to create an infrastructure, recruit and 
develop staffing, and create awareness. Awareness is one of the 
things that the direct mail program has done. The direct mail 
program now is becoming a productive program. Our prospecting 
has been 78 cents on the dollar. We have not lost money on any 
of our prospecting. Our house file is now down, as I said, to 
about 16 to 17 cents on the dollar. We are no longer 
prospecting. So all the funds that we bring in currently are in 
the range of 15 to 16 cents to raise a dollar.

                       wwii memorial fund raising

    Our projections continue--it is a very fluid campaign, as I 
mentioned, because of the amounts of money that surprise us, 
like the Wal-Mart campaign and the History Channel created a 
program, provided us with about $2.8 million worth of in-kind 
service. They are now showing an hour long film about the 
memorial. They have created 75,000 curriculum sets for school 
children to be used by teachers who can call a 1-800 number or 
access this information on the History Channel's Web site. 
15,000 of these curriculum sets have been ordered already. This 
program was introduced about 6 weeks ago.
    So I guess what I am saying is we are beginning to get this 
ground swell of support from numerous folks from throughout the 
country.
    Our return on our investment on direct mail, to answer your 
question directly, is we have taken in about $27 million and we 
spent about $15 million to raise those funds. So we are coming 
out ahead.
    General Woerner. Thanks to the Congress, sir, we have 
recently been authorized nonprofit status for postage which 
will result in significant savings for us.

                    abmc maintenance and engineering

    Mr. Walsh. On the overall budget, this is in regard to 
Arlington Cemetery, whose folks were here yesterday. An 
aggressive maintenance and construction program at ABMC 
facilities is an absolute necessity to preserve these sacred 
memorials. This subcommittee has over the past few years taken 
a special interest in ABMC and has provided additional funds to 
allow the commission to pursue just such an aggressive program 
in its cemeteries throughout Europe and other parts of the 
world.
    It has worked for us before. I want you to know how very 
much we appreciate the way you and your staff, wherever they 
may be located, have grasped this opportunity, being done some 
3 years ago and performed so well. You can certainly be proud 
of all the work you have done on behalf of the honored veterans 
and the American public.
    I should also mention that OMB has not been quite as 
supportive in this effort to eliminate the extensive backlog of 
maintenance requirements which existed when we began this 
program, and it is in this vein that I want to begin my 
questioning.
    Is it safe to assume a reduction in your fiscal year 2000 
request is tied principally to the additional increment we have 
added to reduce your maintenance backlog?
    General Herrling. No, sir. The reason for the reduction of 
the $2 million is really a three part answer. As you stated, a 
portion is due to taking out $2 million for the FY 2000 
Congressional add. In addition, another minus $2 million is due 
to the repricing of our foreign currency requirements. The 
dollar has been strong against the foreign currencies we spend 
in Europe, therefore we will require less dollars to accomplish 
the required level of expenditures. In overall terms, these 
reductions were partially offset by our two new initiatives, 
the infrastructure modernization program and the productivity 
program, which together amount to a plus $2 million.
    General Woerner. The other part is that we----

                  foreign currency fluctuation account

    Mr. Walsh. All right. So the account for this year reflects 
an account balance of about $900,000 positive, to the good?
    General Herrling. Yes, that is correct.
    Mr. Walsh. So if you include this reduction of 2 million, 
the net is down about a million?
    General Woerner. The $2 million coming from $28 million to 
$26 million, fundamentally represents a net difference. It 
results after reductions for the FY 2000 plus-up that you gave 
us, the repricing of our foreign currency estimates and other 
reductions. This was partially offset by increases for the two 
new initiatives, FY 2001 expected personnel pay raises, the 
accounting system and other increases. We will insert these 
details in an answer to your question.
    [The information follows:]


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                  maintenance and engineering backlog

    Mr. Walsh. How does the backlog stand right now? In the 
budget justification you said we will have a small backlog of 
maintenance, repair and capital improvement projects at the end 
of 2001.
    General Woerner. Yes, sir. Right now we have a $7.5 million 
backlog. We anticipated being able to reduce that to about 
three million dollars plus by the end of the fiscal year, but 
we have been set back by the storm damage of a million dollars.
    Mr. Walsh. What did that backlog stand at, say, 3 years 
ago?
    General Herrling. $14.7 million.
    Mr. Walsh. At the end of 3 years you are down to about 
three million, if you had not had that million in there. The 
reduction could go towards the backlog; if we did not reduce 
your budget, according to the OMB request, you could take 
another million towards the backlog.
    General Woerner. Yes, we can. That would all go to the 
backlog. In other words, if the Congress appropriated an 
additional 2 million, it would all go to the backlog and would 
get us closer to zeroing out our backlog by a full year or so.

                              storm damage

    Mr. Walsh. The storm damage was about a million dollars you 
say?
    General Woerner. Yes, sir.
    Mr. Walsh. That would then be added to the backlog?
    General Woerner. That is added to the backlog that is 
already there.
    General Herrling. Here are some pictures.
    Mr. Walsh. Looks like central New York 2 days ago.
    General Herrling. The French estimate they lost about 10 
million trees in total, and it will take them the next 5 years 
to clean it up and restore all of that.

                            35 hour workweek

    Mr. Walsh. Okay. I don't want to keep you too long. One 
last question and then I will go to Mr. Goode. France has 
adopted the 35-hour workweek. Can you give us an idea what is 
currently happening in France with regard to this, how many of 
your cemeteries are currently involved and what you plan to do 
to deal with it?
    General Herrling. Sir, the State Department in France, the 
embassy in Paris, has decided that they are not going to 
implement the 35-hour workweek at this time, and they are still 
negotiating with the French government over that. But 
eventually we will have to go to a 35-hour workweek, and the 
impact to us in France will be considerable if we do not offset 
it with productivity improvements to make up the difference in 
the workweek. We have been working with OMB, and we are 
developing a program to see if we can't improve the efficiency 
of our cemetery operations through new technology, automation, 
leasing and outsourcing some of the types of work we do.
    OMB is reluctant to give us additional personnel, and I 
understand that, but they are not reluctant to start an 
initiative where we can take a look at new equipment, 
automation, leasing and outsourcing some of the work we do to 
make up the difference in the personnel shortfall.
    Mr. Walsh. Thank you.
    General Herrling. It will have a significant impact.
    Mr. Walsh. Mr. Goode.

                      MONUMENT AND LAND OWNERSHIP

    Mr. Goode. Thank you, Mr. Chairman. Let me ask you, your 
total request I believe is $26 million, right?
    General Woerner. Yes, sir.
    Mr. Goode. And as I read, you maintain various monuments 
all over the world; is that correct?
    General Woerner. Yes, sir.
    Mr. Goode. And you have, what is it, 24?
    General Woerner. 24 cemeteries, sir, 27 monuments, 
memorials, markers that are on our books.
    Mr. Goode. Are all of them the property of the U.S. 
Government? Now, what about the ones in France and Mexico?
    General Woerner. Sir, the legality of the land ownership 
varies around the world, but in all cases we act virtually as a 
sovereign country within that piece of real estate, although 
the transfer of ownership does vary from country to country.
    The only area where it is in doubt right now, because of 
the canal transfer, is in Panama. We have been, for the last 
few years, working with the embassy to clarify our status now 
that the Canal Zone has been returned to Panama. That has not 
yet been resolved. We have a draft agreement, that both 
countries have agreed to follow pending legislative action by 
the Panamanian legislature.

                           MONUMENT LOCATIONS

    Mr. Goode. Of the 27 monuments how many are in the U.S.?
    General Herrling. Five.
    General Woerner. Five, sir.
    Mr. Goode. And where are they?
    General Herrling. There is one in lower Manhattan called 
the East Coast Memorial. It is right there in Battery Park, a 
very large memorial, and it is to commemorate those who lost 
their lives in the Atlantic in World War II, air crewmen and 
sailors. There is a similar memorial out in the Presidio of San 
Francisco. It is called the West Coast Memorial. Here in 
Washington there is Pershing Plaza down on Pennsylvania Avenue 
between 14th and 15th, and that is a memorial to the American 
Expeditionary Force from World War I. Then the Korean War 
Veterans Memorial, which is located close to the Lincoln 
Memorial, and a memorial in Hawaii at the Punchbowl. Those are 
the five in the United States.

                            STATE MEMORIALS

    Mr. Goode. Since your inception have you ever helped in 
State memorials that honor say World War II veterans, 
monuments?
    General Woerner. That is not in our charter, sir, but we 
have been authorized on a reimbursable basis to assist 
organizations in maintaining their memorials, monuments and 
markers, once a trust fund has been established.

                             D-DAY MEMORIAL

    Mr. Goode. Have you had the occasion or heard of the D-Day 
Memorial in Bedford County which is a national memorial. It has 
gotten considerable State funding and Charles Schulz----
    General Herrling. Yes.
    Mr. Goode [continuing]. Contributed a couple million.
    General Woerner. Even though we have----
    Mr. Goode. Have you been in touch with that group at all or 
have they been in touch with you?
    General Herrling. We haven't been in touch with them in any 
formal way, but there is some confusion between the National 
World War II Memorial and the D-Day Memorial. So sometimes we 
will get their correspondence and they will get our 
correspondence, but there is no formal tie there.
    Mr. Goode. Because that is going to be very nice--it is 
already--they have gotten a lot of money. They need a little 
more but it is going to be a top attraction in this country.
    General Woerner. Even though we have these five memorials 
in the United States, sir, our charter back in 1923 from 
Congress places our responsibility primarily overseas.

                     BATTLE OF NORMANDY FOUNDATION

    Mr. Goode. Let me ask you about one other, the Battle of 
Normandy Foundation, and you have probably heard or gotten a 
lot of calls about that.
    General Herrling. Sure have.
    Mr. Goode. I have read e-mails saying that it is a sham. 
What can you say about that?
    General Herrling. I can't speak authoritatively on it. I 
can talk from having conversations with people, and they are 
saying some of the same things. The purpose of the foundation 
when it was organized was to erect a monument at Normandy, and 
the people that were involved in it were asking $40 from each 
participant, and they collected I don't know how many 
millions----
    Mr. Goode. Four million is what I have heard.
    General Herrling. Somehow over time that money evaporated. 
The memorial was never built. That has been resurrected here in 
the last 2 years. There was serious concern that people had 
given money to this foundation and the memorial never 
materialized. So a new group is trying to pull this project 
back together. They have a design and they have a fund raising 
program going, and I think this is a very legitimate effort to 
right a prior wrong.
    Mr. Goode. Because I have some constituents, they received 
a certificate indicating their name was on the wall when there 
was no wall in existence.
    General Herrling. That is true.
    Mr. Pond. Congressman, there is a GAO report which I think 
your staff can pull out very easily. It was written about 3 
years ago and is probably the most accurate government document 
that states what was going on at that time.
    Mr. Goode. Pierre Salinger's name was on it. I am not 
saying they had any direct knowledge of not utilizing funds. 
Are any law enforcement agencies investigating that or do you 
know?
    Mr. Pond. It was reported on--I do not know factually but I 
saw a ``60 Minute'' program on television that reported that 
the FBI was looking into that. I think I saw that program a 
year ago.
    Mr. Goode. I would suspect that group got some money that 
persons would have been better off had they contributed to you 
or to the D-Day Memorial in Bedford.
    General Herrling. It has had a bit of an adverse effect 
because the people who gave to that D-Day Memorial were very 
reluctant and some of them still haven't given to the National 
World War II Memorial just because of that.
    Mr. Goode. Thank you, Mr. Chairman.
    Mr. Walsh. Thank you. And thank you all very much for your 
testimony. Mrs. Meek, do you have any?
    Mrs. Meek. No, I do not.
    Mr. Walsh. We will have questions that we will submit for 
the record. Thank you very much.
    [The information follows:]


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                                           Tuesday, March 28, 2000.

                OFFICE OF SCIENCE AND TECHNOLOGY POLICY

                                WITNESS

NEAL LANE, ASSISTANT TO THE PRESIDENT FOR SCIENCE AND TECHNOLOGY AND 
    DIRECTOR OF THE OFFICE OF SCIENCE AND TECHNOLOGY POLICY
    Mr. Walsh. We will begin. Our witness for today is a 
familiar face and name. He has been here in a number of 
different capacities. We welcome back Dr. Neal Lane, who is 
serving the President as the director of the Office of Science 
and Technology Policy and assistant to the President for 
Science and Technology.
    This year OSTP is requesting $5,201,000, the same amount as 
requested last year. This amount represents an increase of 
$93,000 from last year's appropriation. We thank you for being 
here today, Doctor, and look forward to your testimony. I would 
ask Ms. Kaptur, as the minority representative, if she has any 
opening statement or remark.
    Ms. Kaptur. Thank you, Mr. Chairman. I just wanted to 
welcome Dr. Lane back to the committee this morning and to say 
what an important responsibility you have. I just returned from 
an American Chemical Society meeting in California late 
yesterday, and the science and technology area, in almost every 
aspect of it, is just sort of propelling the world into areas 
in which we have not seen before.
    I think, for me, some of the key issues relate to ethics 
and science and how we make decisions here in the absence of 
complete information, as science moves ahead in so many aspects 
of life on Earth, and probably life off the Earth. So we look 
forward to your testimony, and thank you very much for your 
service to our country.
    Mr. Walsh. Thank you, Marcy.
    Dr. Lane, the floor is yours.
    Mr. Lane. Thank you, Mr. Chairman and members of the 
committee. I am very pleased to appear before you today. I 
would like to ask that my written testimony, which describes 
OSTP's budget and highlights the administration's fiscal year 
2001 R&D budget request be included for the record.
    Mr. Walsh. Without objection.
    Mr. Lane. The President and Vice President have proposed an 
historic science and technology budget for fiscal year 2001, 
and I cannot emphasize enough how dedicated the administration 
is to working with you to see that the R&D budget is enacted. I 
believe this budget will generate bipartisan momentum to put 
our R&D portfolio on an optimum investment trajectory, one that 
increases research in the core disciplines of science and 
technology across the board, providing balance among the 
disciplines and continued prosperity in the 21st century.
    Mr. Chairman, I believe you and I share a commitment to 
keeping America's position as a world leader in science and 
technology intact. I hope you agree OSTP plays a vital role in 
leveraging the Government's science and technology investments 
for broad national goals. OSTP's excellent small staff advises 
the President on fast-breaking science and technology 
developments, it coordinates the work of the R&D agencies to 
ensure we get the biggest bang for our science and technology 
bucks, and it promotes strategic partnerships among the science 
and technology stakeholders, State and local Governments, 
industry, academia and various international players.
    We believe we bring real value added to the national 
science and technology enterprise. Two examples that provide a 
sense of OSTP's influence are the administration's initiatives 
in information technology R&D, and the newer initiative this 
year on nanotechnology.
    The Information Technology R&D Initiative responds to last 
year's wake-up call from the congressionally chartered 
committee, the President's Information Technology Advisory 
Committee. We call it PITAC. OSTP was instrumental in setting 
and getting the committee established in the first place.
    We also worked closely with the committee to make sure that 
its work was useful to the Federal agencies, while still 
challenging those agencies to think outside the box about their 
responsibilities and possibilities in information technology 
research. Once we had the committee's recommendations, OSTP 
pulled together the Federal agencies to develop a response, and 
we ultimately concluded that information technology is so 
important that we proposed, and you funded, new Federal R&D 
investments.
    This year, we build upon that effort, taking your advice, 
Mr. Chairman, and the recommendation of the PITAC Committee, by 
presenting a single integrated information technology R&D 
portfolio, which includes the base high-performance computing 
and communication programs, which includes the next-generation 
Internet and the new activities established last year in the 
President's Information Technology for the 21st Century 
Initiative and DoE's Accelerated Strategic Computer Initiative 
called ASCI. This was all in response to the recommendation of 
the PITAC.
    This year, the President has requested $2.315 billion for 
IT R&D. That is 35 percent above and beyond our ongoing 
research programs. Out of this increase, Mr. Chairman, $279 
million, nearly half of the initiative, comes through your 
subcommittee. I hope we can continue to count on your support.
    Let me also mention as an aside that cyber security is very 
much in our minds, and I just want to mention, even though it 
does not fall under this committee, the administration is 
requesting $50 million, through NIST, to create an Institute 
for Information Infrastructure Protection. It was initially 
proposed by the President's Committee of Advisors on Science 
and Technology to help build the knowledge base that we are 
going to need to make sure that our future information networks 
are safe, reliable, robust and secure as possible.
    I would also like to highlight OSTP's work on an initiative 
in nanotechnology research. OSTP, through the auspices of the 
President's National Science Technology Council, convened an 
interagency working group to look into the feasibility of a 
nanotechnology initiative. After the working group finalized 
its work, OSTP recommended that PCAST, the President's Advisory 
Committee on Science and Technology, convene a panel to review 
the recommendations of the working group and to advise OSTP and 
others in the administration on how best to implement their 
findings. This effort culminated in the National Nanotechnology 
Initiative, which will provide a $225 million increase in the 
emerging fields of nano science and nano engineering, nearly 
doubling the current Federal investment. Once again, nearly 
half of this increase will come through this subcommittee. 
Roughly 70 percent of the new funding proposed under the 
Nanotechnology Initiative will go to university-based research. 
Universities such as Syracuse will help lead this next new 
revolution.
    These investments will help meet the growing demand for 
workers with nano-scale science and engineering skills, and the 
administration believes that nanotechnology will have a 
profound impact on our economy and society in the early 21st 
century, perhaps comparable to that of information technology 
itself or cellular, and genetic and molecular biology.
    Information technology and nanotechnology are our largest 
R&D initiatives for the fiscal year 2001 budget. But OSTP also 
played a critical role in developing coordinated interagency 
budgets and policies in the areas of plant genome, food safety 
R&D, emerging infectious disease, sustainable development, 
critical infrastructure protection and education research, as 
well as other areas.
    So Mr. Chairman, I ask today for your continued support of 
OSTP's role in coordinating science and technology policy for 
the Executive Branch and for our Nation at large. OSTP's budget 
request of $5.2 million and 40 FTEs for fiscal year 2001 
represents no increase in FTE level and an increase of budget 
authority of just over 2 percent. We believe these additional 
resources are essential to continue to provide the highest 
quality of work across our broad spectrum of responsibilities.
    Mr. Chairman and members of the committee, I hope this 
brief overview, combined with my written statement, convey to 
you the extent of the administration's commitment to advancing 
science and technology in the national interest in the 
importance of OSTP's role in the enterprise. Regardless of 
party affiliation, in the end, we can all agree that 
investments in science and technology are investments in our 
Nation's future. So I look forward to achieving bipartisan 
support for a national S&T strategy that will combine the 
resources of industry, academia, nonprofit organizations and 
all levels of Government to advance knowledge to promote 
education, strengthen institutions and develop human potential.
    I ask not only your support for OSTP's fiscal year 2001 
budget, but also want you to know how much I appreciate the 
longstanding bipartisan support of the committee for OSTP and 
for the entire science and technology enterprise. I would be 
happy to answer any questions that you and members of the 
committee have.
    Thank you, Mr. Chairman.
    [Statement of Hon. Neal Lane on page 1129.]
    Mr. Walsh. Thank you very much for your statement, Dr. 
Lane. Thank you, also, on behalf of the Subcommittee for your 
commitment not only to advocating science, but for leading 
science and technology in our country and for the many, many 
years that you have provided leadership at all levels from 
academia all of the way up to the White House.
    Mr. Lane. Thank you.
    Mr. Walsh. Your advocacy is appreciated here, too.
    Mr. Lane. Thank you.

                          human genome project

    Mr. Walsh. I normally constrain my questions to budget and 
operations, but I am just going to take advantage of having you 
here and give you an opportunity to philosophize a little bit. 
[Laughter.]
    Mr. Lane. Oh, boy. [Laughter.]
    Mr. Walsh. You meet with a lot of very bright people, 
leaders in these technologies, and I would just like to pick 
your brain a little bit.
    This decision on opening up the genome map, the decision 
that came from Great Britain, and it was absolutely the right 
decision, where you take the computer model, open architecture, 
sharing information has benefitted everyone tremendously.
    The issue that we got involved with in the Congress in the 
last couple of years was how much of this information, as it is 
derived, is public information? How do you serve the public's 
need for information, especially if it is taxpayer supported, 
and where do you draw the line? What are your thoughts on that.
    Mr. Lane. I appreciate the question, Mr. Chairman. I will 
say a few things about the statement itself.
    We have been talking with our colleagues in Great Britain 
about issuing a high-level statement on the human genome 
database for at least six months, and the timing of the actual 
rolling out of the statement was to coincide with the Medal of 
Science, Medal of Technology event. It was a good time. We were 
celebrating science and the wonders of technology, and it was 
thought to be a good time to make the statement.
    The second thing I should say is the statement itself 
simply reaffirms a policy that we have had throughout the 
history of the Human Genome Project. Our agreement with our 
partners, there are two agencies involved, the Department of 
Energy and NIH here, and then the Wellcome Trust in U.K. Our 
agreement has been that the sequence genome data is put in Gen 
Bank immediately, within 24 hours. As soon as you sequence 
another string of it, you put it in GenBank, and it is 
available for the world, companies, private entities of other 
kinds, universities, anybody who wants to access it. We think 
that is very important because, first of all, that raw, 
fundamental information, everybody agrees, is not patentable.
    So this statement is in no way a change in patent policy or 
intended to be a change in patent policy. It simply highlights 
the importance of getting that raw data out there so that those 
who want to do more research on it can have it and companies 
who want to get access to it can easily do so. So I think that 
is not controversial.
    The statement also says that intellectual property needs to 
be protected in cases where what you have essentially is an 
invention. So you maybe not only have the sequence information, 
but you know what it is good for and how to use it. And those 
decisions are made by our Patent and Trademark folks, PTO, and 
they have guidelines out now. And, again, this statement is not 
to suggest changes in those guidelines.
    So sometimes people ask me, I have had a lot of 
conversations about this statement, sometimes people say why 
make the statement if it is just reaffirmation of existing 
policy? And the reason is because we want to encourage 
everybody who is doing sequencing of the human genome to make 
the information as available as quickly as they can.
    Mr. Walsh. If I can interrupt for just a moment, it is 
obvious that not everybody got the message that it was existing 
policy, based on the reaction of the stock market that day.
    Mr. Lane. Absolutely. And a really clear indication, I 
think, of what the issues are appeared today. There was a Wall 
Street Journal article--well, a Washington Post op-ed, I guess, 
Bill Hazeltine, who is CEO of Human Genome Sciences Company, 
sort of laid this out. But you are absolutely right.
    I mean, talk about an example of unintended consequences. I 
think it showed that, and now these are not my own words, just 
reading the press coverage, I think the conclusion was that it 
showed that there is not a good understanding of what these 
companies are doing and what the genome is all about and what 
is patentable and what is not. So it is quite true that the 
reaction was strong and unfortunate. I found that even during 
the day of the rollout, the press coverage changed, so that by 
the afternoon I thought people had a pretty good understanding 
of what the issues were here. But, unfortunately, the early 
reaction was quite negative.
    Mr. Walsh. Never predictable.
    Mr. Lane. We have not gotten, I hasten to say, we have also 
not gotten complaints from any companies that this was a bad 
statement. I think what people were bothered about was how 
misunderstood it was, and that certainly is unfortunate.

                             nanotechnology

    Mr. Walsh. Nanotechnology is fascinating but I am not sure 
everybody understands it exactly. There is the basic science 
and then there is the applications of it. Could you talk a 
little bit about both.
    Mr. Lane. Nanotechnology is an area that has really evolved 
over a period of a decade or more. And, in short, it is an 
ability to manipulate matter at the atomic molecular level. A 
nanometer is kind of the size of an atom or a molecular. It is 
that domain. A DNA spiral is about 2.5 nanometers wide. So that 
gives you some sense of the size that we are talking about. A 
blood cell is, I think, a thousand or more nanometers. So that 
is the scale we are talking about.
    What we have now are the tools to actually manipulate 
matter at that scale. But there are a lot of very fundamental 
questions that need to be answered in order to be able to do 
that. So this initiative is about the basic long-term research, 
the high-risk research that is generally done in universities 
or some of our national labs and occasionally done in 
industrial basic research arms, but that activity has been 
going down substantially through the years.
    So this is to focus on the fundamental questions about how 
you manipulate matter at the atomic and molecular scale, and 
the possibilities for application downstream are enormous in 
medicine and information technology.
    Mr. Walsh. What is real? There are a lot of suggestions 
about what is possible, but, in your mind, what is real?
    Mr. Lane. I have not heard any speculation, and in case you 
ask me the details, I have got my little slick nanotechnology 
brochure out, which you have got, and I will not read through 
those in the interest of your time. But all of these things 
that are laid out in this document are feasible, in the sense 
they do not violate any physical laws. But some of them are 20 
or more years, I believe, downstream. And like any other basic 
research, you do not know which things are likely to come 
sooner and which things are likely to come later. That is the 
nature of basic research. So there is nothing here that 
violates physical law.
    Almost all of these things about self-reproducing robotic 
systems that get written about these days in kind of terrifying 
ways are feasible, but we are nowhere near there yet. And there 
is a lot of research going to have to be done before we can do 
it. The idea of little monitoring systems, little smart systems 
that are so small that doctors can easily put them in the 
system to not only monitor, but may even seek out and repair 
damage are all feasible.
    Mr. Walsh. No more sigmoidoscopies. [Laughter.]
    Mr. Lane. Let me just say, Mr. Chairman, I am extremely 
excited about this initiative. I could talk about this 
initiative all day. It must sound as if some of the rhetoric 
that is being used here is really sort of overkill. When I say 
it may have the impact of information technology, a third of 
our economic growth currently is in the general area of 
information technology, that is making a very strong statement. 
But that is what the President's Advisory Committee 
ultimately----
    Mr. Walsh. Given the finite mess of our resources, the 
inability, over a long period of time, to sustain itself, there 
are some amazing possibilities here.
    Mr. Lane. The incredible thing about this kind of 
technology--again, if you think way downstream--is that in the 
case of manufacturing, if you can build up some objects 
molecule by molecule, you can avoid an enormous amount of 
waste, and inefficiency and also pollution that comes by 
building down in a sense. You take a thing and whittle it down 
to make a little device and lose a lot of the byproducts along 
the way.
    Mr. Walsh. That is really one of the fundamental 
differences of what you are suggesting.
    Mr. Lane. That is right. That is right. But in every area 
you can think about, I mention medicine, computing, 
manufacturing, and a lot of other areas that sound even more 
wild, the real-time monitoring of bridges and roads or airplane 
wings, self-repairing airplane materials and new kinds of 
plastics that when a little crack develops, they not only 
notice it, but they can also repair it. These sound wild, and I 
guess they are in a way, but I think the potential is enormous. 
But our investment is on the very basic research, where I think 
we can think bold thoughts and push the frontier as hard as we 
can.
    Mr. Walsh. Thank you very much.
    Mr. Lane. Thank you.
    Mr. Walsh. Ms. Kaptur?

                              civilian r&d

    Ms. Kaptur. Thank you, Mr. Chairman.
    Dr. Lane, let me ask you, so I understand, on page 5 of 
your testimony, so I understand the numbers, you say that the 
R&D request for civilian is $43.3. I assume the remainder is 
military-oriented research that gets us to the $85.3 billion 
number.
    Mr. Lane. Yes. That is correct.
    Ms. Kaptur. And then you talk about basic research being 
$20.3. Is that part of the $43.3?
    Mr. Lane. Yes. That is correct.
    Ms. Kaptur. As is the university-based research.
    Mr. Lane. Yes. That is correct.
    Ms. Kaptur. I just wanted that clarified.
    Mr. Lane. So those are just different ways of cutting the 
overall R&D number.

                       math and science education

    Ms. Kaptur. I have so many questions for you.
    First, students. If we look at every high school principal 
I talk to says they cannot get science and math teachers. What 
is your read of what is going on, in terms of the country, and 
who is coming up behind us in the sciences and math?
    Mr. Lane. I believe our greatest challenge is the need that 
the country obviously has, and will continue to have even in 
greater numbers, for scientifically and mathematically educated 
young people, as well as professional scientists and engineers. 
And we do not do a very good job in the school systems in K-12 
education.
    Ms. Kaptur. May I interrupt you just for a second here?
    Mr. Lane. Sure. Please.
    Ms. Kaptur. From the time I was a kid, when there was 
Sputnik, and nobody else in here, other than maybe Dave, is old 
enough to remember that.
    Mr. Walsh. I remember Sputnik.
    Ms. Kaptur. We have always been talking about this. Did we 
get through the sixties, and seventies and eighties okay, and 
is what we face after the nineties and moving into the 21st 
century now, is it different from what we faced before, the 
magnitude of it? I mean, you have got a feel for this. I do not 
have a feel for the texture of it. What is going on now 
compared to before?
    Mr. Lane. I think our system of K-12 education has been 
mixed, for as long as I have been alive, and maybe even prior 
to that. We think back on the wonderful times with Mrs. 
Abercrombie, you know, in my home room or something, and I did 
have wonderful experiences. I think you all did. But I also had 
some really bad courses in science and math. We have not done a 
really good job ever, in my view. So I do not want to be too 
quick to say it has all gone downhill fast because I simply do 
not believe that.
    I think the challenges have grown because our population 
has grown, and other sets of issues that teachers and kids have 
to deal with are quite different than I faced when I was a kid; 
social pressures, salary disparities, all kinds of other 
issues. In the end, I believe we will make no progress, in 
spite of all of the excellent programs that our agencies have 
in place. And NSF is an agency I know well. It has a systemic 
reform effort that I think is very good.
    But if you really want to change the whole system, it is 
easy to understand how you do that. It is just hard to find the 
resources. You cannot continue to pay teachers the way we have 
been paying them. You cannot continue to give them no time to 
prepare to teach. You cannot continue to deprive the teachers 
of resources in the classroom. So that if they want a 
microscope, they have got to go buy it with their own money.
    I think there is no secret to the problems that we face. It 
is just that the challenge of dealing with it is enormous, and 
it is not just in science and math, it is throughout our whole 
system of education. So we have to keep trying, and the Federal 
Government needs to play its role, as it continues to do. But I 
think a lot has been studied about what our problems are in K-
12 education and science and math education and more broadly.
    And I think the answers are you have to have teachers in 
the classroom who understand the subjects and who have time to 
engage the students, and you have to have the resources in the 
schools so that the teachers can do their job. And the teachers 
are not going to stay without salary. And we know the turnover 
rate is frightening. The teachers cannot teach subjects they 
have not studied in school. So that has to be it for us.
    Ms. Kaptur. What percentage of science teachers in this 
country, forget math just for a second, from what you know, at 
the K through 12 level, what percent of science teachers are 
teaching a subject that they have gotten a degree in?
    Mr. Lane. Let me ask Dr. Bienenstock if he has a sense of 
that.
    Mr. Bienenstock. Of the order of 50 percent.
    Mr. Lane. Fifty was going to be my guess. It is also quite 
disparate, depending on the field. If you ask in the area of 
physics, how many teachers have a degree in physics, that 
number is smaller.
    Arthur Bienenstock is associate director for Science at 
OSTP.
    Ms. Kaptur. Is there anything in this budget that changes 
anything you have just talked about?
    Mr. Lane. I think there is a lot here that will change the 
situation that I have just described. There is an Integrated 
Education Research Initiative in here, where the Department of 
Education, a department that truly understands how schools work 
and what the problems are in districts, works together with NIH 
and with NSF to try to bring the best ideas of science and 
mathematics together with the best ideas of education. And I 
think those research studies will lead to better curricula and 
better ways of training teachers and better ways of attracting 
teachers into the classroom.
    I think, though, underneath all of that are systemic 
problems that I do not see the Federal Government being able to 
deal with. We should do what we do well, and I think research, 
large-scale experiments on the use of technology to improve 
education, those areas in which I think we can add real value. 
And there is a lot in this budget that addresses education from 
that perspective.

                               energy r&d

    Ms. Kaptur. This is on energy. Everybody is complaining 
about gas prices all over the country, and I am reading your 
submission here. And I am wondering, for the record, whether 
you could provide more detail on how the administration looks 
across agencies at how America cuts its umbilical cord to 
foreign imports of petroleum.
    And I know you have got biomass mentioned in here. You do 
not mention clean coal. We have got more BTUs under the ground 
in coal in my region of the country than we have got oil in the 
Middle East. We had clean coal research years ago. I do not 
know what has happened to that. If there is a way you could--
frankly, I am having trouble getting any clear voice from the 
administration, maybe you are going to be my savior, on this 
whole issue of energy independence, which I would take money 
out of Dave Hobson's budget in Defense and put it into energy 
security for the country. [Laughter.]
    I am that serious. And I have been serious--I said it in my 
first campaign in 1982. I am still serious about it, and the 
country really has not--it is going in the wrong direction, 
except for conservation, which you mentioned.
    Mr. Lane. There is a lot in this budget on addressing the 
issue that you raised, and it ranges all of the way from 
climate change technologies, which is doing the R&D that we 
need to do to find those new technologies to develop more 
efficient, cleaner energy sources, to the Clean Energy 
Initiative, which is--and the bio--and the Clean Energy Biomass 
Biofuels Initiative in here just to find cleaner fuels and also 
enable our rural areas to grow crops, which can be used to 
produce energy and fuel. That is an important initiative.
    The international aspect of clean energy is particularly 
worth noting, I think. It comes out of the President's Advisory 
Committee on Science and Technology's recent report, which 
addresses the developing world. You see, between 1990, I think, 
and 2020, the energy consumption of the developing world is 
going to double. I think I am right. Dr. Bierbaum will correct 
me if I get the numbers wrong. By 2050, it quadruples. So by 
2020, the consumption of the developing world will equal that 
of all of the OECD countries. It is an enormous growth curve.
    And we have a window of opportunity to work with those 
countries now to make sure that as they are putting their 
energy infrastructure in place, they get it right, they do not 
go down the same paths that many of our nations perhaps had to 
do, but did in earlier years: use more efficient energy, 
cleaner energy, and in the meantime, open up markets for 
American companies. This is a $10 trillion market for energy in 
the next 20 years, and half of that, I think, roughly half of 
that is going to be in developing countries, enormous market 
opportunity. And that is why we find the countries are so 
interested in this initiative.
    Well, our role here is not to do what the companies are 
doing or should be doing, our role is to invest in the R&D and 
ensure that those technologies that are developed in our 
laboratories are made available to industry and that our 
industries and our Government labs work with developing 
countries who want to work with us to get those technologies 
out there.
    So I think the opportunity is enormous. And if we wait too 
long, it is not going to happen. Because once, over this next 
10 years, while the countries are sorting out how they are 
going to deal with energy, once they get the infrastructure in 
place, that infrastructure could be there for half a century, 
maybe more. So now is the time to act. It is going to be good 
for the world, but it is going to be very good for us, just in 
terms of our competitive positions.
    Ms. Kaptur. Doctor, do you have the capability to provide 
for the record----
    Mr. Lane. You bet. I will.
    Ms. Kaptur. A better, for me, it takes me, maybe I am 
slower than the rest of the crew here, but to take a look at 
what our energy needs are, just the United States right now, 
how much we import, which is over half; then to take a look at 
what investments we are making in various energy technologies, 
whether it is hydrogen, whether it is biomass, whether it is 
clean coal, photonics, whatever the investments are. I have 
never seen that anywhere, and I have looked for it. And it 
would be very helpful to me because then I can ask the 
question, is this good enough for our country.
    Mr. Lane. We will try to provide this for the record.
    Ms. Kaptur. Thank you very much.
    Mr. Lane. May I correct something I said earlier? I think I 
failed to point out that within the basic research number that 
you mentioned, that also includes DoD's 6.1 money. So that has 
all of the civilian basic research, and it is also a little 
piece of the Defense budget, just their 6.1.
    Ms. Kaptur. Thank you.
    Mr. Lane. Thank you.
    Mr. Walsh. Thank you.
    Mr. Sununu?
    Mr. Sununu. Thank you, Mr. Chairman.
    Good morning.
    Mr. Lane. Good morning.

                       basic vs. applied research

    Mr. Sununu. Let us start there on that number. It is $20.3 
billion for basic research. I assume, correct me if this is not 
correct, that that includes NIH, NSF and most of the DoE 
funding?
    Mr. Lane. Yes. That is correct.
    Mr. Sununu. In fact, that is probably the lion's share of 
that $20 billion?
    Mr. Lane. Yes. The DoE basic research funding, yes.
    Mr. Sununu. So that leaves $23 billion of nonbasic 
research. Where is the bulk of that?
    Mr. Lane. Some of that is NIH because they also fund 
applied research. NSF funds a tiny bit of what they call 
applied research, and these lines are pretty gray, but I want 
to be as clear as I can be. Much of it is in DoE. So, for 
example, some of the technology programs will be in this number 
and other agencies.

                             energy policy

    Mr. Sununu. A follow-up question of Mrs. Kaptur's 
discussion of energy, and energy policy. In the abstract, we 
are all for higher energy efficiency, new energy technologies, 
the things that can make what we spend money on every day, from 
driving our car to having a comfortable household, less 
expensive and, of course, more efficient.
    But let me pose a hypothetical or an assumption about some 
of our past energy policy. And you describe for me, perhaps, 
what is wrong and/or if it is correct, how we avoid these 
pitfalls in the future.
    In the early eighties or the late seventies, about the time 
the DoE was first put together, the focus of Federal research 
was on synthetic fuels, as you well know. And in the early to 
mid-eighties, a disproportionate share of Federal energy 
research was on fluidized bed coal combustion technology. And 
fluidized bed technology is used in maybe something less than 
10 percent of the coal-fired plants today. But by and large, it 
is not a technology that really drove energy efficiency in this 
country. The synthetic fuels program never amounted to 
anything.
    But both initiatives, by consuming a disproportionate share 
of our national energy research budget, I would argue, shifted 
private dollars into these areas as well to take advantage of 
those kinds of programs or ideas that Federal administrators in 
these program areas were emphasizing. So in pursuing, again, 
for the cost of a large portion of our energy and R&D budget, 
we shifted private dollars away from technologies which 
ultimately did prove to really drive both energy efficiency 
improvements, and equally important, emissions reduction; for 
example, the SCR, the catalytic processes that are used to both 
improve BTU output and reduce NAAQS emissions in plants today. 
So this is a case where one might argue the Federal investment 
and the Federal focus on certain kinds of energy research had a 
detrimental impact on improving efficiency and reducing 
emissions.
    Mr. Lane. Well, I recognize the assertion that you are 
making. I have no experience with those decisions during that 
period and I have no data on which I can----
    Mr. Sununu. I am certainly not holding you responsible. I 
am just trying to understand what the potential pitfalls of 
shifting private dollars in one direction or another.
    Mr. Lane. I will say a couple of things that maybe will be 
helpful here. I think we cannot say with a high level of 
confidence that we know just what areas of R&D we need to make 
the investment in because they are going to end up producing 
the answer or the best answer. We are going to get some right, 
we are going to get some wrong. I think the work in 
photovoltaics, for example, has clearly paid off. Photovoltaics 
efficiency going up by over a factor of ten and costs have gone 
down by over a factor of ten is a more precise statement in the 
time we have been working in that area. Now it is the 
technology of choice for some rural areas, some isolated 
situations. We see them out on individual electrical devices of 
one kind or another.
    We are not going to know for sure going in just what is 
going to pay off. What you have to do, I believe, is to ensure 
that your program is, first of all, not doing what industry 
ought to be doing, and therefore you really have to be doing 
some of these things in partnership with industry. You have got 
to be sitting with company people so that you are fully 
informed on what their plans are and what their needs are and 
get their perspective on what the future holds. But if it is 
really research, you are not going to know, with a high level 
of confidence.
    We believe that the programs we are talking about now, for 
example, in the coal area, we know coal right now is not 
competitive with natural gas, and that is causing real problems 
in many of our communities. So what do we do about that? We 
think we need to invest in research to understand how to make 
coal competitive, not for the purpose of making it competitive, 
but just so overall we get our energy costs down, we become 
less dependent on other parts of the world, all of the things 
that we think are important.
    Mr. Sununu. But do not those who own coal reserves or who 
own coal-fired generating stations, one, have the absolute 
ability to calculate, with a very high degree of accuracy, the 
financial return of a given improvement in efficiency and, 
therefore, have the financial incentive, full financial 
incentive to make an investment in these technologies?
    Mr. Lane. From the perspective of the coal producer, I am 
going to want to maximize my profits, and I like the idea of 
being able to deliver the energy more efficiently and clean and 
all of those things. I think this is a win-win situation. But I 
think it is key that those folks are part of the discussion, 
that those people, their voices are heard, and we understand 
what their needs are and what their expectations are.
    But in the end, I think we are all after the same sort of 
thing. We would like less dependence on foreign resources. We 
would like to be sure, however we produce our energy, that it 
is clean and it is efficient. That is good for everybody. And 
that is what these programs are aimed that we have been 
discussing or aim to do.

                           genome disclosure

    Mr. Sununu. I think the concern is, in that last example 
you gave, though, that we are singling out the coal industry 
for financial support to support activities that they fully 
understand the financial ramifications of.
    A question about the genome, and I very much appreciate 
your earlier comments clarifying the statement. Is it my 
understanding then that the Hazeltine op-ed, which was in the 
Wall Street Journal, that the administration from the policy 
standpoint, does not disagree with any of the assertions made 
by Mr. Hazeltine or the descriptions of how he envisions this 
process unfolding of disclosure and licensing.
    Mr. Lane. I think, we are talking about this morning's op-
ed piece. That is the one I am talking about.
    Mr. Sununu. No, I apologize. This was an op-ed of about a 
week ago, shortly after the statements where he explained 
Genome Science's policy of disclosure.
    Mr. Lane. Right. Had I written it, I would have written it 
somewhat differently. So I do not want to say that we agree 
with every word in the statement. I think the underlying 
description of the situation is consistent with the 
administration policy. It lays out what you need, for something 
to be patentable in a way that I believe is consistent with our 
PTO guidelines. So I think, from that perspective, it helps 
clarify this situation.

                             plant genomics

    Mr. Sununu. Now, the private sector, and I believe it may 
have been Mr. Hazeltine's company, has recently disclosed the 
full DNA sequencing for the fruit fly; is that correct?
    Mr. Lane. That is correct, yes.
    Mr. Sununu. And so, clearly, that they believe that that 
has value, in the long run, generating economic support or 
value for their industry.
    Mr. Lane. I think it was after the Celera Genomics. Am I 
right, folks?
    Mr. Sununu. It was a private-sector initiative, though; is 
that a fair characterization?
    Mr. Gabriel. In partnership with universities----
    Mr. Lane. This is Cliff Gabriel, who is our assistant 
director of Science.
    Mr. Sununu. My point here is that you talked about a 
National Plant Genome Initiative, and if the private sector has 
the incentive to participate in even an enhanced disclosure of 
fruity fly sequencing, it would certainly seem that they would 
have every economic incentive to unravel the complex genomes of 
economically important plants. So why divert public resources 
into this effort, when it would seem to me that this is the 
most clear and logical next step for the private sector to 
tackle, and of course by your point made initially, that 
disclosure is going to be made fully and without any prejudice?
    Mr. Lane. I think it is a very good question, which I 
appreciate.
    The Federal effort in plant genome really started with the, 
I think, NSF was the only agency involved, but maybe other 
agencies early on as well, to sequence this little mustard 
plant called arabidopsis [ph.], or roughly like that. It is an 
ugly little mustard plant. It does not live very long. The 
reason NSF, as a part of an international partnership, started 
on that was because it is a fairly small genome. So given the 
technology that we had several years ago, you really could 
imagine sequencing that pretty fast, and it is now almost 
finished.
    Why do you care? I mean, who cares about this mustard 
plant? The reason is because many of the genes, the actual 
genes that would be identified and whose function we do the 
biology to understand, the biochemistry, are exactly the same 
genes that are going to show up in corn or in aspen trees. And 
in fact, in the Arabidopsis sequencing, the researchers found 
the flowering gene. So they are actually able to take that 
gene, put it in the genome of an aspen tree, and make a tree 
flower in a few years, rather than having to wait through its 
full maturity. That kind of research has been going on.
    A lot of those sorts of experimental research activities I 
think are not likely to be done by industry, which is more 
likely to be focused on maybe corn or a cereal where they just 
want to get the genome as fast as they can and understand it as 
well as they can. I think the whole situation has evolved.
    Let me say the following: If we got to a point where the 
companies can sequence a whole plant genome faster and cheaper 
than the Federal Government can do it, why not? I mean, why not 
get them to sequence it?
    Mr. Sununu. Has not the relative success, though, of the 
private sector in sequencing, the rate at which they have been 
able to sequence parts of the human genome, indicated that they 
are better and faster than the Federal Government?
    Mr. Lane. There is always the issue of whether they are 
doing the same thing or not. But I would agree with you that 
the progress that has been made in the private sector and 
genome sequencing is quite extraordinary. And a lot of the 
technologies that they are using came out of the Federal 
investment in basic research, sometimes not in genomics at all, 
but in other areas of biology, and some came out of chemistry. 
Technologies came out of chemistry and physics. So there is a 
good argument for the overall balanced Federal support of R&D. 
But the progress has been quite impressive.
    What I do not think we have seen so much of out of the 
private sector, but some of it may simply not be shared, is the 
functional genomics, the biochemistry, the research that needs 
to be done once you have found the gene to figure out what in 
the world it does; I mean, what protein does it code? What does 
that do? How do maybe two genes work together? That is an 
enormous, complex and fascinating area of science, and it can 
be extremely expensive and very risky in that you are not going 
to know going in whether you want to make that investment 
because you do not know if that is the route that you are going 
to get a real product out of or something that you need.
    So I think there is a very important role for basic 
research for the Federal Government here. But the focus needs 
to be on risk taking, real value added, doing the things that 
industry is not doing and working closely with industry so that 
when industry can do something better, why not enlist them in 
the process.
    Mr. Hobson [presiding]. Since the chairman left, I am in 
charge, so I get to ask questions now.
    Mr. Lane. Yes, sir.
    Mr. Hobson. I want to make a couple of comments first. I 
have a couple of concerns. Well, on oil and energy, I remember 
back when we had all of this crisis, and we looked at Shell Oil 
and all of these other types of things we spent all of this 
money on, and it seems like every time we begin to do this, 
then the spigot gets turned on again and everybody runs away. 
We had tax credits, and I bought a diesel car, and it was a 
neat deal, and then suddenly we went away from that sort of 
thing. I think we need to have a more consistent policy.
    The other comment I want to make is, in looking through 
this, I am very concerned. I sit on another committee, as Ms. 
Kaptur mentioned, and one of the things I see happening is the 
technology base of this country, with the mergers and 
acquisitions, we do not have the competition in some of the 
technical areas that I think we should have, especially in 
aerospace and some deep science stuff that we are doing in some 
of the Defense technology area.
    I also see the services, and the Secretary of Defense 
testified at our committee, and I think he is incorrect, that 
the private sector will pick up. For example, in the Air Force 
technology research and development budget used to be equal to 
both the Army's and the Navy's together, and now it is less 
than either one of them. And the thing that has kept us in the 
forefront is some of the basic science research that has been 
done in the Air Force. And I see that going away; one, by the 
fact that the Air Force is getting out of applied research and 
the Defense Secretary saying the private sector is going to 
pick that up. I do not think that is true, and I would 
appreciate, at some point, your comment on that.
    And my last comment, I am going to read a question here. I 
am concerned about the science teaching of children, also, and 
literacy overall, and I am hoping to do something in this bill 
later on to work on literacy in our State. But I want to 
mention something, in your jurisdiction. One of your main goals 
is to maintain our leadership in science, engineering and math. 
While you focus on several important subject areas like 
aviation safety, biotechnology, genomics, to name a few, most 
of these programs are basic institutions of higher education or 
Government labs.
    I have got a program in my district running through NASA 
called SEMAA, Science, Engineering, Mathematics and Aerospace 
Academy. This was created by a former colleague, Lou Stokes, to 
involve underserved grade school students in the fields of math 
and science. And I had some difficulty getting this started in 
my district. But today in Springfield city schools, over 270 
students are currently enrolled in SEMAA programs, and there is 
a waiting list for next year. And I guess I would ask what is 
OSTP doing for math, science and technology outreach in our 
schools, especially ones in rural communities.
    And I remember, I have got to tell you, I remember some of 
those teachers that we had in science, and they were, and it is 
hard to keep those people today because there is such a demand 
for their services in the community in the private sector. We 
do not pay enough to keep them.
    So I would like to ask about the SEMAA program or things 
like it because if we do not get these kids, just like reading, 
if you do not get them by the third or fourth grade, you are 
probably not going to get them along the way. And if you do not 
challenge them at younger ages, we do not get the kids going on 
for the science degrees.
    So if you want to comment about any of those things.

                            glenn commission

    Mr. Lane. I appreciate your questions, Mr. Hobson.
    Let me just mention, starting with the last one first, I am 
pleased to be a member of the Glenn Commission, and we are now 
right now discussing how to improve teaching, I think 
recognizing that with all of the studies that have been done, 
until we get a teacher issue that I talked about earlier, then 
we are going to have a hard time coping with the rest of the 
issues. There is no point in having a curriculum if you do not 
have a teacher who can deal with it.
    And so one of the sessions I participated in most recently 
was this session on induction. It is recognized that, depending 
on how you induct the teacher into the classroom, what you do 
when the teacher first arrives in the school, you either have a 
good experience, the teacher does, or a really bad experience. 
And once one starts to look into the whole practice of 
induction in the school system, we realize there are all kinds 
of problems.
    Sometimes a brand new teacher gets the worst teaching load, 
gets the worst school, and by ``worst,'' I mean the least 
desirable in terms of whether you are enjoying teaching or not 
and maybe even a tougher set of courses. Often the brand new 
teacher has no mentor. So there is nobody there who knows how 
the system works. I also commented earlier sometimes there are 
no resources, no microscope, no chemicals. And teachers with 
experience have learned how to cope with all of that. And if 
they are there at the table helping the new teacher coming in, 
it can make a huge amount of difference.
    So I expect out of the Glenn Commission will come some 
recommendations that we will be able to follow up on and maybe 
build on some of the programs we already have in place in the 
Department of Education and NSF and dealing with teachers in 
helping improve the situation for teachers.
    I would also mention that a project that Duncan Moore, who 
is my associate director for Technology, has helped spearhead 
with NIST is a program to work with local industry, and by 
``local'' I mean around a school or schools, so that the 
industry works with the school to attract a science and math 
teacher who otherwise might not come, help recruit them and 
also hire them in the summer so a teacher can come for a full 
year's pay and also an enriching experience by working with 
local industry. And we are trying to get that off the ground 
and very enthusiastic about doing that.

                                dod r&d

    Moving up to the Air Force R&D program, I share your 
concern about the erosion, if you like, of the R&D budget in 
Air Force and then more broadly in DoD. Air Force has gone down 
faster than Army-Navy programs, but the overall recent history 
of Defense R&D is not positive. And the Defense Department 
supports a very large percentage of some of our engineering and 
research activities in universities, in physical sciences.
    I think a field like electrical engineering, as much as 70 
percent of the academic research was funded by the Department 
of Defense. So if that funding goes down, it's going to have 
enormous implications, even beyond maintaining our defense 
capability and having those technologies for the warfighters in 
20 years or 10 years, but it also has a big impact on our 
overall human resources in the country, in science, math and 
engineering.
    I have had a number of discussions with the policy makers 
in the Department of Defense about this issue, and I find a lot 
of reflection, concern, about the issues, but there are many 
pressures on the Defense budget, so in the end what you see 
presented in the budgets request to the Congress reflects not 
just the importance of R&D, which is very important, but other 
issues that the Defense Department is trying to deal with.
    This year, I am happy to say that the basic research 
request is up, so the President is requesting more money for 
basic research than last year. But the long-term trend is 
troublesome and I think something we need to continue to work 
at.
    I would say if, indeed, it is the decision of the 
Department of Defense, working with the Congress, to put R&D on 
a different path or at a different level, that's an important 
policy decision and one may need to look at what the 
implications are for the other agencies that support R&D in the 
country. Does it mean another agency needs to pay more 
attention to developing those technologies that would be 
important, not only for the mission of that agency, but perhaps 
for Defense as well.
    It would seem to me that, if Defense is going to need the 
technologies, Defense had better fund the R&D. Otherwise, there 
will be problems in a decade or two down the road. The issue is 
of importance to me. I do understand the pressures that bear on 
putting together a Defense budget, so the realities are that, 
finally, when all those priorities are established, R&D has not 
been doing so well.

                       alternative energy sources

    Mr. Hobson. We put $43 million--in fact, some of it went 
into New York, Massachusetts, Ohio and elsewhere, in 
California. It was taken out and is still not back.
    The one question I wanted to ask that you didn't answer is, 
how do we continue on to try these alternate sources of energy? 
The countries of the third world claim that we want to force 
all the new stuff on them, which is more costly, and allow 
ourselves to continue the use of cheap oil as they turn the 
spigots on and off. So they are somewhat resistant to our 
advice to them. They say, ``You don't seem to be taking it 
yourselves--'' and we don't. As soon as the spigot turns back 
on from OPEC, everybody will buy the Lincoln Navigator, which I 
really like, or the pick-up truck that doesn't come under the 
same rules, which have become so popular.
    How do we continue this emphasis to get the energy into the 
newer, modern technology? I mean, she's right. We've got tons 
of coal with sulphur in it in the State of Ohio, and in West 
Virginia and places like that, but we can't use it.
    Mr. Lane. My view about this is that we have to continue 
the investment and increase the investment, as we are proposing 
to do, in these energy technologies that right now appear to be 
too expensive, both to our own energy producers and consumers 
who would need to pay the price and to the other countries you 
mentioned. We need to get those costs down.
    I think, with some of the advances we're going to make in 
areas like nanotechnology, we're going to be able to do that. 
We're going to be able to do things that we have tried in past 
years and just not been successful at making happen. We need 
some kind of breakthrough. I can't promise you, obviously, that 
nanotechnology is going to do it, but it is the kind of 
paradigm shifting approach to all of the areas in which we have 
need to manipulate matter that I think there is a good chance 
that we could actually crack this one and get those 
technologies so that they're low cost and clean, and then that 
will open up those markets in the rest of the world and they 
won't pollute our air or our water, but also we won't do it to 
ourselves.
    I don't have any kind of magic answer, except let's keep 
pushing the technologies as hard as we can until we find the 
one that works.
    Mr. Hobson. Well, thank you for the work you do.
    I would just make one final comment, that if we had that on 
the skin of the V2, we could have saved a lot of money along 
the way. [Laughter.]
    Mr. Walsh. Mr. Knollenberg.
    Mr. Knollenberg. Mr. Chairman, thank you very much.
    Mr. Lane, welcome.
    Mr. Lane. How are you, Mr. Knollenberg?
    Mr. Knollenberg. I'm fine, thank you.
    This nanotechnology thing, I also want to focus on that. 
But that is very interesting. I don't know how we can expect 
any kind of a breakthrough in the next 30 minutes, or maybe 
even 30 years. But I hope it's in between and on the front 
side.
    I want to talk to you about climate control, not a 
surprise, perhaps. As you know, I've been an opponent of the 
Kyoto Protocol because I personally think it's flawed. I don't 
think it will get us there. In fact, I feel so strongly about 
it--and I have wide, bipartisan reinforcement with that, which 
included spending prohibitions in six appropriations bills. And 
these bills, by the way, are the law of the land, they've been 
signed, and they're in place.
    But it gives me some heartburn when I see--at least I'm 
concerned to a point of getting heartburn--when I see the 
President's committee, PCAST, for example, which is a committee 
of advisors on science and technology, which has a relationship 
with you----
    Mr. Lane. Yes.
    Mr. Knollenberg [continuing]. And, of course, with OSTP, 
who warmly embrace the clear development mechanisms. I don't 
have to tell you, but I will remind this committee that is a 
technique that is reserved only before the Kyoto Protocol. It's 
not a part of the UNFCC. It is the Kyoto Protocol that has both 
the emissions trading aspect and the clean development 
mechanisms, or CDMs.
    What bothers me--and I've talked about back door 
implementation--but what bothers me is in this very book, which 
is entitled ``Powerful Partnerships''--I would like to submit 
the page for the record--on page 337. There is reference in a 
square to the implementation, joint implementation, and the 
reference is made--and I'll put my glasses on and read it, this 
along with whatever else is in here, indicates that there is 
promotion to consider emissions trading and joint 
implementation, which as I reaffirmed, are terms and a part--
are buzz words or phrases that are a part of Kyoto. They have 
nothing to do with the United Nations framework on climate 
control. Nothing.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Mr. Knollenberg. And yet, it appears as though you're 
promoting, recommending, that we use those concepts now with 
reference to joint implementation, which suggests that you're 
promoting something that would be an end-around to the 
Constitution. It would be back door implementation.
    My concern is this. We can produce more statutory 
limitations of some kind. In fact, we will even ask you what 
the wording should be so that you don't cross the line. But I 
can tell you, the EPA has crossed it at least 16 times. They're 
actually spending taxpayer dollars in pursuing joint 
implementation type projects, emissions trading, and on and on.
    I know the administration, and everybody I've talked to, 
tells me that they're not doing it, not crossing the line. 
They're not going to implement the Kyoto treaty. Well, I would 
suggest to them, why are you doing these side bars, these side 
steps? Why don't you just send the thing over to the Senate and 
let them ratify it? Then you can move out, or down, presuming 
it passes, and you can move on.
    You know and I know they won't send it, or aren't sending 
it, because they don't have the support there. But why do the 
end around? Frankly, I see too many examples of where that is 
happening.
    The other thing I would like to ask you about--and you can 
maybe respond to this at a later point--your budget request for 
fiscal year 2001 funding is to cover the activities of PCAST 
for the year, is that right? Where is that in the line--we 
can't find it. Where is it?
    Mr. Lane. We can send it over to you. I don't have the 
details. I can ask if any of my people can give you additional 
information on it.

                                  cdms

    Mr. Knollenberg. We would like to have you focus in on it 
and respond to the questions I have raised about the CDMs and 
the emissions trading.
    Mr. Lane. Sure. May I make a comment now and I can submit 
further for the record, if you would like.
    I would have to read this again carefully to make sure I 
know the context in which this side bar is in here. It is in a 
box. Let me say a couple of things about my take-away message 
from this report. What the report has done is to recommend to 
the President steps that the administration might take in order 
to work with developing countries, primarily, around the world, 
to ensure that we open up our markets, we open up their markets 
to us, because there's this enormous emerging market for 
energy, and that we also work with them during their time of 
transition to be sure they're using the best technology, the 
cleanest technologies, and the most efficient technologies, so 
that they don't have to go down the same road that we went 
down. And there are a whole slew of recommendations on how to 
do this.
    My recollections of the context in which this box on the 
clean development was that if we were to ratify the Kyoto 
Agreement, here is a description of the mechanism whereby one 
might do that. But it is not a----
    Mr. Knollenberg. Let me interrupt you because----
    Mr. Lane. Please.
    Mr. Knollenberg. I understand where you're going with that. 
But really, the prohibition also includes wording that relates 
to the ``preparation for.'' If this isn't preparation, I've 
never seen it. That was the only way we felt that we could put 
any strength, any teeth, in the language, was to include that.
    Because when you prepare for it, you're spending taxpayer 
dollars on a treaty that has yet to be submitted to the Senate 
for ratification. Maybe you haven't dented much in the 
direction of violating those words; on the other hand, maybe 
you have. But I think this gives you a blueprint. It is 
architected to do just that, prepare to implement. So I just 
want to insert----
    Mr. Lane. We owe you a thoughtful response for the record. 
I'm giving you my best response here, but we will respond for 
the record.
    Mr. Knollenberg. Not to interrupt you, but the concern I 
have is that if we don't get some kind of response, that's 
clean and clear and follows the line of this wording, then our 
resort would be, of course, to strengthen it. We don't 
necessarily want to do that, but we will.
    Mr. Lane. I understand. May I make a comment about that?
    Mr. Knollenberg. Sure.
    Mr. Lane. The programs that we're actually trying to fund, 
they really are about several, what we think are national 
goals, economic goals, trying to open up markets, and national 
security goals that have to do with stability and reducing our 
dependence on foreign oil, and they have to do with protecting 
the environment.
    Mr. Knollenberg. Sure. Those are all good. I don't fault 
those. In fact, I was going to say that the United Nations 
framework, which was initiated some years ago, is a good 
initiative that provides all kinds of avenues. And you talked 
about some of the technologies. I fundamentally believe we have 
to get there, too.
    But in the meantime, this involvement with U.S. taxpayer 
dollars in terms of overseas operations with developing 
countries, which you recall was the whole reason this thing got 
blown away in the U.S. Senate by a vote of 95-0. Don't do 
anything that does not involve the developing countries on 
their dollar, on their commitment in some fashion, if not 
dollars.
    So we do have some concern about it. I just want to----
    Mr. Lane. We'll get you a response on that.
    Mr. Knollenberg. Let me also turn now to the nuclear energy 
side. That is one of the things I believe I heard that the 
administration and certainly comes with your support, too, 
believes that nuclear should be a part of the energy mix.
    Mr. Lane. Yes, sir.
    Mr. Knollenberg. Incidentally, it has risen to something 
like a little over 22 percent in this last year, simply because 
it was there to do it. I know--I'm not going to repeat this 
over and over--but I know you know that those technologies of 
biomass, solar, et cetera, are way down below the three percent 
range, and if you take out biomass, it's below one percent, way 
below. So we have some ground to cover.
    On the nuclear side, it looks to me like, while there is 
some growing use of nuclear, even though there's a few less 
plants around, that in 1997 the plan by PCAST recommended that 
NERI--that's the Nuclear Energy Research Initiative--be 
established at a funding level of $50 million, and increasing 
to $100 million by the year 2002. In 1999, the report followed 
which recommended a ten million international component to 
NERI, increasing to 20 million by fiscal year 2005. And 
although the NERI program has been established also in DOE's 
Nuclear Energy Division, it is now funded far below what the 
PCAST recommended levels were. Even the international NERI 
component in this year's budget is $3 million less than the 
recommended level.
    I guess I would like to get, number one, your belief that 
nuclear energy and nuclear power can be a big part of our 
Nation's energy mix, and then--of course, you know it doesn't 
generate any greenhouse gases. So I would just like to get a 
commitment from you that it is something we want to include in 
the bag.
    Mr. Lane. I agree, Mr. Knollenberg, that nuclear energy has 
been and is going to continue to be an important part of the 
overall energy strategy. We have more work to do with the 
public, I think, on gaining their confidence and understanding 
of what nuclear energy is all about. It has very real 
advantages that often don't get emphasized when articles get 
written about it. And, of course, like anything else, we want 
to be sure that we've got standards in place, that it's a safe 
industry, and all of those kinds of things that are sort of 
obvious.
    Mr. Knollenberg. Can you tell me why the recommendations 
aren't being followed? Why aren't we keeping those levels up to 
where it was recommended?
    Mr. Lane. Well, I wish I could. I mean, many of the PCAST 
recommendations are for funding levels that we haven't been 
able to get up to. I think in large part it has to do with the 
special priority, which I agree with, that has been placed on 
getting hold of the budget, getting the deficit down, which the 
President, working with the Congress, has been able to do, 
until now we're talking about how we deal with surplus issues. 
That's really good news for the American people, I think.
    But during that period, there have been some rather tight 
constraints, on the entire budget. I would say R&D has been 
favored amongst some other areas during that period, but also 
the PCAST recommendations--the climate change technologies, for 
example, which really are not all about climate change but are 
about economics and about national security--we are also pretty 
far below what PCAST has recommended in those areas. So we try 
to do as good a job as we can. We don't always quite get it up 
to----
    Mr. Knollenberg. As a percentage, though, I think the 
nonnuclear, including the solar voltaics, et cetera, have 
gotten a bigger bump in Congress than nuclear has, or clean 
coal, or whatever the other initiative might be. In the blend 
of things that we need to consider for our energy problems--and 
right now we're in a bit of a pickle of sorts. We're revisiting 
1973, in a sense. Our energy policy, frankly, I have to believe 
is somewhat flawed or out of step. We should be doing something 
that includes those things that work today that will work 
better with more research directed that way, too.
    Of course, I know all of this doesn't fall in your lap. It 
is not your decision. But I would hope that both NERI and the 
international component would get a boost. I have been pushing 
for that for quite some time with a great deal of vigor.
    Mr. Lane. We'll have a look at that.
    Mr. Knollenberg. I think that concludes my questions, Mr. 
Chairman. Thank you, Mr. Lane.
    Mr. Walsh. Thank you, Joe.
    Mr. Goode.

                                  pngv

    Mr. Goode. Just one question. In the area of automobile 
emissions, do you see advancement quickly in electric cars or 
some other alternative, like solar cell cars, hydrogen-operated 
vehicles?
    Mr. Lane. Good morning, Mr. Goode.
    As you know, the partnership in the next generation of 
vehicles (PNGV) has been in place now I think six years. I 
think we're in the sixth year of a ten year program. We started 
out with very ambitious goals, working with a partnership 
between the U.S. Government and the Big Three auto makers.
    The goals were to produce a family size car that gets 80 
miles per gallon, meets all the emission standards, and is 
affordable. I think the progress has been quite impressive. The 
Big Three have all rolled out concept cars, and those concept 
cars don't yet meet all the specs. But we have four more years 
to go and we're confident that, by the end of the ten years, 
they will.
    There are a couple of pretty attractive options for 
powering these vehicles. One is sort of a hybrid electric 
diesel or electric gasoline, and the other is the fuel cell, 
the hydrogen. Both look attractive. The fuel cell probably has 
still more technological challenge to it right now. On the 
other hand, high burning hydrogen is terrific. You get no 
emission, it's as clean as can be, and highly efficient. But we 
still have a lot of research to do in order to be able to 
handle fuel cells effectively in automobiles. So that's part of 
the focus of the R&D effort, the PNGV R&D effort right now.
    I think the companies have made enormous progress. The idea 
of the partnership is we work with the companies on the really 
pre-competitive R&D, and then the companies, as soon as they 
think they're ready to take that technology and make themselves 
a car, they go off and do that. We're not part of that and we 
don't know what they're doing until they roll it out.
    I think it's a very successful effort. We are very 
optimistic that we're going to meet those goals in the ten year 
time frame.
    Mr. Sununu. Would the gentleman yield on that point?
    Mr. Goode. Sure.
    Mr. Sununu. You say a very successful effort. There's over 
half a billion dollars, $500 million for a transportation-
intelligent system in partnership with--I don't know the exact 
year that partnership started, but my guess is we're up close 
to a billion dollars in cumulative funding at this point.
    I have yet to really hear what kind of specific innovation 
or foundation has come out of this research that is going into 
the vehicles that either have been put on the market now, or 
will be. If you go out ten years, you're saying well, ten 
years, $250 million a year, we're going to put another two to 
four billion dollars into this effort. I don't consider it to 
be ``highly successful'' when the innovations that are out 
here--and you mentioned fuel cells. That's actually funded 
under a separate program. DOE has been putting a lot of money 
into fuel cells.
    But most of the structural innovations, the motor 
development and innovations, the coupling of some electrical 
components to the combustion systems, where they're using a 
dual source, these are technologies that the automotive firms 
have been working on independently for a long time. The biggest 
questions are in whether the market demand is there, because if 
the market demand is there, it will drive the cost down. It's a 
chicken and egg phenomenon.
    So where is the significant success? Where is the 
significant innovation that has come from the billion we have 
spent and the four billion we will?
    Mr. Lane. We can respond for the record, if you want.
    Mr. Sununu. My only other question was whether or not Bill 
Joy was going to run the nanotechnology----
    [Laughter.]
    Mr. Sununu. We can skip right over that one if you have a 
good answer here.
    Mr. Lane. You can know that I didn't help Bill Joy write 
that article. But he is an extremely thoughtful leader in the 
community. I think he raises some very important points.
    Mr. Sununu. Sure.
    Mr. Goode has the time.
    Mr. Goode. I yield back.
    Mr. Walsh. Thank you.
    Ms. Kaptur has one more question for the record?
    Ms. Kaptur. Thank you, Mr. Chairman.
    Normally we have rotation, and in deference to the 
chairman's desire to move along, I withheld. But I will say for 
the record that I will be submitting questions to you and 
asking your help on the following areas:
    Number one, my growing concern about the ownership of the 
germ plasma of the world and the chemical companies owning all 
of the seed companies now.
    Secondly, the independence of researchers at our public 
universities being compromised because of the influence of 
funds coming in through private interests. I'm going to ask you 
some questions about the independence of those researchers.
    Thirdly, in the area of serious mental illness, I'm going 
to ask you for the same type of summary I asked for on the 
energy question. You have not mentioned the VA, the Department 
of Veterans Affairs, in your submission this morning. I have 
been fighting a battle up here for years to get significant 
research done on serious mental illness, and I would like to 
know how that is arrayed across the Federal establishment.
    Several of the members talked about nuclear. I am very 
interested--last week another vote was up here on Yucca 
Mountain. I would like to know what research is going on on 
spent plutonium and low-level radioactive waste, the whole 
range of radioactive waste, and whether that is the only 
technological alternative we are left with, shipping it out 
there and storing it. That's the one Congress is being asked to 
vote on now.
    Finally, I am very interested and will ask you questions on 
the agro ecosystem sustainability, questions dealing with time 
series data on a lot of the biotechnology that is now being 
done, the type of research--take the Monarch butterfly issue, 
for example. You know, you have competing research, but there 
is no time series data on anything.
    I would like to know to what extent we are doing research 
related to long-term effects on the ecosystem and where that 
might be housed within the Federal establishment.
    I thank you very much, Mr. Chairman. And thank you, Dr. 
Lane. It's a pleasure to have you before us.
    Mr. Lane. Thank you.
    Ms. Kaptur. Thank you for sharing your brilliance with all 
of us.
    Mr. Walsh. Thank you, Dr. Lane.
    Mr. Lane. I appreciate it. Thank you very much.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                                          Wednesday, March 1, 2000.

                    COUNCIL ON ENVIRONMENTAL QUALITY

                                WITNESS

GEORGE T. FRAMPTON, CHAIR, COUNCIL ON ENVIRONMENTAL QUALITY, EXECUTIVE 
    OFFICE OF THE PRESIDENT
    Mr. Walsh. Good morning.
    I would like to welcome members of the subcommittee to our 
hearing this morning, and I would also like to welcome Mr. 
Frampton from Council on Environmental Quality.
    This morning we will take testimony on the fiscal year 2001 
budget request of the Council on Environmental Quality and the 
Department of Army Cemeterial expenses for Arlington National 
Cemetery and the Soldiers and Airmen's Home National Cemetery. 
We will begin with CEQ whose fiscal year 2001 request of 
$3,020,000 represents an increase of $204,000 over fiscal year 
2000. CEQ's personnel level would likewise increase to 26 full-
time equivalent positions. Testifying on behalf of CEQ, which, 
by the way, celebrated its 30th anniversary on January 1st this 
year, is its acting chairman, Mr. George Frampton. Mr. 
Frampton, we wish to welcome you back before the Subcommittee 
and in a moment I would like you to present your testimony but 
before doing so I would like to recognize my colleague, Mr. 
Mollohan.
    Mr. Mollohan. Thank you, Mr. Chairman. I would just like to 
welcome the witness to the hearing and look forward to his 
testimony.
    Mr. Walsh. Thank you. Mr. Frampton, why don't you proceed 
with your statement.
    Mr. Frampton. Mr. Chairman, thank you, Mr. Mollohan, and 
just to introduce a few folks from CEQ, my chief of staff, Dan 
Sakura; general counsel, Dinah Bear; chief administrative and 
budget officer, Carolyn Mosely; associate director for 
legislation, Judy Jablow; and from our communications 
department, Kymberly Escobar.
    Mr. Chairman, you stole my opening line. We are starting 
our 30th year January 1st. Our request for this year is 
$3,020,000. That is the same amount as we requested last year 
and the year before. That is about a $200,000 increase from 
fiscal year 2000. As you noted, we believe we are at an 
authorized level of 23 FTEs. And we had a little conversation 
about that this morning. And there may be some confusion, but 
we are pushing up against that in our hiring complements and 
would be seeking authorization for next year at the slightly 
higher level of 26 FTEs.
    I think that the same basic mission of CEQ that Congress 
wrote into the law 30 years ago, the mission statement is still 
relevant, much more relevant today to be the principal advisory 
group to the President on the long-term direction of 
environmental policy, to oversee the implementation of NEPA and 
how the agencies do their NEPA work, be an expert on not just 
preparation of environmental impact statements and environment 
assessments, but the entire NEPA process; to coordinate 
interagency issues and often that means refereeing or even 
arbitrating between agencies. At a time when most of the 
natural resource and environmental issues that we face are 
multidepartment and multiagency, that becomes important. I have 
submitted written testimony which I will not try to summarize.
    I would like to make one observation about the work of CEQ. 
When I testified a year ago, I had been in this job as acting 
chair a couple of months; and one of the things I said was that 
the two major areas in which CEQ's workload was and had been 
expanding, one area was to serve as sort of an ombudsman or 
case officer for State and local officials, for Members of 
Congress, who saw that Federal agencies weren't working 
together, a citizen or interest had a problem with a Federal 
agency, where do you come to solve that if you can't come to 
the agency. People would come to us, and so we have become more 
and more of a problem-solving agency.
    The second major increase in CEQ's work over the last 5-10 
years in particular has been working with State and local 
governments, and now we--most of our major natural resource and 
environmental issues are not just interdepartmental or 
interagency, they really involve different levels of government 
and interaction with States and counties and very often the 
private sector.
    I was reminded of that because yesterday in preparing for 
this hearing I had a chance to go and think back over the last 
4 or 5 days of my schedule and think about the things that 
occupied most of my time. Friday and Monday, for example, I 
spent a substantial amount of time meeting with two governors 
from two northern New England States who are interested in how 
we begin to use State grants for land acquisition to protect 
forests by Federal cost sharing to buy easements to continue to 
keep the working forest going and protect open space.
    On Monday--Sunday and Monday, I had a series of meetings 
with two northwestern governors, two Members of Congress, three 
county executives, six Indian tribes, and several people from 
the private sector about how the State and metro governments in 
Washington and Oregon with private interests like Microsoft and 
Boeing are going to work with Federal agencies to develop 
salmon restoration plans which ultimately are going to involve 
a Federal delegation to State and local government on how they 
are going to do salmon restoration under the rubric of the 
Federal program, listing of a dozen major salmon runs, but 
nevertheless all of the restoration efforts will be implemented 
by State and local government and by private interests.
    Yesterday I had a meeting with OMB on how the 
administration shapes its policy toward MTBE which has been a 
problem in California and Maine and some other northeast 
States. Eight Federal agencies and departments are involved, 
but what is interesting is that on Sunday and Monday I was 
approached by four governors all of whom wanted to talk about a 
State loan and what is essentially a set of Federal problems, 
but the States are vitally interested in this and three 
governors on Sunday and Monday with whom I had discussions 
about issues relating to sprawl and smart growth, including the 
governor of Georgia and the governor of North Carolina and the 
governor of Arizona.
    So I think that is a little unusual because the governors 
were here this weekend, but it is a reminder to me and 
something that I wanted to note for you how much of CEQ's work 
now really goes beyond Federal agencies but working on the 
relationship between Federal agencies, State and local 
government and the private sector because much of what the 
Federal Government is doing in the environment and natural 
resources cannot be effectively implemented without this kind 
of cooperation. Again if you are a county executive or a 
governor from a State and you want to approach a number of 
Federal agencies, the natural inclination is to come to CEQ 
because we have some relationship with all of the agencies. So 
I think that type of work is going to continue to be an 
increasing percentage of CEQ's workload.
    With that, Mr. Chairman, I am happy to stop and take 
questions.
    [Statement of George Frampton on page 1140.]

                             ceq personnel

    Mr. Walsh. Thank you.
    On this issue of personnel, just to get it clarified, in 
the fiscal year 2000 budget justification you indicated that 
personnel level for fiscal year 1999 was 22. In this year's 
justification you indicate that there are 24 FTEs, and you want 
to increase to 26. That is an increase of four, not two. What 
is the personnel level?
    Mr. Frampton. Well, we had some discussion about this this 
morning, and to finally resolve this we may need to check our 
numbers and get back to you. Our understanding at least coming 
into this morning was that you had authorized last year 24. We 
thought that you had authorized--we were operating on the 
assumption that you had authorized 24 FTEs and that actually we 
were at a 23 limit because of the OMB limitation.
    We are pressing up against that now because right this 
minute if we were to fill one position which was recently 
vacated and a secretarial position which we need, a second 
support, we have only one support person for the entire 
organization, we would be at 24 and to do that we felt we were 
going to have to go back to OMB and litigate with them whether 
we could have the full congressional allocation. If we don't 
have that many FTEs, we will have to revisit whether we can 
fill that position.
    Next year, if you gave us another $200,000, most of which 
are for increased personnel costs, our first two priorities are 
that we might be able to hire two additional people. We would 
be able to hire a junior staff person because we have a lot of 
senior people, and we need another support person. We rely 
primarily on volunteers and interns to answer our telephones 
and do our support work. It is not ideal from a professional 
point of view. That is our view of the current situation.

                              smart growth

    Mr. Walsh. If you can get that squared away, it would be 
helpful.
    On programmatic issues, your budget request indicates that 
there will be a major new effort to assist Federal departments 
and agencies to promote smart growth, open growth, and 
sensitive habitat. Isn't this what you have been doing all 
along? Why is this a new program?
    Mr. Frampton. It is not a new program, but it is a 
description of the kinds of activities that I just described to 
you in my opening oral statement that I think are taking more 
and more--in other words, the work of State and local 
government----
    Mr. Walsh. You refer to it as a major new effort.
    Mr. Frampton. Well, perhaps I should stand corrected. A 
major expanded effort.
    Mr. Walsh. All right.
    Mr. Frampton. But it is what we want to hire another--if we 
had another program position, we would hire a relatively--not a 
very senior person but a mid-level person to work on these 
issues and we--to give you an example of the problems we have 
with budget and FTE, we currently have a person who came to 
work this summer/fall for us who is on an inter-governmental 
transfer who actually is being paid by the State of Oregon who 
has a labor union background and worked for a long time for the 
economic development organization in Oregon and was central to 
the Jobs in the Woods program. He has come to CEQ to help us 
look at economic development issues in places like the 
Columbian Basin, perhaps northern New England, and some other 
parts of the East to bring a very important expertise that he 
has.
    Oregon State is very happy to have this. They are paying 
his salary, but he counts as an FTE against our FTE allocation. 
That is how we have gotten not just one but two people to do 
this activity. We basically borrowed somebody because we do not 
have the money. If you are able to give us more money for 
fiscal year 2001, the additional mid-level person that we would 
like to hire is somebody that we are going to direct toward the 
kinds of things that are demanded of us from State and local 
governments.

                         statutory integration

    Mr. Walsh. This area of statutory integration, specifically 
does CEQ normally review EPA's proposed new rules to determine 
if an action in one area may result in a problem in another? As 
an example, did you approve EPA's rule on radon in drinking 
water? As I interpret it, it could possibly mean great expense 
to water users.
    I addressed the metropolitan water group yesterday, and the 
concern there is that a very dangerous situation exists with 
radon gas as an airborne problem that you do not have with 
water. There are potentially things that could be caused by 
either, but the level of concern is much higher with airborne 
radon. And the way that systems are going to be forced to deal 
with radon in water may cause significant airborne problems. 
Did you comment on that rulemaking?
    Mr. Frampton. I do not personally know the answer to that 
question. I would like to get back to you. Let me describe how 
the process works.
    EPA or other agency rules come to the Office of Management 
and Budget for clearance, and OMB runs a clearance process and 
puts proposed rules out for comments to other agencies and 
within the policy staffs--within the White House. So----
    Mr. Walsh. The proposed rule goes to OMB?
    Mr. Frampton. That is correct. It has to be cleared because 
it is not just agency rules, they are administration rules. So 
to ensure consistency on rulemaking, OMB has final clearance 
over rules. So CEQ will--there will be referred to CEQ as well 
as to a dozen other places by OMB new agency-proposed rules or 
proposed final rules. If this was done in the last year as an 
EPA rule, then I suspect that it did come to CEQ for comment; 
and it may be that somebody on my staff--I do not personally 
recall this coming up as an issue. I would put together a 
response to you on what we did. If there is a substantive 
issue, I will address the substantive issue.
    Mr. Walsh. So when EPA proposes a rule, OMB has control 
over whether or not it becomes a final rule?
    Mr. Frampton. Absolutely. The executive branch has a 
centralized system that rules do not go out until they are 
cleared through OMB. OMB is the central clearance mechanism. If 
there are disputes within agencies, usually OMB and the 
National Economic Council do interagency or intraexecutive 
branch process. CEQ is one of many policy organs or departments 
that get a chance to comment.
    Mr. Walsh. Do they look at the actual policy implications, 
and do they have experts at OMB who specifically have that as 
their charge?
    Mr. Frampton. They do have some policy people and examiners 
who are very familiar with environmental issues, but to some 
significant extent on environmental aspects of the rule, they 
would look to CEQ for that expertise and to other policy shops 
as well. There are people at National Economic Council and 
various other policy groups.
    Mr. Walsh. Where does the statutory integration come in?
    Mr. Frampton. When you say the statutory integration, this 
is a process for executive branch rulemaking that applies to 
all rulemaking, not just environmental rulemaking. All 
rulemaking throughout the Federal Government, whether it is an 
Energy Department rule or a Justice Department rule.
    Obviously on an environmental or natural resource 
regulation, CEQ is going to have a lot to say. But we do not 
have the final role in--we do not have a decision-making role 
in whether EPA can bring a rule.
    Mr. Walsh. Does OMB ever review rulemaking proposed by EPA 
that CEQ would not be involved in?
    Mr. Frampton. OMB should not do an interagency process on a 
rule that involves the environment without CEQ being involved.
    Mr. Walsh. But do they?
    Mr. Frampton. Not to my knowledge. That is why this rule if 
it has been issued in the last year, and I was not privy--I was 
not personally involved with it.
    Mr. Walsh. Staff tells me it is still in the formulation 
stage.
    Mr. Frampton. If it is a proposed rule and it does come to 
OMB for proposed issuance, CEQ will be involved in the process.
    Mr. Walsh. I will leave that for now. Mr. Mollohan.

                         clean coal technology

    Mr. Mollohan. Thank you, Mr. Chairman.
    Mr. Frampton, I would like to welcome you to the hearing; 
and I would like to begin with the subject that we discussed 
briefly last year, the use of coal as a national energy source. 
I am going to give you some facts to help you along.
    According to the Department of Energy's Energy Information 
Administration, the EIA, electricity consumption in 1998 
reached 3,400 billion kilowatt hours. Of that amount, 55 
percent was supplied by coal; 20 percent by nuclear; 10 percent 
by gas; another 10 percent by hydropower; and 4 percent by oil. 
Non-hydro renewables such as municipal, solid waste supplied 
around 1 percent. Again these numbers are from the Energy 
Information Administration.
    Do they sound familiar to you?
    Mr. Frampton. They do. EIA also projects that electricity 
consumption will grow at approximately 1.4 percent per year. 
Predictions about energy consumption in the future are very 
uncertain. Back in the early 1980s--1970s and 1980s--they were 
projecting that it would grow by 7 percent right before it 
started declining.
    Mr. Mollohan. They are projecting 1.4 percent per year with 
an overall increase in consumption of about 40 percent by 2020. 
I would like to take a look at the fuels that we will use to 
generate this energy increase. I am going to ask some 
questions. And I am not going to ask you to respond to them 
here, but I would like you to respond to these next three 
questions for the record, if you will. Will we build more 
nuclear plants? I think that is probably unlikely. Will we 
build new hydro plants? Will we use more oil to generate 
electricity? Will we use more natural gas? I think that gas 
will be a different story. We will use more natural gas, but I 
am interested in your comment.
    Emerging renewables such as solar panels, wind farms, and 
crops grown for power use are expected to double; but I would 
like your comment about what you project the growth in non-
hydro renewables. So if you add up these EIA numbers for 2020, 
nuclear will supply 7 percent of our electricity, hydro 7 
percent, gas will supply 30 percent, oil 1 percent and non-
hydro renewables 2 to 3 percent, which leaves 55 percent of the 
energy yet to be generated. And according to EIA estimates, 
that amount will come from coal.
    My point is this: The market is simply too huge to be 
filled by any one fuel, be it natural gas, renewables, or even 
coal. However, coal will remain a major contributor to the U.S. 
economic supply. I would submit that, if we are going to be 
economically viable as a nation, and recognizing that our 
economic growth is due in large part to cheap energy, we need 
to ensure the development of technologies and policies to 
ensure that coal use is compatible with our environmental 
objectives.
    I would like to suggest a particular technology path, the 
use of ultra-efficient use of coal. Through the Clean Coal 
Technology program, we have demonstrated technologies that 
increase the efficiency of power generation by over 25 percent 
compared to conventional coal-powered plants. And currently in 
the R&D pipeline are new technologies that can go even further; 
they can literally double the efficiencies of these plants. 
With all of this in mind, looking at EIA's numbers, considering 
our economic reliance on cheap energy, and thinking about our 
desire for national energy independence, we should encourage 
clean coal use domestically as well as internationally.
    I do not know that there is only one correct way to do 
this, but it seems to me that you must make the integration of 
these technologies economically desirable to coal-fired 
utilities through tax credits or other incentives. My question: 
Where do these kinds of questions fit into this 
administration's environmental thinking?
    Mr. Frampton. Well, I am happy to answer your specific 
questions for the record.
    But to answer your sort of ultimate question, I think that 
as you know right now there is not very much new or clean coal 
capacity being added domestically because it is not--the market 
does not support it, but there is certainly an expectation that 
base-loaded coal plants in 5 to 10 years will be in demand, and 
the administration has asked for $233 million for clean coal 
and gas, natural gas, new technology investments in the fiscal 
year 2001 budget.
    Mr. Mollohan. What do you mean by ``there will be a 
demand''?
    Mr. Frampton. A market demand.
    Mr. Mollohan. For what?
    Mr. Frampton. For next generation or cutting edge clean 
coal technology. The smaller peak load right now, the market 
seems to be supporting natural gas, but there is an expectation 
when there is a need for new base load technology, clean coal 
technologies would be able to respond to that domestically.
    Mr. Mollohan. In what way, technically or economically?
    Mr. Frampton. Economically.
    Mr. Mollohan. And the marketplace will support that, absent 
government incentives, to encourage coal-fired utilities to 
incorporate new technologies? That is the question that I 
really have for you.
    Mr. Frampton. Well----
    Mr. Mollohan. And that is what you ought to be thinking 
about.
    Mr. Frampton. I think what we are asking for--let me tell 
you what we are asking for and then let me see if I can 
understand what you are suggesting. Perhaps we are not doing 
enough of what we should be doing more of.
    We are continuing to invest in the technology.
    Mr. Mollohan. You are at decreasing levels.
    Mr. Frampton. We are at the same request level as last 
year, and we have proposed a new $200 million initiative to 
promote clean energy, including clean coal export because in 
the near future in developing countries for clean coal 
technologies, the need is clearly there. That appears to be 
where the industry thinks that the short term market is, and so 
we are proposing a quite robust program to promote exports.
    Now, I am not sure what you are asking me about incentives. 
Are you asking what we are doing to provide government 
incentives for installing new technologies? In other words, is 
it to correct for the fact that the market will not support 
that?
    Mr. Mollohan. That would be my question and my suggestion. 
This $200 million that you are asking for clean coal export, 
how would you use that?
    Mr. Frampton. It is spread out among a number of agencies. 
Part of it is for export credit agencies.
    Mr. Mollohan. So you would subsidize the foreign investment 
in clean coal technology?
    Mr. Frampton. U.S. investment abroad.
    Mr. Mollohan. You would subsidize----
    Mr. Frampton. It would include insurance.
    Mr. Mollohan. Is the answer yes?
    Mr. Frampton. In effect, it is yes.
    Mr. Mollohan. You would subsidize the incorporation of 
clean coal technology in internationally produced coal-fired 
electricity? Is that part of the $200 million?
    Mr. Frampton. Well, depending on how you define subsidize--
--
    Mr. Mollohan. I mean subsidizing foreign entities--which 
may be fine.
    Mr. Frampton. I am not sure that the subsidy would go 
directly to industry. We are talking about funding insurance 
programs, and to the extent that is a subsidy we are open to--
--
    Mr. Mollohan. You just do not know the answer to that 
question?
    Mr. Frampton. I do not know how you characterize subsidy.
    Mr. Mollohan. Are you talking about export credits?
    Mr. Frampton. Yes.
    Mr. Mollohan. Is not money given to foreign entities to 
invest in American products a subsidy?
    Mr. Frampton. I think it is an indirect subsidy.
    Mr. Mollohan. I call it a direct subsidy. All I am saying 
is that is what you ought to be doing.
    Mr. Frampton. If the Commerce Department conducts trade 
missions to China to try to promote U.S. clean-coal technology 
in China, is that an indirect subsidy of General Electric. The 
programs are designed to promote U.S. industry clean coal----
    Mr. Mollohan. I want to find out where our differences and 
agreements are. I think that is fine, but $200 million won't 
touch it. My question is what are you thinking about, given the 
scenario that I have laid out, which I think is pretty 
accurate. We have been relying on coal-fired production for a 
long time, and when we start building a new base load we ought 
to be thinking how we incorporate it so we can produce 
reasonably priced electricity in an environmentally sound 
manner.
    But the problem is the marketplace. And right now the 
utilities are investing in smaller gas plants for peak load, 
keeping their old coal-fired plants going by redoing them 
because the marketplace will not stand incorporating the clean 
coal technology which we have already developed and spent 
billions of dollars on as a country. The market cannot stand 
them spending the amount of money that it would take to do 
that.
    So the reasonable answer to that is: If you are going to 
impose environmental controls, which I do not disagree are 
necessary, we ought to be thinking about how do we make this 
incredibly expensive investment possible so that we can rely 
upon coal as an energy source--which we must do. I think it 
would be very farsighted for you to think about this.
    Mr. Frampton. Let me respond to you in writing on 
everything that we are doing on the clean coal domestic 
incentives. We have subsidized over the last 10 years 40 clean 
coal pilot projects, and each of those projects have involved--
--
    Mr. Mollohan. And they have proven the technology.
    Mr. Frampton [continuing]. An individual project subsidy.
    Mr. Mollohan. That is not a commercialization subsidy.
    Mr. Frampton. Right.
    Mr. Mollohan. That is the key point.
    In your fiscal year 2001 budget, you proposed to cut 
research on coal and power systems by $18 million or about 9 
percent. And the budget includes a complex budget proposal 
which has the result of reducing funding for the clean coal 
demonstration program by $155 million below the levels 
available under current law.
    Given what you have just said, how can that make sense?
    Mr. Frampton. My impression and I would like again the 
chance to respond to you in writing and supplement this answer, 
my impression is that this year like last year we are funding 
the clean coal demonstration program at the maximum level that 
the projects can actually use the money. In other words, 
nothing is being held back from projects that are still not at 
a stage where an amount is used to finance active construction. 
We are funding the program at what I understand to be the 
maximum burn rate.
    Mr. Mollohan. Mr. Chairman, I have just one more question. 
The charter of the Council gives you the responsibility for 
advising the President about the proper balance in Federal and 
environmental policies. My question is since last year, have 
you personally or anybody at the council been involved in 
discussions about the budget as it relates to clean coal 
technology, research, demonstrations and incentivizing 
commercialization of the technology?
    Mr. Frampton. Well, not directly to the President. CEQ 
has--I have to a small extent and other people at CEQ have been 
involved in the overall development of the budget, technology 
and the energy part of it. So the answer to that is yes.
    Mr. Mollohan. Thank you. Thank you, Mr. Chairman.
    Mr. Walsh. Mr. Knollenberg.

                             climate change

    Mr. Knollenberg. Thank you very much, Mr. Frampton. Welcome 
again. We have talked I know both in hearings and in my office, 
and I appreciate your coming by to discuss what to me is an 
important issue, that being climate change. I know that the 
President in the State of the Union address did put again great 
emphasis upon the environmental challenge. I think the words 
were, ``This is the greatest environmental challenge of the new 
century and that challenge is global warming.'' And those were 
his words during the State of the Union.
    There seems to be--and I have language in several bills, it 
is a part of some six or seven, and there is bipartisan support 
in this Congress to send the treaty to the Senate for 
ratification before any kind of implementation take place. On 
page 934 of the budget again this year as last year, there is a 
footnote to strike the language, suggesting that it is not 
necessary and the reason is because the administration is not 
going to send the treaty to the Senate.
    My suggestion is if that is the case, what is wrong with 
leaving the language in there? I cite two examples--three 
examples, actually. I have sent letters to the EPA, to the DOE, 
and then thirdly to AID. All of those agencies have actually 
been in the business of moving in the direction of Kyoto-type 
mechanisms or using emphasis in their letters to solicit people 
to come to meetings across the world, not just here, in Europe, 
Germany and one was in Canada.
    And as of this moment, we did send a letter challenging 
what they are doing, are you spending money? Because the 
prohibition is on money. EPA has asked for more time. DOE and 
AID have not responded to any kind of indication as to what 
their answer is. If you send people overseas with the idea of 
discussing market mechanisms which are Kyoto, equals Kyoto and 
nothing else, you must be spending taxpayer money for that 
purpose. And I want you to respond to that, and I want to tell 
you that these examples tell us that--and the deletion or 
omission or including the language or recommendation of the 
language to stay in those bills tells me there seems to be a 
relentless move on the part of the administration to do that, 
to end run, to implement the protocol.
    The budget numbers which I can discuss with you, 4.1 
billion dollars to be spent on various initiatives on climate 
change. The one thing I would add to this is that it is 4.1 
billion over 5 years, the first year it is only 200 million 
which suggests that all of the money of the great majority of 
the dollars are going to be spent in the next 5 or 6 years.
    That is a little odd. It is front loaded very slightly, but 
most of the money is spent later. I do not know what they have 
in mind for spending that money in the outyears. But the 
questions that I have for you, and I have asked you these 
before and I will ask again because of what is taking place 
here on page 934 tells me that I should ask them again. Is the 
administration implementing the Kyoto protocol even though the 
Senate has not ratified it?
    Mr. Frampton. The answer is no. Now let me answer the 
initial question. Why are we proposing in the budget to remove 
the rider language, strike the rider language. I think the 
reason that we are moving to do that is precisely demonstrated 
by the letters and the requests that you have made.
    The administration has and I hope to convince you of this 
by now but perhaps I have not. The administration has no desire 
and has no notion or plan to preimplement Kyoto or propose any 
rules or regulations that would be preenactment of the Kyoto 
protocol which has not been finally negotiated or ratified.
    But you have--and that is what the administration 
understands that the riders prevent us from doing. We 
absolutely are going to live up to that language. However, you 
have raised questions about two other types of activities that 
we do not think are prescribed by the rider or could or should 
be prescribed. One type of activity is voluntary meetings 
requested by industry, by people like BP Amoco to talk about 
their interest in voluntary reduction in greenhouse gases, and 
you have raised questions about whether government employees 
should go to meetings requested by industry.
    Mr. Knollenberg. Who pays for the government employee to 
make that trip?
    Mr. Frampton. The government does.
    Mr. Knollenberg. Yes.
    Mr. Frampton. The second category as I understand it of 
activities or meetings that you have asked about or raised 
questions about are meetings that involve international 
negotiations. And the administration's firm position is that 
your riders do not apply to international negotiations, indeed 
we are responding----
    Mr. Knollenberg. With respect to----
    Mr. Walsh. May I just interrupt. Just to correct the 
record, you referred to this language as a rider. In actuality, 
it is a legitimate spending limitation so I would like the 
record to show that we are talking not necessarily about a 
legislative rider but a spending limitation.
    Mr. Knollenberg. I appreciate the Chairman's clarification. 
That is exactly what it is.
    Mr. Frampton. The administration's position and the Justice 
Department's position is that the legislative language does not 
apply to international negotiations and were it to be asserted 
with respect to activities that have to do with international 
negotiations, it would be unconstitutional.
    Mr. Knollenberg. So you are saying if you are requested to 
appear by some international company, that it is okay for you 
to spend funds--the prohibition is on funds. It is dollars. 
That it is okay when you are requested to appear before a 
seminar in Zurich? It is okay to spend taxpayer dollars on 
that? But what?
    Mr. Frampton. I think you raised questions about----
    Mr. Knollenberg. Answer that question. If the 
administration assumes--I just want your answer. If they assume 
that it is okay to spend taxpayer dollars to send people to 
Zurich, then you are spending taxpayer dollars, right?
    Mr. Frampton. Right.
    Mr. Knollenberg. And that is okay?
    Mr. Frampton. Is it okay for Federal employees to go to a 
meeting in Zurich that is a meeting with private industry, 
including American companies or global companies, to talk about 
fostering voluntary reductions by industry in greenhouse gas 
emissions, pursuant to conventions--I think it is clearly our 
understanding that is appropriate.
    Mr. Knollenberg. Are you saying so long as the initiation 
is not by the Federal Government? That it is by somebody else? 
You mentioned--you said when someone requests the attendance of 
the administration or U.S. AID or whomever it may be, you are 
saying those requests do come in? I'm just trying to get a 
clarification where does this notice of----
    Mr. Frampton. I do not think that it makes any difference 
who initiates the request. I used that example because you 
raised questions about a meeting in the EUB with agency 
officials that was requested by a number of private companies 
to talk about how they would voluntarily reduce greenhouse gas 
issues, and you raised questions whether that was a violation 
of the legislative language. And I think the administration's--
and I believe Congress's--understanding of the rider is so 
clear that it does not apply to that. That the uncertainty 
caused by this is the reason we are seeking to straighten this 
out.
    Mr. Knollenberg. There is not clearness in Congress on what 
you just said. Many of us have a different opinion about that. 
What we want to make sure about--because you see the rising 
budgets for climate control. You see more activity by the 
various governmental agencies initiated by the administration. 
It gives us one conclusion, that there is circumvention, there 
is end running of the constitution and spending taxpayer 
dollars for these practices.
    That is a conclusion that I draw, and I would not buy into 
the administration assumption at this point at all. I think we 
have to talk some more about that. But I guess the question you 
have already answered is what criteria and measures is CEQ 
doing to insist or to guarantee, ensure, that the protocol is 
not being implemented? Are you doing anything?
    Mr. Frampton. Well, it is not CEQ's responsibility to 
enforce this provision with respect to agencies. But I think to 
the extent that this issue came to us we would be guided by 
the--there is no report language. We would be guided by the 
plain language of the legislative language and the colloquy 
that occurs between Senators Byrd, Bond, and Mikulski about its 
meaning.
    Mr. Knollenberg. You are saying what might be more 
favorable to the administration which is the Senate version. 
You know there is a deadlock in the House. You see the point 
that I am raising. Is there back door implementation and are 
these moneys--by the way, I will have questions for the record 
or in writing to you as to what these moneys really would be 
spent for and who are the people. How many people for example 
do you have active in your organization that are working on 
climate control?
    Mr. Frampton. I would be happy to respond for the record.
    Mr. Knollenberg. I would appreciate getting something on 
the record with respect to this, and I thank you for your time.
    Mr. Frampton. Just to finish our dialogue here, my point 
was that it is the very uncertainty about the scope of the 
language, including some--I guess certainly you expressed some 
uncertainty about whether it includes activities that the 
administration clearly feels are constitutionally protected 
activities that give rise to our wanting not to have the 
continuation of this uncertainty created next year.
    Mr. Knollenberg. I am interested in mainly two. I want to 
focus on money because money is--the spending limitation that 
is the prohibition. Thank you, Mr. Chairman.
    Mr. Walsh. Mrs. Meek.

                               ceq budget

    Mrs. Meek. Thank you, Mr. Chairman.
    Mr. Frampton, I have two concerns that I would like to 
discuss with you. One impinges on the other. You are asking for 
a $2400,000 increase for your allocation this year. How do you 
expect to use this money? I ask you that question because I am 
concerned about the mediation that you attempt to do in your 
agency; and many times it is involved with local, State and 
national kinds of disputes. To what extent are you using some 
of these staff FTEs which you have asked the committee for in 
mediation in mitigating some of the many kinds of things that 
you are running into?
    I will bring up to you a situation in my District which I 
will discuss a little more after you answer that question.
    Mr. Frampton. Well, if we are able to convince you to 
supplement our budget for next year, our intention is to use--
and we can work out the issues with respect to whether we are 
already, by filling a position, about to be over this year's 
FTEs, we would hope to hire one more staff person to work 
largely on issues that relate to state and local government and 
one more support person.
    With respect to the question of how much effort or how many 
people are doing mediation, while we do have some formal 
relationships with mediation entities, we are not doing very 
much formal mediation, but I would say that a great deal of 
what we do has the elements of mediation because usually we get 
called on when Federal agencies or Federal-State entities do 
not see eye to eye and they are looking to us to come in and 
serve in a problem-solving role. I would say probably 20 or 30 
percent at least of what CEQ people do would meet the 
definition of informal mediation.
    Mrs. Meek. I think it would be instructive for the 
committee to understand how you are doing some of these reviews 
that you have to make. Tell us how much money goes into making 
such a review?
    Mr. Frampton. CEQ does not actually do the environmental 
impact statements, for example. What we try to do is help the 
agency figure out how to do those. We will get a number of 
agencies together and do those reviews in the most cost 
effective way possible. In terms of----
    Mrs. Meek. Would you get me the information as to the 
amount of money that it costs you and the agencies. CEQ is 
neither fish nor fowl, and you are trying to make all of these 
agencies come together in these reviews. It is very, very hard 
to do. I am just trying to get a feel in terms of what you do, 
what is it that you give to that, and how much it costs.
    Mr. Frampton. Why do I not try to give you an estimate in 
writing of what percentage of the overall effort is trying to 
mediate.
    Mrs. Meek. I have problems with the reviews and the way 
that they must be conducted because you are trying to work with 
all of the other agencies and it really reflects on the kinds 
of things that have happened in my district. We do have fish 
and wildlife, just to deal with one of them is a big task. I am 
concerned as to whether or not you are able to use the FTE 
strength that you have to impact on that kind of situation. It 
seems to me that you would need special kinds of people to do 
the kind of things that your agency is trying to do.
    Mr. Frampton. We do, and that is why we have elected over 
time to hire senior people because we cannot bring in people 2 
years out of graduate school or law school. We are basically an 
organization that has a lot of very senior people but not very 
much support or mid-level or lower level to support very 
experienced people. We have people who have been doing this for 
25, 30 years who do all of their own Xeroxing, messengering, 
computer work. That is not a particularly effective way to run 
an organization, but that is the position we are in. We have 
chosen--we need those people.

                        homestead air force base

    Mrs. Meek. The last part of my question is one which I have 
brought to your attention every year. It has to do with the 
Homestead Air Force Base. In 1993, the Realignment and Base 
Closure Commission gave us permission to turn this into--into a 
civilian airport. You remember that. That was in 1993.
    Then when BRAC came back in 1995, we reaffirmed this and 
confirmed that this could go on. The EIS was completed in 1993. 
But ever since then the progress of that base has moved 
steadily like a snail and now we are almost at the point of 
completing the final SEIS and that has been almost 4 years in 
between.
    Public comments are being gathered, and that whole area is 
in a turmoil. The environment is on one side; the county is on 
the other side trying to go after the promise that the 
administration made. Both administrations made a promise to the 
people in my district that this would happen, that there would 
be an airport renewed at that spot.
    Well up to this point there has not been any on that. I 
know that you are not responsible for it, but you do have a 
great deal of input into this process. Can you give me and the 
committee some sort of timetable as to when you think the final 
process will be done? You are receiving public comment now, can 
you with any degree of finality tell us when that will be 
completed?
    Mr. Frampton. As we discussed earlier this morning, 
Congresswoman, I appreciate your frustration. I wouldn't 
disagree with you that this has moved at a snail-like pace.
    The snail has made a little progress. The draft 
supplemental impact statement is out on the street, and we are 
taking public comment. I think what has changed, as you 
mentioned, is that when the President, the Vice President, the 
administration made a commitment to economic redevelopment for 
south Dade County. There was only one proposal on the table and 
that was the airport.
    Now what has happened is there appear to be two viable 
competing development proposals, and both are being analyzed in 
the EIS. The proposed alternative is still the airport, but 
obviously that has become a little bit controversial.
    There is support for both proposals. The administration's 
commitment to finish this process and go forward with economic 
redevelopment remains as firm as it has been. I cannot tell you 
that by September 1 or October 1 or date certain. I do not want 
to trap myself because I cannot guarantee a particular date.
    But I can tell you that the administration's commitment to 
get this done before the end of this administration, get this 
finalized is just as firm as it was. I think the hard issue 
would be, you know, whether there really is a viability to the 
airport, local communities coming out if there are two 
alternative viable proposals. But the commitment to 
redevelopment is there. The commitment to see this through to 
completion is firm.
    That may not be exactly the date that you asked but since 
this is not under my control, I do not want to put my own 
personal credibility on the line by saying a date certain.
    Mrs. Meek. I guess my point is CEQ has been given a role in 
this particular kind of interaction.
    Mr. Frampton. And we are riding herd. We are very aware of 
this issue, and it is a very high profile issue.
    Mrs. Meek. Thank you, Mr. Chairman.
    Mr. Walsh. Mr. Goode.
    Mr. Goode. I do not have any questions, Mr. Chairman.
    Mr. Walsh. I was not going to go around again, but Mr. 
Knollenberg did have a question that he wanted to ask.
    Mr. Frampton. Could I respond to him on the record.
    Mr. Walsh. I am sure you can.
    He will submit that as will the rest of us, any other 
questions that we have in writing.

                           ceq annual report

    Mr. Mollohan. Mr. Chairman, one last question. Do you have 
a requirement to prepare an annual report?
    Mr. Frampton. We do.
    Mr. Mollohan. Which you have not done for several years; is 
that correct?
    Mr. Frampton. 1997 is published. 1998 we are trying to--it 
is almost finished and we are trying to do that as--to the 
extent possible on the Web rather than incur a lot of printing 
costs. Our current plan is to try to do 1999 and 2000 together 
as a double which we are now required by law to do.
    Mr. Walsh. Thank you.
    Mr. Knollenberg has returned and he would like to ask his 
question on the record.

                         great lakes initiative

    Mr. Knollenberg. I wanted to talk about the Great Lakes 
Initiative. We do not want to greet $50 million coming back 
into the Midwest with anything but ``thank you.''
    Mr. Frampton. Good.
    Mr. Knollenberg. The question that we have about it is that 
no one within the Michigan delegation seems to know that this 
was even coming. Senator Levin did not know; Senator Abraham 
did not know; we did not know. Carolyn Kilpatrick did not know 
to my knowledge. Does anybody know anything about what this $50 
million really does, to whom does it go, and what kind of grant 
has to be written to receive any kind of benefit from it? I 
understand that it is allocated through some grant process? 
What we are really wondering is, what is it? Can you tell us?
    Mr. Frampton. This is intended to be a program which 
operates within the context of the ongoing EPA Great Lakes 
effort and focuses on those--I believe it is--I probably should 
know this, 12 or 14 principal hot spots that were identified 10 
or 11 years ago. So it is a very focused on a particular set--
--
    Mr. Knollenberg. So there are specific areas?
    Mr. Frampton. There are specific areas and specific 
problems that have been the targets of principal targets of 
cleanup for 10 years we just have not had enough money. The 
concept is to have a competitive grant program, and the money 
would go to State and local governments to work on remediation, 
treatment, or restoration that relates to these particular hot 
spots and would be matched basically on about a 2 to 1 basis.
    Mr. Knollenberg. Why was any member of the delegation in 
Michigan not consulted?
    Mr. Frampton. This was not a program that was developed----
    Mr. Knollenberg. And you mentioned eight or ten spots over 
the years. Even John Dingell as far as I know was not 
contacted. None of us knows what this thing is and the 
wonderment is do other States know? There are other States 
obviously in the Great Lakes environment. Our concern is----
    Mr. Frampton. My understanding is that there was a State 
Federal process in the late 1980s, early 1990s. But I am not an 
expert on that. That was to develop a set of areas of emphasis 
which everybody working in this set of problems understands.
    Mr. Knollenberg. For the record, what I would like to--
these hot spots I would like to know what they are. I would 
like to submit for the record questions regarding specifics on 
what those focused areas of interest are. And we are not trying 
to walk away from something that we think that benefits the 
Great Lakes, but we would like to know. If there was no 
consultation done whatsoever, and I would like to know also for 
the record, who, if anybody, was reached within the State of 
Illinois, Wisconsin, and the other States that border, Ohio.
    Does anybody know anything about this. What kind of 
communication was provided prior to the announcement by the 
President. I will include a couple of additional questions, Mr. 
Chairman, relative to the project and look forward to your 
response.
    We are just very much in the dark. My understanding is that 
Senator Levin was somewhat provoked--I do not think that I am 
saying that out of turn but by not knowing what it is. We want 
an explanation, and hopefully you will give us that. And I will 
include the other questions regarding some specifics on this 
issue. Mr. Chairman, thank you.
    Mr. Frampton. Thank you.
    [The information follows:]


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                           W I T N E S S E S

                              ----------                              
                                                                   Page
Aylward, Jim.....................................................   807
Blanding, W.L., Jr...............................................   655
Brodsky, Lewis...................................................   655
Brown, Ann.......................................................   437
Bryson, Jeffrey..................................................   101
Cole, Owen.......................................................   389
Coronado, Gil....................................................   655
D'Amours, N.E....................................................   389
Davis, Roy.......................................................   101
Frampton, G.T....................................................  1009
Gall M.S.........................................................   437
Gilbert, Pamela..................................................   437
Herrling, Maj. Gen. John.........................................   807
Hill, Dr. P.L., Jr...............................................     1
Jackson, Joyce...................................................   389
Jones, Maurice...................................................   747
Jordan, Carolyn..................................................   389
Kelly, Margaret..................................................   101
Knight, George...................................................   101
Lane, Neal.......................................................   917
Lazar, E.W.......................................................   747
Medford, R.L.....................................................   437
Metzler, J.C., Jr................................................    63
Moore, T.H.......................................................   437
Nasif, T.N.......................................................   561
Newburger, Beth..................................................   561
Poje, G.V........................................................     1
Pond, Ken........................................................   807
Quist, E.E.......................................................   437
Rosenthal, Dr. Isadore...........................................     1
Schilling, Debi..................................................   561
Snuggs, Clarence.................................................   101
Taylor, Dr. A.K..................................................     1
Westphal, J.W....................................................    63
Widener, M.L.....................................................   101
Winans, Dennis...................................................   389
Woerner, Gen. Fred...............................................   807
Yolles, H.S......................................................   389


                               I N D E X

                              ----------                              

           Chemical Safety and Hazardous Investigation Board

                                                                   Page
Appropriation Request Sufficiency................................    25
Board Governance.................................................    26
Board Management Assignments.....................................    23
Board's Oral Testimony...........................................     1
Emphasis on Investigations and Safety Programs...................     3
Evaluating Performance...........................................    25
Hiring Goal......................................................    24
Management Changes...............................................     2
Management Style.................................................    24
Need for Board...................................................    26
Staff Assignment Changes.........................................    23
Successes and Lessons Learned....................................     3
Y2K and Chemical Safety..........................................     4

                    Department of Army (Civil Works)

Arlington's Importance...........................................    63
Budget Increases.................................................    72
Budget Justification.............................................    83
Burial Regulations...............................................    73
Capital Investment Plan..........................................    65
Construction Budget..............................................    71
Contract Services................................................    74
Exception........................................................    73
Important Initiatives............................................    64
Introduction.....................................................    63
Kennedy Gravesites...............................................    73
Master Plan......................................................    64
Questions for the Record.........................................    76
Soldiers' and Airmen's Home......................................    73
Videotapes of Services...........................................    74

                 Neighborhood Reinvestment Corporation

Budget Justification.............................................   131
Campaign for Home Ownership 2002.................................   103
Economic Revitalization..........................................   127
Effects of Reduced Funding.......................................   125
FY 1999 Highlights...............................................   102
FY 2000 Year to Date.............................................   102
Looking Ahead to FY 2001.........................................   104
Network Activities in Virginia...................................   130
Network Activity in New Jersey...................................   127
Revitalizing Communities.........................................   126
Rural Activities.................................................   129
Using Revolving Loan Funds in Rural Areas........................   103
Working Relationship with HUD....................................   128

                  National Credit Union Administration

Budget Justification.............................................   422
CDFI and EDI Program Involvement.................................   411
CLF Loans........................................................   409
Community Development Credit Unions..............................   410
Community Development Revolving Loan Fund......................401, 407
Financial Services in Public Housing Communities.................   405
Individual Development Account...................................   407
Limitation on Borrowing for Purpose of Providing Direct Loans....   400
National Credit Union Share Insurance Fund.......................   408
Opening Remarks..................................................   389
Questions for the Record.........................................   412
State of the Credit Union Industry...............................   403
Written Statement................................................   393

                   Consumer Product Safety Commission

Actions of UL....................................................   472
Baby Cribs.......................................................   453
Budget Justification.............................................   505
Child Care Centers...............................................   468
Database Integration.............................................   460
Flammable Fabrics................................................   467
In-House Testing.................................................   462
Laboratory Modernization.........................................   461
Lead Wick Candles................................................   463
Opening Statement................................................   437
Questions for the Record.........................................   476
Rent Cost........................................................   470
Three New Efforts................................................   438
Thrift Stores....................................................   464
Upholstered Furniture Project....................................   464

                  Federal Consumer Information Center

Accuracy of Government Publications..............................   577
Budget Justification.............................................   593
Catalogs.........................................................   572
Consolidation Savings............................................   570
Cooperative Program..............................................   574
FIC Contract.....................................................   571
Mailing Lists....................................................   578
Medical Privacy Issues...........................................   577
Opening Statement................................................   561
Outreach to Small Communities....................................   573
Print Material versus Web Page Accesses..........................   576
Publications.....................................................   575
Questions for the Record.........................................   581
Senior Executive Position........................................   571
Spanish Publications.............................................   575
Targeted Groups..................................................   578
Topics of Interest to Consumers..................................   577
Updating the Consumer Action Handbook............................   579
Web Site Design..................................................   571
Web Site versus Print Publication................................   570
Welcome..........................................................   561

               U.S. Court of Appeals for Veterans Claims

Budget Justification.............................................   636
Statement........................................................   631

                        Selective Service System

Agency Performance...............................................   695
Compliance.......................................................   678
Consequences for not Registering.................................   685
DOD Initiatives..................................................   681
Joint Recruiting and Advertising Program.........................   686
List Sharing.....................................................   680
National Service.................................................   694
Opening Remarks..................................................   655
Outreach.........................................................   686
Reform Proposal................................................689, 691
Rent Costs.......................................................   691
The Rostker Proposal.............................................   682
Volunteers.......................................................   688
Written Statement................................................   658

           Community Development Financial Institutions Fund

Accessibility of CDFI Programs...................................   760
Award Caps.......................................................   759
Budget Justification.............................................   769
Carryover........................................................   750
CDFI Fund Initiatives............................................   748
Conclusion (of opening statement)................................   750
Fiscal Year 2001 Budget Request..................................   750
Funding Cycles...................................................   753
Grants vs. Loans.................................................   759
Increase in Applications.........................................   759
Introduction.....................................................   748
Managing For Results.............................................   748
Microenterprise Funding..........................................   752
Monitoring Awardees..............................................   755
Native American Initiative.......................................   756
Native American Study............................................   758
Potential Funds from APIC........................................   751
Questions for the Record.........................................   764
Reauthorization of the CDFI Fund.................................   761
Rural vs. Urban CDFIs..........................................755, 757
SECAP Program....................................................   761
Secondary Market.................................................   756
Training and Technical Assistance for Native Americans...........   751
Trenton, NJ Neighborhood Reinvestment Corporation................   760

                  American Battle Monuments Commission

35 Hour Workweek.................................................   818
ABMC Maintenance and Engineering.................................   815
Battle of Normandy Foundation....................................   820
Budget Justification.............................................   836
D-Day Memorial...................................................   820
Direct Mail......................................................   815
Foreign Currency Fluctuation Account.............................   816
Maintenance and Engineering Backlog..............................   818
Monument and Land Ownership......................................   819
Monument Locations...............................................   819
Opening Statement................................................   807
Questions for the Record.........................................   822
State Memorials..................................................   819
Storm Damage.....................................................   818
Welcome..........................................................   807
WWII Memorial Cost.............................................810, 814
WWII Memorial Fund Raising................................809, 810, 815
WWII Memorial State Support......................................   811

   Federal Deposit Insurance Corporation, Office of Inspector General

Budget Justification.............................................   876
Statement........................................................   858

                Office of Science and Technology Policy

Alternative Energy Sources.......................................   933
Basic vs. Applied Research.......................................   926
CDMS.............................................................   938
Civilian R&D.....................................................   923
DOD R&D..........................................................   932
Energy Policy....................................................   927
Energy R&D.......................................................   925
Genome Disclosure................................................   928
Glenn Commission.................................................   931
Human Genome.....................................................   920
Math and Science Education.......................................   923
Nanotechnology...................................................   921
Opening Statement................................................   917
Plant Genomics...................................................   929
PNGV.............................................................   941

                    Council on Environmental Quality

Budget Justification.............................................  1045
CEQ Annual Report................................................  1023
CEQ Budget.......................................................  1020
CEQ Personnel....................................................  1011
Clean Coal Technology............................................  1014
Climate Change...................................................  1017
Great Lakes Initiative...........................................  1023
Opening Statement................................................  1009
Questions for the Record.........................................  1024
Smart Growth.....................................................  1011
Statutory Integration............................................  1012

                                
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