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




      DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY,

              AND RELATED AGENCIES APPROPRIATIONS FOR 2001

                 DEPARTMENTS OF COMMERCE, JUSTICE, AND

                   STATE, THE JUDICIARY, AND RELATED

                    AGENCIES APPROPRIATIONS FOR 2001

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS
                             SECOND SESSION
                                ________
  SUBCOMMITTEE ON THE DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE 
                    JUDICIARY, AND RELATED AGENCIES
                    HAROLD ROGERS, Kentucky, Chairman
 JIM KOLBE, Arizona                  JOSE E. SERRANO, New York
 CHARLES H. TAYLOR, North Carolina   JULIAN C. DIXON, California
 RALPH REGULA, Ohio                  ALAN B. MOLLOHAN, West Virginia
 TOM LATHAM, Iowa                    LUCILLE ROYBAL-ALLARD, California
 DAN MILLER, Florida
 ZACH WAMP, Tennessee               
                    
 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.
    Gail Del Balzo, Jennifer Miller, Mike Ringler, and Christine Ryan
                           Subcommittee Staff
                                ________
                                 PART 5
                                                                   Page
 Secretary of Commerce............................................    1
 United States Trade Representative...............................   55
 National Oceanic and Atmospheric Administration..................  129
 Bureau of the Census.............................................  211

                              

                                ________
         Printed for the use of the Committee on Appropriations
                                ________
                     U.S. GOVERNMENT PRINTING OFFICE
 68-146                     WASHINGTON : 2001




                       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 COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED 
                    AGENCIES APPROPRIATIONS FOR 2001

                              ----------                              

                                          Wednesday, March 1, 2000.

                         DEPARTMENT OF COMMERCE

                                WITNESS

WILLIAM M. DALEY, SECRETARY
    Mr. Rogers. The Committee will be in order. We are pleased 
to welcome this afternoon William Daley, the Secretary of 
Commerce, who will testify on behalf of programs and the 2001 
budget request for the Commerce Department. Your budget request 
is $4.978 billion, an increase of $910 million, or 21 percent, 
above the amount Congress provided for the current year, when 
you exclude the one time 2000 spike for the 2000 census.
    As we continue to honor the commitment to maintain budget 
discipline, the subcommittee, as it has in the past, will be 
looking for you to assist us in developing priorities for the 
Department and finding ways to most efficiently allocate the 
limited resources the subcommittee will have to dispose of. We 
are looking forward to working with you in that respect.
    We will insert your written statement in the record and the 
Department's budget in brief, and in a moment we will ask if 
you would like to summarize your remarks. Let me first yield to 
my colleague, Mr. Serrano.
    Mr. Serrano. Thank you, Mr. Chairman. It is indeed a 
pleasure to welcome Secretary Daley again today. It is good to 
see you, Mr. Secretary.
    As I look over your budget I am always amazed at the scope 
of programs and activities within the Commerce Department. From 
the depths of the oceans to outer space and all over the world 
you people are doing valuable work to benefit all of us. As we 
have discussed, I represent the poorest congressional district 
in the country so I am particularly interested in your efforts 
to close the digital divide and make the new technologies 
accessible to all. Similarly, I represent a district that had 
the worst undercount in the 1990 census. So I am keenly 
interested in achieving the most fair and accurate count 
possible in the 2000 census.
    With that in mind, I look forward to hearing your statement 
and to discussing these and other issues with you and to 
continue to work with you as the year goes on.
    Mr. Rogers. Mr. Secretary.
    Secretary Daley. Thank you very much, Mr. Chairman, and to 
the members of the subcommittee, it is a pleasure to be before 
you and present the Commerce Department's budget for the new 
fiscal year. Let me first, Mr. Chairman, thank you, the members 
and the staff of the committee, for what I believe has been a 
very good working relationship over the last 3 years. This will 
be our last go around, and it has been not only a pleasure and 
an honor for me to appear before this committee but I believe 
the working relationship has been outstanding, and I appreciate 
that very much, and especially the relationship which you and I 
have developed.
    Mr. Rogers. Before you move on from that let me respond 
quickly by saying you have been very easy to work with. What I 
like about you, among other things, is that you lay things on 
top of the table and there is no hidden agenda, and I 
appreciate that very much, but you have been an excellent 
Secretary to deal with, and we look forward to the balance of 
your term.
    Secretary Daley. Thank you, Mr. Chairman. As we all know, 
we are in the longest economic expansion in our Nation's 
history, and as a result we are in an era of unprecedented 
budget surpluses. Obviously, our goal is to try to continue 
this for many years to come, and our new budget, I believe, 
helps us advance this objective.
    We are requesting a budget that covers our everyday chores, 
from taking the census to advancing U.S. trade and protecting 
the environment. But we are also requesting $875 million in new 
strategic investments that will help us do our jobs better and, 
at the same time, prepare us for the future. These investments 
are not only consistent with President Clinton's priorities 
but, in my opinion, they reflect many of the priorities of 
Congress. All told our budget calls for $5 billion next year, 
down 37 percent from this year's $8.5 billion budget. Of course 
the decline is because of the bulk of the work for the Census 
2000 will be done during the current fiscal year.
    As you know, last week we had an address problem with 
letters being sent to households notifying them that the census 
questionnaire would soon follow. We have taken immediate steps 
to determine how this happened. The Government Printing Office, 
which is handling the contract, is investigating what went 
wrong, but the important thing is that the letters are going 
out on time and will be delivered to the correct addresses by 
the U.S. Postal Service. Let me thank the U.S. Postal Service 
for the tremendous job which they did last week and which we 
know they are going to do through this entire operation.
    I can assure you, Mr. Chairman, that the census 
questionnaires that go into the mail later this month are 
correctly addressed. The bottom line is that we remain on track 
for completing the census on time, for fiscal year 2001 there 
is more work to be done, however. We need $393 million for 
processing and distributing the data and for closing down the 
hundreds of local census offices.
    To be honest, we have prided ourselves in this Department 
on keeping a lid on our budget, and aside from the census, our 
core budget has remained fairly constant at about $4 billion 
for the last few years, but the time has come to invest in the 
future so we can continue delivering high quality services to 
the taxpayers of America.
    In my opinion, this is a very prudent budget that despite 
the increase will pay dividends in the long run. I would like 
to briefly highlight some of our proposals. E-commerce is the 
growth engine of the future. We have never seen anything like 
it, but this revolution is definitely not without its 
challenges. All of us got a wake-up call a few weeks ago that 
showed how vulnerable the Internet is to cyber attacks. 
Obviously it is smart business to make sure we have tighter 
security so we can maintain the public confidence in the 
Internet. So we are proposing $76 million to work on this 
problem.
    To fully exploit the Internet's potential, everyone needs 
to get plugged into the revolution. So we are asking $175 
million to help narrow the digital divide and, at the same 
time, promote e-commerce. Based on a study we did recently, the 
gap between technology haves and have nots is widening, 
especially in rural communities and in the very distressed 
areas of America. So we are focusing our resources there. The 
money could be used to increase computer use and Internet 
access in the home. Grants could go to local organizations on a 
competitive basis, but they would not go directly to private 
entities or individuals.
    We also want to triple NTIA's technology opportunity 
program and give $23 million to EDA to install high speed 
broadband technology. And to help minority serving institutions 
educate more scientists and engineers, we are requesting $28 
million.
    For EDA overall we are seeking a $50 million increase. Some 
of the increase would be used to promote economic development 
in our native American communities and revitalize communities 
throughout the Mississippi Delta. As we all know, accurate 
measurement of the economy is an absolutely vital government 
function. So we are seeking $29 million for tracking e-commerce 
growth and for enhancing our statistical infrastructure.
    Tomorrow we will be releasing our first indicator for the 
new e-economy, when we release our new quarterly e-tailing 
report. It will show how sales over the Internet went during 
the holiday e-shopping season.
    For NOAA we are requesting $2.8 billion. This includes $376 
million in new money for protecting the environment. Much of 
this supports the President's Lands Legacy Initiative, which is 
one of the greatest efforts to save our natural resources since 
President Teddy Roosevelt.
    We are requesting $60 million so America can continue to 
honor its commitments to the 1999 Pacific Salmon Agreement, and 
we are seeking increases for a variety of marine life programs.
    Predicting the weather and maintaining the largest 
nonmilitary fleet of satellites in the world are our key 
priorities. We are also asking for increases in those areas, 
including the $100 million to finish modernizing and sustaining 
the National Weather Service and satellite maintenance. We need 
$28 million as part of a multiyear effort to improve forecasts 
of El Nino and other climate events.
    This will once again be another banner year for trade. So 
we are requesting $72 million. Bringing China into the WTO 
obviously would help us reduce our trade deficit by opening 
many markets in China that have been closed to our exporters. 
By granting China permanent normal trade relations and bringing 
them into the WTO, we will get the opportunity to compete in 
many new markets from agriculture to telecommunication and, as 
a member of the WTO, China for the first time would have to 
play by global trade rules.
    Given the sheer volume of our trade with China and other 
nations, specially in Asia, we need more resources to remain 
effective in enforcing our trade laws and agreements that are 
already on the books. So we are requesting $21 million for 
those purposes.
    To be frank, how can we expect the American people to 
support those of us who agree that trade and more liberal trade 
is good for us if they see we are not doing a good job of 
enforcing and policing our current agreements? We can trust our 
trading partners, but we must verify that our trade deals are 
lived up to.
    There is $16 million for promoting environmental exports 
and exports by small manufacturers. We are also proposing $35 
million to help communities adjust when a plant closes due to 
trade or other economic shocks.
    The last area I would like to mention, Mr. Chairman, is 
management. Without a doubt the number one challenge for our 
government in the years ahead is to deliver basic services more 
efficiently. Over the past few years we have made improvements 
at Commerce from producing clean financial statements for all 
the bureaus to improving our security. But in the 21st century, 
government must be e-ready. For several years now we have asked 
for money to rewire our building with optical fiber so we can 
be a fully digital Department. With fiber, our network would 
operate 10 times faster than it does today. Ten years ago 
people could wait overnight for an urgent letter, but to get 
the job done for the taxpayers, our workers need the 
information delivered instantly to their computers. As the 
first Secretary of this, the Internet century, and if I may 
say, the longest serving Commerce Secretary in this century, I 
strongly urge the subcommittee to provide the $6 million we 
need to rewire our building. It is absolutely essential to our 
future.
    Finally, we are requesting funds for a number of critical 
building projects, notably for NOAA and the Census Bureau.
    Mr. Chairman, that completes a brief outline of our 2001 
budget. I am prepared to answer any questions. Once again it 
has been an honor and a pleasure to appear before your 
committee.
    Thank you.
    [The information follows:]
      [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 


    Mr. Rogers. Thank you, Mr. Secretary. It has been a 
pleasure for us to have you here these years as well.
    Now, we are on the cusp of the biggest peacetime 
mobilization of manpower that our Nation has ever engaged in--
the decennial census. We will have spent, when it is all over I 
hope, no more than $6.8 billion. There has not been a topic 
more discussed, I don't think, in the Congress or in the world 
than the 1990 census--the 2000 census. Well, 1990 ran a close 
second. And here we are on the verge and all of us realize that 
people responding to the census questionnaires will have done 
so because they have confidence in the system. The numbers that 
the census finally produces will only be as accurate as people 
have confidence in the system by which the numbers were 
derived. And yet the first act out of the box, mailing out the 
first letter, first contact that most Americans will have with 
the census, was a letter that bore the wrong address to 110 
million people. Not a good confidence builder, not a good PR 
thing for the census, but not a very good PR thing with this 
subcommittee because we have had a lot of discussions about how 
the census will have been conducted.
    I was here, arrived on this subcommittee in 1983 and 
leading up to the 1990 census and it was as critical a thing as 
it is now, perhaps even more so, and that was my own party's 
administration so I am trying to make this a bipartisan thing. 
This echoes to me 1990 all over again, and I swore after the 
1990 debacle that if I was on this subcommittee it would never 
happen again. After that, I became chairman of the subcommittee 
and it is happening again, and I am not happy. That is to say 
the least and that is at the outset of the census.
    I hope this is not evidence of things to come, but I must 
say this latest incident on top of the most recent GAO report 
leaves me gravely concerned. That report, which I am sure you 
have seen, issued just 4 months ago, states, ``significant 
operational uncertainties continue to surround the Bureau's 
efforts to increase participation in the census and to collect 
timely and accurate data. These uncertainties raise concerns 
that the 2000 census may be less accurate than the 1990 
census.'' Are we paying $6.8 billion for a census that will be 
worse than 1990?
    Secretary Daley. Mr. Chairman, the goal of the entire 
operation of this decennial census, I assume from the first 
moment after the 1990 census, was to make this the most 
accurate, and the tremendous amount of taxpayers' money that is 
spent on this is with that goal in mind.
    There is no defense of the mistake that was made in this 
mailing. It was not only an embarrassment and a PR problem, it 
was a management problem. We have prided ourselves on the fact 
that we have done a lot. This is the first contact with the 
public. There has obviously been a tremendous amount of work 
done in preparation for all of this that has moved smoothly 
without this sort of embarrassment. We are in the process, 
along with the GPO, who subcontracted this out to the printer, 
in determining exactly how this happened and why it happened. 
Our quality checks in preparation for it and the GPO's all 
were, in our opinion, adequate and obviously this mistake with 
the number was not part of any plan.
    It is still to be determined exactly at what point in the 
process this problem occurred. No question about it, we did not 
do an adequate quality check during the printing of the letter. 
And for that we are paying in credibility questioning. All I 
can say, Mr. Chairman, is that our questionnaires will go out 
within 2 weeks. We are very confident that we know that this 
problem does not exist on the questionnaires. Our goal is to 
make sure that the return of that questionnaire is at a 
response rate that is at least, if not better, and we have to 
do better, than last time. We are doing all sorts of activities 
that this committee has funded and approved, and if I may, 
Congressman Miller's support of the Census Subcommittee of so 
many of these activities is most appreciated.
    We are going to spend, Mr. Chairman, $167 million on 
advertising to raise the awareness. First time ever we will be 
the third largest advertiser during this period of mid-March 
through the end of April in America and all for the intended 
purpose of increasing the response rate. But there is no 
question we have got to take action, and Dr. Prewitt has laid 
out a plan, an immediate plan, to try to address a potential 
problem with this letter as far as the intended impact of the 
letter and making sure that, number one, we do know that they 
will all be delivered. The Post Office has assured us of that, 
and therefore, the potential impact upon the response to that 
letter should be minimal, negative impact, and we have taken 
some steps. I think Dr. Prewitt is spending about an extra 
$1,000,000 to address that problem with advertising in certain 
communities where language is of great concern.
    So I am not defending this obviously, Mr. Chairman, but I 
am still confident that the bottom line is this will be the 
most accurate census, you will be able to say that next year.
    Mr. Rogers. Well, will you stand with me next year and we 
both can say that?
    Secretary Daley. I will stand with you. I may not sit at 
this table but I will stand somewhere with you and say that I 
believe it was the most accurate census, no question about it. 
Look, this is going to be a difficult process. It has been 
since the day I walked in here talking about the census, and 
this is as you said, Mr. Chairman, the largest mobilization, 
and it is fraught with potential problems, and the bottom line 
is the public has got to participate in this process.

                           Two-Number Census

    Mr. Rogers. Well, you are attempting to have a two-number 
census, which I think has been the problem all along. The 
courts agree that we should have, as far as redistricting and 
reapportionment is concerned, an actual count as we have done 
every time since 1790, an actual count. You determined that you 
wanted to also have a sampling count--take raw numbers and 
manipulate them. That was your decision, not Congress nor the 
courts. So you are insisting upon a two-number census. We have 
questioned all along whether you can actually pull off a two-
number census without sacrificing the actual count, as the 
courts say you can't.
    The recent GAO report raises serious questions and 
concerns. They concluded ``that completing nonresponse follow 
up on schedule without compromising data quality will be 
difficult''. The GAO has raised bigger issues; namely, the 
fundamental pieces of the census, mail response and follow up, 
and if they raised concerns just 4 months ago, how can we have 
any assurance that the rest of the census plans and operations 
are okay? I mean, we are not getting a very good confidence 
builder from GAO or with census operations to date.
    Secretary Daley. I think the issues raised by GAO are 
issues and concerns that we share. We have the same concerns 
obviously about this process, about the mail return, the 
percent received. That is why we have taken extra steps this 
time that weren't taken in previous censuses to try to stop 
this slide in return of questionnaires. So we share the 
concerns of GAO. We can't tell them, nor would anyone guarantee 
to them 4 months ago or 5 months ago, whenever the GAO analysis 
was done and reported, that one could guarantee that it will be 
higher than the last time.
    Again, we have implemented plans, we have outreach with 
every community and have come up with what we think is the best 
plan to try to address some of those concerns, but the concerns 
that GAO raises are concerns that we share. We think we have 
addressed them and we have to implement the plan and after, 
when everyone will review the plans and the ideas to see if 
they were able to accomplish what we thought we would, then we 
will make a judgment. You will make a judgment as you move 
forward to 2010.
    Mr. Rogers. Well, GAO also says, I point out, that you have 
4 weeks less time than 1990 to follow up on nonresponse 
mailings--nonmail responses and that you have 12 million more 
households to follow up on. I mean, we are really into the 
nitty-gritty here, and I hope you have confidence you can pull 
that off in the time schedule that we are required to do it in, 
but I guess what I would really like to have your assurance on 
is that if you get behind, that we won't sacrifice the actual 
count in favor of a sampling or a noncount number.
    Secretary Daley. I can assure you, Mr. Chairman, that the 
goal here is to get the most accurate count and to do the best 
job in the first go around. One of the reasons we have spent so 
much and put so much emphasis in preparation of the mailing of 
the questionnaires is so we can get the awareness level up and 
hopefully have a greater chance of getting a higher response 
and an awareness out in the communities of America that, number 
one, not only the questionnaires are coming but then 
enumerators are coming. So in that shortened period that there 
is a better game plan than we had 9 years ago. Even though they 
may have had a longer period to be out in the community in 
1990, we think we have improved on the game plan going door to 
door and being able to have a greater impact in a shorter 
period and also with the prenotification procedures that have 
taken place and the outreach to communities and organizations 
to be part of our partnership plan, which is an enormous plan 
that has been going on now for quite a long time.
    Mr. Rogers. Well, we will have Dr. Prewitt to testify late 
this month after we have had a chance to see the response 
perhaps of the mailout. So we will have a better feel for that 
hopefully late this month when he testifies here and we will 
keep up with that as he goes along with the census as well. I 
will have further questions later. Mr. Serrano.
    Mr. Serrano. Thank you, Mr. Chairman. Let me just follow up 
a second. We had discussed, Mr. Secretary, you and I, the 
possible public reaction to receiving this mailing with this 
mistake on it. Any further thoughts on what could happen?
    Secretary Daley. We expect that there will be very few 
people who would not be opening the letter, and we have begun, 
in addition to the plan that we had before, to add on some 
extra advertising in communities where the language part of 
this questionnaire may pose a problem. Requesting a 
questionnaire in a different language is so important to make 
sure that people in those communities know they should open 
this letter. The bottom line of all of this and what Dr. 
Prewitt did Monday in a press conference, what we have tried to 
do is to send the message out that this an important letter to 
open. It is marked census. It should be easy for people to see 
that this is an official document from the government and they 
should open it, and that will be followed up. So we expect, 
along with the assurance by the Post Office that they will be 
able to deliver these questionnaires everywhere, that the 
impact should be very minor.
    Mr. Rogers. Would you yield briefly on that?
    Mr. Serrano. Sure.
    Mr. Rogers. And I will give you extra time. A person that 
doesn't speak English, who is suspicious of the government 
letter in the first place, gets a letter marked ``resident'' at 
such and such address, which happens to be where they live but 
the address is wrong, doesn't that encourage that person even 
more so to toss a letter that is not addressed to him or her 
and is the wrong address?
    Secretary Daley. My understanding, and I am not an expert 
in this, but supposedly experts have been consulted, on this 
direct mail and how people react to it. They say that there 
will be a minor impact on people who would do exactly what you 
say. Those who throw away resident addressed mail anyway, no 
matter what the address is, may throw it away. But take, for 
example, in an apartment building, everyone in that apartment 
building will probably get a questionnaire, whether it is 
addressed to them individually or not. Again this is what 
people have said to the census people who do this for a living 
and understand how people react to direct mail, what is 
equivalent to direct mail or bulk mail, that it would have a 
minor impact.
    Mr. Serrano. Thank you. I am confident that we will all be 
able to recover from this and straighten it out. My bigger 
concern is something that you have no control over in the 
Census Bureau and that is the fact that, in my 25 odd years in 
public office, on many occasions I have sent mail, newsletters 
and the like that said either resident or postal patron, 
returned by the post office to me as addressee unknown, and I 
don't know how it could have happened but it seems to happen a 
lot; it is still happening to a certain extent. So that is 
something where I hope there is more coordination--just tell 
those folks to deliver them, one to each mailbox.
    Mr. Rogers. I am worried that it says addresser unknown.
    Secretary Daley. That is a problem.

                             Digital Divide

    Mr. Serrano. That is a real problem.
    Let us talk about the digital divide. In 1988, when I was 
chairman of the Education Committee of the New York State 
Assembly, I said we are on top of this one from the beginning, 
we are watching this computer revolution and I said on this one 
we will know who to blame if 10 years from now, and here it is 
12 years out, some folks are being totally left behind. We will 
have no one to blame but ourselves because it is not something 
we inherited from another generation. We were there at the 
beginning, and yet all the reports coming out now indicate 
that, in fact, we do have a problem and we are already leaving 
too many people behind.
    Can you be a little more specific as to how you want to 
attack this and what role you feel you have to play in this and 
the Department has to play in this?
    Secretary Daley. We were a catalyst I think, we in the 
Department of Commerce, in raising the awareness of this 
digital divide. We have done a Falling Through The Net Study 
twice now highlighting this gap that is growing, and the last 
report showed a tremendously widened gap, especially upon a 
racial basis between white households and African American or 
Hispanic American households and their accessibility and usage 
of the Internet. Obviously we all know the impact this is 
having on our economy and future and job opportunities and our 
ability to stay in this society.
    I think it presents two problems if this continues. One is, 
of course, the potential economic impact leaving behind a group 
of people and the impact on jobs and the overall economy. In 
addition to that, the impact upon our society to have one more 
example of a divide amongst us is not a good thing, it is a bad 
thing.
    The good news is I believe the marketplace will eventually 
solve this divide. I think the marketplace will see a group of 
people who are potential customers, potential users of these 
technologies and the marketplace will find ways to address this 
divide.
    The question for us I think in government, for us as we 
have looked at it in the Department, is can we help that 
closing of the divide be sooner rather than later. We have a 
number of programs within this budget, the 2001 budget, that we 
think further that objective. In EDA, a $23 million request to 
bring broadband to very rural communities of America and the 
very distressed of communities of America. Then that 
infrastructure is there so the technologies can take advantage 
of that access of the infrastructure.
    In NTIA we have tripled the technology opportunity program 
to $45 million, which gives grants to organizations and 
communities. We have our new home Internet Access program, $50 
million through NTIA. So we have a whole broad range of 
programs, and we will continue to do the Falling Through The 
Net survey.
    We also did a digital divide summit at the Department where 
we brought together companies, educators, community groups, and 
civil rights organizations to find ways that they suggest we do 
this. I will say, Congressman, that even though I think this is 
a serious problem, we have a lot of resources that we are 
requesting to help address it. I do believe the private sector 
is stepping up to the table also because it is in their self-
interest. But this divide left to continue to grow, and for a 
longer period than we hope, will have an impact on our economy 
and will have an impact on society.
    Mr. Serrano. You are saying the private sector will step 
up, and it makes sense to me that they would want their product 
to spread. What have you seen and what are you encouraging them 
to do? What are they doing already that you can see?
    Secretary Daley. Out of this digital divide summit we 
decided to do visits to see what is going on in 12 areas of 
America. The first school we visited was Ralph Bunche in New 
York, in Harlem, probably the least connected school district 
in America, the Fifth District, I think, of the New York City 
School District. And we had four companies helping to bring 
products and bringing capacity to the school. Cisco Networking 
Academy is one of the best programs in America where they team 
up with schools to train kids and then have programs so that 
there can be job opportunities for those young people as they 
come through the system.
    So there are lots of good things with corporations working 
with educational institutions to try not only to bring 
technologies but the training for teachers, and the training of 
parents so that they can work with their kids. There are many 
good things going on out there with the private sector working 
with mostly educational institutions at the local level that we 
think are very encouraging, another step hopefully to close 
this divide.
    Mr. Serrano. Is there a divide between us and the rest of 
the world to your knowledge?
    Secretary Daley. There is a major divide. We are very, very 
well connected compared to--well, most of the world obviously. 
The main reason is we have such an intensive and extensive 
infrastructure of telecommunications in our country. There are 
parts of the world that obviously don't have that yet. So that 
gave us the ability to be further ahead, with the competitive 
nature of our telecommunications industry, and the 
entrepreneurship of America. There is a number of reasons why 
we are further advanced than most of the world. I was in Latin 
America 2 weeks ago, and many of those countries are 
experiencing the same thing where they have the explosion going 
on in the Internet, and they really see a divide that is even 
much, much worse than we have because there is greater social 
and economic divides in those countries than we have in our 
country. So there is a global divide going on, also.
    Mr. Rogers. Mr. Kolbe.

                      China's Accession to the WTO

    Mr. Kolbe. Thank you, Mr. Chairman. Mr. Secretary, welcome. 
Let me ask a question of you just to get it on the record, that 
I asked of Secretary Albright this morning. You spoke in your 
opening remarks about China and its importance of the accession 
of China to the WTO. Let me ask you more specifically. What 
kind of impact will China's accession to the WTO have on 
American business and industry?
    Secretary Daley. Our market is basically open to Chinese 
goods as exemplified by the fact that our trade deficit is so 
high with them. Their market has historically been closed 
whether it is telecommunications or auto tariffs that are much 
too high so that the realistic exploitation of U.S. products or 
automobiles is unrealistic considering tariffs. This agreement 
brings all those down and allows U.S. companies the chance to 
be competitive in the market that has been historically closed, 
and we believe that will present enormous opportunities.
    I don't have a dollar figure for the growth of exports or 
jobs, but it is seemingly fairly simple logic on my part that 
if our market is open, and their market is closed, they are 
doing much more business here. If they open their market, 
American companies, which are as competitive and proven around 
the world as anyone, will do very, very well in that market and 
won't be forced to just go and invest and transfer technologies 
there but, because of this agreement, we will have a greater 
chance to export goods.
    Mr. Kolbe. Are you saying that business really won't get 
the benefits of that without China's being in the WTO and we 
can't get it otherwise?
    Secretary Daley. Basically we can't get it otherwise 
because this agreement, of which we have negotiated the best of 
anyone, any deal by any country, would not apply to us.

                      Home Internet Access Program

    Mr. Kolbe. Thank you. Mr. Serrano talked to you about the 
digital divide. I want to talk about a different aspect of 
that. You have a request in your budget for a new grants 
program, $50 million I believe it is, for low income 
individuals and families to provide them with connections, 
training and support necessary for full participation in 
today's increasingly online society. Sounds good.
    My first question is, how are you going to administer this? 
Are you going to administer it through a State agency? Is 
everybody going to come to the big brother in Washington to get 
this money? Are you going to divide it up by States? How is it 
going to work?
    Secretary Daley. Basically it will be administered and 
funded through NTIA. It will be a grants program but it will be 
a peer reviewed program with community organizations, local 
nonprofits. We will basically administer it through our 
National Telecommunications and Information Administration, but 
we will not decide that so much will go state by state. We are 
in the process of setting up the procedure on how to administer 
the program.
    Mr. Kolbe. Has NTIA ever administered a grants program of 
this size? I mean you are talking about $50 million. That is 
not peanuts. It is a fair number of grants they are going to 
have to review here.
    Secretary Daley. I don't think we have a grant program in 
NTIA that is this size, you are right. The TOP grant program is 
$15 million in 2000, and we are requesting that it be raised to 
$45 million.
    Mr. Kolbe. I appreciate what we are trying to do here 
because I think you are right. The information technology world 
that we are living in threatens to leave out people who don't 
have the benefits of that, and so we all agree on the 
objective, which is to make sure people have access to 
computers, technology and the kinds of information that flow 
from that. It seems to me the private sector has been very 
helpful in a lot of areas in making this happen.
    In West Virginia, for example, there is a seniors 
technology training program which provides computer access and 
training to citizens across West Virginia. And Intel, along 
with Microsoft and Hewlett-Packard has a program called Teach 
to the Future, which trains 400,000 teachers in applying new 
technology to the classroom.
    With these kinds of initiatives going on with the private 
sector, do we really need this kind of a government initiative, 
a new government program? I thought this was the era of smaller 
government.
    Secretary Daley. Well, this program would require a dollar 
for dollar match by the local nonprofit or the State or local 
or tribal government or the university or college. So it is not 
just a grant of our money--of Federal Government's money 
without some involvement by the local partner. So I think that 
is a requirement that changes the nature of it a little, but I 
think it is an important time for us to try to put as much 
resources towards this objective. It would be great in 2 or 3 
or 5 years if we all sat back and said this divide is closed, 
the marketplace has done it, along with the support of 
government, and this sort of program would not be needed.
    But it seems to us at this point with this divide growing 
that we should be trying to attempt to do as much as we can, 
and this is one more attempt especially, to the very 
disadvantaged, whether it is very interurban or very rural. If 
they are left behind, this not only has an impact on them 
obviously as individuals but on entire communities. That could 
be devastating.
    Mr. Kolbe. Do you know if there was an interagency task 
force which developed this initiative? Were there consultations 
with organizations like the FCC or Department of Education in 
drafting and preparing this initiative? Do you know how this 
initiative came about?
    Secretary Daley. To be honest with you, Congressman, I am 
not sure what interagency process was used to develop this 
initiative.
    Mr. Kolbe. I think we are going to want to look at this one 
very carefully. Mr. Chairman, I may have some questions either 
later or for the record.
    Mr. Rogers. All right. Mr. Latham.

                            Decennial Census

    Mr. Latham. Thank you, Mr. Chairman, and welcome, Mr. 
Daley. I just have a couple questions, one having to do with 
the census and also at the same time the economics and 
statistics administration are both trying to collect 
information from both the census and the American Community 
Survey at the same time. And it has been reported by some 
communities in my district, and Iowa is a State that because it 
is rural has a long form on the census that many people are 
neglecting to participate in both programs or only filling out 
one form because they believe they are the same thing and that 
some communities are having real problems getting people 
involved with the census because they say, well, we have 
already filled out a long form or a form. Can you tell me why 
similar surveys were mailed or distributed at the same time? It 
is causing a real problem.
    Secretary Daley. This is the first time, Congressman, that 
I have heard that there is a problem. Obviously the 
questionnaire of the 2000 census which will go out in about 10 
days is something that was scheduled probably 10 years ago, and 
why at the same time there would be the American Survey going 
on. Rob Shapiro of the ESA would like to make a comment. If I 
could, I will get back to you, Congressman, and tell you. 
Obviously we would like to find a way to avoid any confusion, 
and I will talk to Dr. Prewitt and find out whether there is 
something we can do to outreach in the very rural areas where 
there is this confusion.
    [Clerk's note.--Subsequent to the hearing, the following 
information was provided:]
            [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 

       International Commercial Infrastructure Development

    Mr. Latham. As you are probably well aware, Iowa has a lot 
of insurance companies. I think we are second to Connecticut as 
far as number of companies. Last year the Administration 
proposed a program, a commercial infrastructure development 
program, that would assist American insurance companies 
internationally by providing technical, regulatory and 
supervisory assistance to foreign governments in transition 
markets and thereby helping them to meet liberalization 
commitments negotiated with WTO. Other financial industries, 
banks and security firms, have received some assistance I think 
from the Treasury Department. I just wonder what funds have 
been designated in this fiscal year from the Department and 
what your request is or how much is going to be designated next 
year?
    Secretary Daley. Congressman, because that program was not 
funded by the Congress last year, we obviously have no program 
going on this year. Because of the lack of interest in the 
program by the Congress, we decided not to put it in for the 
request for 2001 even though we do believe that the need is 
there as far as building a commercial, legal or regulatory 
framework in infrastructure in many of these countries. We try 
at a local level with our commercial service officers and with 
other resources we may have in our general counsel's office to 
give advice to certain countries that request advice on some of 
these areas of commercial or legal or regulatory 
infrastructures, but without the sort of funds that we 
requested last year, it is pretty limited, and as I said, we 
did not request any funding in 2001.

                               Broadband

    Mr. Latham. Just one other question, one of the initiatives 
is a proposal within the EDA to deploy high speed Internet 
access to underserved rural and urban communities. I guess, 
number one, is it redundant to universal service program, are 
we reinventing the wheel? And from my understanding it is not 
even authorized. Are you seeking authorization?
    Secretary Daley. We believe it is authorized, Congressman. 
We believe also from having heard from many communities, 
especially in very rural parts of America, that bringing 
broadband to their communities is absolutely necessary for them 
to be able to be competitive with other parts of the country 
where the competition is so great and the business 
opportunities are so great that the broadband has brought more 
quickly, and we think this is an economic development issue. We 
think EDA is uniquely situated because of their experiences in 
working with local governments on economic development issues 
that they can administer this in a way that the likelihood is 
greater.

                      Home Internet Access Program

    Mr. Latham. Is the basis of the authorization the Home 
Internet Access program? That has expired, I know. I just 
wonder about the authorization.
    Secretary Daley. This is Greg Rohde, head of NTIA, if I 
could ask you. Mr. Chairman, Mr. Rohde.
    Mr. Rogers. Yes, please proceed.
    Mr. Rohde. Mr. Chairman, I am Greg Rohde, Administrator of 
NTIA. The Home Internet Access Program as well as the 
Technology Opportunities Program are authorized under the 
statute of section 390 of the Communications Act of 1934 that 
provides general authority to NTIA to administer grants to 
nonprofit State and local and tribal governments to expand 
access to telecommunications facilities, including broadcast 
and nonbroadcast.
    Mr. Latham. Apparently, there is some confusion because to 
my knowledge I think even in your book you say it has expired 
as of September 30, 1994, the authorization.
    Mr. Rohde. This is the authority which the appropriations 
committees have used to continue the funding for both the PTFP 
program every year as well as what is now called the Technology 
Opportunities Program, which has been formerly known as the 
TIIAP program.
    Mr. Latham. We continue to be authorizers, Mr. Chairman. 
Thank you.
    Secretary Daley. If I could, Congressman, we would like to 
obviously work with Congress to get this authorized and we will 
try to do that this year.
    Mr. Rogers. Mr. Miller.

                             Census Bureau

    Mr. Miller. Mr. Secretary, let me ask a few questions about 
census, and I hope we have time to at least come back because I 
have some noncensus questions. The first one is something I 
will direct to Dr. Prewitt before my subcommittee next week so 
I will be bringing it up then. Throughout the past years as we 
prepare for this, it has been stated that the 2000 census will 
be the most open and transparent census in history. However, we 
are having real problems of access, and it is not just my 
subcommittee. It is not just the monitoring board, but it is 
GAO, and all of us have the congressional responsibility for 
oversight.
    I was talking with GAO today, and the person who is 
responsible for the census says in his 18 years at GAO he has 
never had a more difficult agency to deal with. Now, GAO will 
be coming to testify in a couple weeks. We will talk about this 
again. We must have a census that can be trusted. I can say we 
are all partisan, but this should not be a partisan issue. The 
GAO says we can eventually get our information, but we have to 
jump through so many hoops and it is so slow and so delayed and 
the barrier is being artificially created. So I am going to 
talk to Director Prewitt next week or maybe on the phone before 
then, but I wanted to make you aware that this is a problem. I 
don't know about the Inspector General. I haven't talked with 
them. GAO is having problems, and I know we have been having 
problems for months. I want to make you aware of it, and I hope 
you can prod people along to say it is unnecessary to make them 
jump through so many hoops to get some data.
    Secretary Daley. I don't differ with you at all, 
Congressman. I will once again go back with you. We have had 
this discussion before. This concern has been expressed to me 
by the chairman in the past and by yourself. Let me also thank 
you, this has been from my experience 3 very difficult years 
and, at times, very political. But I must say the cooperation 
on a very nonpartisan basis has been incredible this last year 
since we went through this with the Supreme Court case last 
year and everybody knew which way we were going, and it has 
been incredibly positive I believe. That is not saying that it 
will continue, but let's hope so.
    I will say in defense of the Census Bureau, they are under 
incredible pressure, as you know, for all sorts of reasons, 
internal and external. They have enormous requests all the 
time. Obviously the priority ought to be to give to Congress 
what they request and what the committee requests and then 
everyone else who needs information. They are, in their defense 
again, being inundated and we have trouble at the same time 
getting information. I will talk to Dr. Prewitt again and get 
an assurance so I can come back to you and tell you that your 
request will be responded to more quickly.
    Mr. Miller. As I said, when a GAO person said after 18 
years this is the worst experience he has ever had, that is a 
bad indictment of the Census Bureau. We need to have the most 
open and transparent census. Eventually we do get information, 
but it is causing more trouble for the Bureau. Sometimes the 
GAO just wants to talk to somebody rather than having to go 
through this person and that person and then weeks later 
receive the data and there is nothing secret about it. They 
just want to have access to it.

                            Decennial Census

    Let me move onto another issue, the chairman talked about 
that issue and that was the 2 sets of numbers and the use of 
ACE to get the adjusted set of numbers. The goal of course is 
to release all of this data by April 1 of 2001. A concern that 
I have had all along, and it is becoming more and more obvious, 
is that ACE--and I brought this up at the last hearing with 
Director Prewitt--ACE is driving the agenda. The Supreme Court 
said we have to do full enumeration. But the bureau is going 
ahead with the ACE, the adjusted set of numbers. This is what 
is driving the agenda. If you go back to the original agreement 
in 1997, the appropriation that we are going to proceed on the 
2-track system, the bureau wasn't doing that system. You were 
so focused on doing the adjusted numbers and the sampling 
numbers, until the Supreme Court ruled and then you were caught 
behind.
    This last GAO report that the chairman talked about 
mentions the concern about this, the fact that a second mailing 
would have dramatically increased the response rate. And GAO 
was inferring in that report that it is unfortunate we are not 
doing that. However, I think the reason was ACE was more 
important. I am concerned that we are going to be coming down 
to the wire this summer, that we are going to be cutting off, 
as the chairman said, we are going to do something like 12 
million more households in the post census follow-up and in a 
shorter period of time, and we are going to end up having poor 
data just because the goal was ACE. I want to make sure that we 
are going to do the best job possible to get the actual set of 
numbers. The best job that we have done for over 200 years. If 
ACE is the only focus, we are not following the Supreme Court 
interpretation or the interests of the American people, I 
think.
    Secretary Daley. I agree to this extent, Congressman, with 
you, that ACE should not drive this process. In my opinion it 
doesn't. This is basically a mailout, mail back operation. That 
is the bulk of this procedure. And that is why we have put so 
much emphasis on pre-questionnaire and getting people engaged 
in this process so that we can get better response rates so 
that opportunities during the going door to door after the mail 
back in April, May and June are more successful than they have 
been in the past. If our front end of this is not as successful 
as we expect, it will have an impact on the ACE procedure 
obviously. And that is why we have put so much emphasis 
upfront. This is not an emphasis on the back end. The bulk of 
the cost that this committee has appropriated for the census is 
about the period between now, or really up to now, through 
June, not during the ACE period. I think in the scheme of 
things, cost-wise, ACE is a very minor----
    Mr. Miller. One of the concerns about ACE is the goal is to 
release the number by April 1 of next year. When we tried to do 
an adjustment back in 1990 it went through several attempts and 
it took them a year or two to get it ready. I am concerned they 
are going to release numbers whether they are very accurate or 
not because they have got this deadline. I want to make sure we 
have the best census possible and I am really concerned that we 
are going to be releasing out the adjusted numbers that are not 
accurate because of that deadline. We have no choice, we have 
to get it by April 1.
    Let me just briefly comment about the addressing error. 
Obviously, this is a major mistake--everybody would like to 
avoid it, no question about it. I just hope Jay Leno doesn't 
get into this issue because it will hurt the credibility of the 
Bureau. It concerns me and it does show that the Bureau can 
make mistakes. This mistake is a colossal one. Anything as 
complicated as ACE, if you can mess up one digit in the 
addressing, ACE will be far more complicated.
    I think you are giving us some assurances. Director Prewitt 
said on the phone that you have double-checked and tried to get 
to the bottom of it. I think GAO is looking into it and the 
Inspector General and we will find out how this whole dumb 
mistake was created.
    Let me switch to this other issue. Do you want to come back 
later or do you want me to ask my question now?
    Mr. Rogers. We have other members. Mr. Wamp.

                          Taxing the Internet

    Mr. Wamp. Thank you, Mr. Chairman. Welcome, Mr. Secretary. 
I have just one simple question, but it is not simple. The e-
commerce issue that you talked about, there is a debate in this 
country about taxing the Internet. We know what impact e-
commerce has on the world economy as our nation's economy leads 
the world's economy and the fact that we are really just on the 
front end of the third great wave of this country's history, 
the Information Revolution. And my governor, Governor Sundquist 
of Tennessee, argued with the governor of Virginia at I think 
the National Governors' Association meeting last week about 
sales tax states losing so much revenue from not taxing the 
Internet. You have certain elements of the private sector like 
shopping center developers that suffer because of no taxation 
of the Internet, the loss of sales tax revenues; and then some 
states like Tennessee, half a dozen states that rely solely on 
the sales tax for their revenues.
    But I want you to say as the longest serving Secretary of 
Commerce in this century what you really believe from your 
professional perspective are the benefits of keeping the 
Internet tax free and really what your opinion is as we face 
this difficult issue? We are under a moratorium right now. 
Obviously the Internet is in many ways driving our economy, 
certainly the investments that are taking place in this 
country. I assume that I know what your answer is, but it would 
be a good time this year as you come to tell us just exactly 
how beneficial is it to keep the Internet tax free.
    Secretary Daley. I think there are two parts to this. If I 
may for the moment, Congressman. You have the moratorium on new 
taxes on the Internet and that I believe is expiring in April 
and probably should be extended because I think the creativity 
of potential taxes on the Internet--of new creative taxes--
would have the potential to seriously impede the growth of the 
Internet. As far as the sales tax issue is concerned, it really 
gets down to a question at this point--e-tailing as it is 
called. We will find out tomorrow when the real numbers are 
released for this holiday season, we kept numbers--but it is 
still probably somewhere around 1 percent of all of the 
retailing in America. So the impact on state and local 
governments at this point is probably still fairly minor. The 
potential though is enormous and that is what frightens 
everyone. I think there is the question of should one be so 
advantaged by this form of shopping as opposed to the 
traditional, what has historically been the traditional, and is 
there a discrimination by virtue of you or I having the ability 
by our economic situation and understanding of the Internet and 
access to it to buy something over the Internet but a poor 
person doesn't, and when he or she goes to a store to buy it, 
they pay a sales tax and you and I get it tax free. That seems 
to be an unfairness in the system that can't be allowed to 
continue.
    At the same time I believe there are technologies that are 
going to be developed to allow the collection of sales tax 
possible over the Internet in spite of the multiple number of 
differences of sales tax collections even within the state. So 
I am saying that technologies are going to allow this to occur, 
the collection of taxes, but I think there has to be 
simplification at the state levels that no states have begun to 
do yet in any serious way so they could legitimately stand up 
and say we could collect these taxes both technology wise and 
our general public has decided to accept taxes on the Internet, 
and we have a way to do that that is simple and technologically 
capable.
    It is a debate that is going to rage for a couple of years 
because I don't think we are prepared yet to talk about what 
would replace sales taxes in states like yours that are so 
dependent on it if e-tailing continues to explode. You also 
have the question of the Supreme Court case, the Quill case, 
and whether or not that ever gets reversed or changed by virtue 
of Congress acting that would allow the collection of these. So 
this debate I believe is not fully waged yet at the local level 
as to what you would do to replace these taxes.
    Mr. Wamp. But simply from a commerce perspective and a 
global economic perspective, the longer we could keep the 
Internet tax free the greater the growth and the more benefits 
to our country?
    Secretary Daley. The more activity on the Internet, the 
more the use of the Internet helps our economy and strengthens 
it. At some point if e-tailing grows like some people expect it 
to and therefore you begin to see a diminution in those 
collection of taxes that are so important to state and locals, 
they will have to decide how to replace it. They may replace it 
with another tax and that is a question for state and locals to 
decide.
    The President the other day in his meeting with the 
governors was very clear in his belief that there has to be a 
coming together on this issue by both the Congress and the 
state and locals. I have a relative who has great concern on 
this issue at a local level and takes a little different 
position than I do, frankly.
    Mr. Wamp. Thank you, Mr. Secretary.
    Mr. Rogers. Mr. Taylor.

                          Apple Juice Dumping

    Mr. Taylor. Mr. Secretary, as you remember at last year's 
hearing, I brought up the issue of apple juice concentrate that 
was being dumped on the U.S. market. I think a lot of folks 
scratched their heads since that was the last thing expected in 
this subcommittee, but it has had a huge impact on the apple 
growers, not only in my district but throughout the country. I 
just want to thank you and thank the folks from the 
International Trade Administration for giving the issue the 
attention that it really deserves. I know the Department of 
Commerce is planning to hold a hearing on March 17 to review 
the final arguments in the dumping case and it should issue its 
final decision, I think, around April 6. I am also aware that 
the International Trade Commission will conduct its final 
hearing on April 10 regarding domestic industry injury and will 
issue its final decision around May 22. I certainly hope that 
these final decisions will confirm what those of us familiar 
with the apple growing industry already know: that China has 
been unfairly dumping juice concentrate and has effectively 
driven our domestic growers out of the market.
    Between 1995 and 1998, imports of Chinese apple juice 
concentrate grew more than 1200 percent while the price of the 
concentrate declined more than 53 percent. U.S. apple growers 
found the price for their juice dropping from $153 per ton down 
to $55 a ton. While I greatly appreciate the Department and the 
ITC's efforts in looking into the apple juice case, I can't 
help but wonder what this kind of behavior by the Chinese means 
for the whole permanent normal trade relations issue. If we 
can't expect China to abide by the existing trade laws, why 
should we expect the extension of permanent normal trade 
relations to China to help? It seems that the stick, and not 
the carrot, is called for and I would just like for you to make 
some comments in that area.

                            Trade With China

    Secretary Daley. Congressman, first I appreciate the 
positive comments about our important administration actions at 
this point. We believe the enforcement of our trade laws, which 
are all WTO consistent, is important for two reasons: one, to 
defend American law that Congress has passed, but more 
importantly, and two, to make sure that a message is sent to 
countries that they can't take advantage of an open market and 
if they do they will pay a price for it and they will, if there 
is a final determination in this case, as they have in other 
areas. We believe that bringing China into the WTO, which is a 
rules based organization that is multilateral and not just 
bilateral, they will have to live up to the rules that all of 
the 135 member countries, not just the United States, are 
requiring. This will put more pressure on them to live up to 
those commitments that they have made.
    There is a definite dispute settlement process in the WTO, 
a process which if I may say, Congressman, we have taken 
advantage of more than any other country and have been more 
successful in filing cases and getting successful results. 
There are frustrations with it in certain cases like bananas 
and others, but overall we have had greater results in far more 
cases than anybody else in the world in the WTO. So I believe 
getting China into that organization and living up to their 
commitments through a dispute settlement process will make them 
a better trading partner. But until then and even after then, 
because these laws that you have passed are consistent with the 
WTO, we will aggressively enforce our trade laws like we have 
done in this apple case.
    Mr. Taylor. Thank you, Mr. Secretary. Thank you, Mr. 
Chairman.

                      Home Internet Access Program

    Mr. Rogers. Thank you. Let me ask you briefly, back to the 
NTIA, Home Internet Access program that the others have asked 
you about. You request $50 million for that new program. How 
much did you request of OMB for the program?
    Secretary Daley. We didn't request an exact amount. We 
worked with them in coming up with this figure.
    Mr. Rogers. The answer is you didn't ask for a penny?
    Secretary Daley. I don't know if we asked for an exact 
amount. We probably didn't. But the fact of the matter is we 
have brought to the White House and the OMB's attention the 
need for and discussions over a long period really as a result 
of our continuing discussion of digital divide, the need to try 
to address some of these very distressed areas of our country 
and the need to bring access to them.
    Mr. Rogers. To date the only detail that we have seen about 
the program is from a February 3 article in the San Francisco 
Chronicle about a week before the budget was submitted. And 
several days after you had not requested a penny from OMB. This 
came from OMB, not the Department; is that right?
    Secretary Daley. The idea of this was done in conjunction 
with OMB. We did not request, as I understand it, a figure. The 
program and the goal of the program is something that we feel 
very strongly about.
    Mr. Rogers. Well, according to the article that I had 
mentioned, and I am quoting ``part of the President's 
initiative is a $50 million subsidy for poor families to buy 
computers and Internet access. That money is the brainchild of 
Silicon Valley executives Wade Randlett, cofounder of TechNet, 
a high tech industry political lobbying organization, and 
Garrett Gruener, a venture capitalist and a founder of Ask 
Jeeves, an Internet search machine. The U.S. Department of 
Commerce will issue monthly vouchers worth $10 apiece to 
households, households will be required to add $5, and that is 
then paid to the company providing low cost, stripped down 
computer and basic Internet access.''
    I have got to wonder who that is going to be paid to.
    And the article quotes Mr. Randlett as admitting ``there 
remains some crucial details to be worked out.''
    Does that accurately describe what we know of the Home 
Internet Access program?
    Secretary Daley. Mr. Chairman, I did not see that article. 
I think there were lots of proposals that were put out during 
the development of this idea. That I believe was their concept 
of how this should work and that was their concept. I have had 
lots of people say to me over the last year or two all sorts of 
ideas on what the government ought to do or not do about 
bringing access or giving everyone a computer or just letting 
the market prevail. That article again is not correct as it 
relates to how we are developing this program and how we 
envision it. I think it is how they would envision a program. 
That was their concept.
    Mr. Rogers. When will we get the details?
    Secretary Daley. We will get you the details very shortly 
from NTIA.
    Mr. Rogers. Well, I think you can sense there is not a lot 
of enthusiasm about it so far, so it may take some selling.
    Secretary Daley. We will be prepared to sell, Mr. Chairman. 
I will just say, though, that that article was their concept of 
how they would like to see a government plan, but it isn't the 
way we see it.

            National Oceanic and Atmospheric Administration

    Mr. Rogers. Now, let me get you to NOAA, which is half of 
your budget or so. There are numerous problems in the budget 
proposal. You have asked first for a very large increase for 
NOAA, $490 million, for a total of $2.818 billion. That is a 
net number. There is approximately $576.6 million in increases 
offset by $82.6 million in program terminations, primarily 
things that Members of Congress added to the bill. But there 
are many problems in the budget proposal for NOAA.

                            Navigation Fees

    First, there are fees that the Congress have turned down 
now three times in a row, $14 million in navigation fees. That 
is NOAA's share of a Coast Guard fee on navigation and vessel 
traffic services that has been proposed by the Administration 
and the Congress rejected it three times running now. And I 
don't see much hope for it in the future. So we have a $14 
million hole already.

                             Fisheries Fees

    Two, fishery management fees of $20 million, rejected four 
times in the past 7 years, rejected by the Authorization 
Committees. So that is another $20 million we have got to find 
somewhere. These are fees that are not going to happen and the 
Administration knows that and yet they persist in making that 
part of their budget proposal.

                          Pacific Coast Salmon

    A $102 million enhancement to an unauthorized program for 
Pacific Coastal Salmon Recovery for grants to four states and 
tribal communities. We funded that last year on a one year only 
basis and you come back to us again for funding for an 
unauthorized program.

                        Coastal Zone Management

    A $106 million increase over a $68 million coastal zone 
management program, a 60 percent increase over current year 
funding. No authorization for the program. On top of that 
coastal zone management request, you are asking another $100 
million for another coastal zone management type program to 
provide grants to coastal states to implement their management 
plans.
    I don't know where we even begin with a budget proposal 
that has this many problems and loopholes in it in order to set 
the stage for consideration of an appropriation. I just don't 
know how we do that. We have got to have some honest numbers, 
frankly, that make sense.
    Secretary Daley. I would just say, Mr. Chairman, obviously 
a number of our requests on the fees, I agree, have been turned 
down by Congress. We do continue to make the case that those 
who benefit and use much of the services of NOAA should be 
paying some share of that, and in those areas that we have 
identified as potential fee areas, that will not impede the 
continuing growth of those industries. We think that they are 
fair and realistic amounts that could be paid and in a small 
way begin to address the cost of a lot of the programs we do 
with the cost being borne by the beneficiaries. As far as the 
specific increases, no question about it, these are substantial 
increases. On the authorization question we would like to work 
with you. We believe that authorization is there for the vast 
majority of the requests that we have made to you. And in those 
areas that we did not have authorization but the Committee 
funded last year, we would hope that they would continue to do 
the same thing this year.

                      Advanced Technology Program

    Mr. Rogers. On ATP, your budget requests a total of $198.6 
million and that is $175 million in direct appropriations and 
$23.1 million of carryover and prior year recoveries. That 
amount is requested to support a total of $65 million in new 
awards, a $15 million increase over current year, $25 million 
more than you did in 1999. Is that correct? So the goal is a 
$200 million program?
    Secretary Daley. Yes, sir.
    Mr. Rogers. Your own budget request, you have a statutory 
cap in your own request on new awards of $65 million.
    Secretary Daley. Of our request of $196.9 million for 2001, 
$86.7 million would be for mortgages, $65 million for first 
year funding of new awards.

                  Economic Development Administration

    Mr. Rogers. Now, at EDA, there are a lot of good things in 
the budget that are unauthorized, but the good news at least 
for some of us, at least we thought, was that after 15 years of 
fighting we finally got a 5-year reauthorization of EDA. This 
Subcommittee, me particularly, have been the strongest 
supporters of funding EDA in the Congress. We have repeatedly 
fought off proposals by both the current and previous 
Administrations to eliminate EDA. Every year the House fights 
the Senate to preserve funding for EDA. And what do we have to 
show? A budget proposal that cuts the traditional programs that 
we fought to protect and keep that benefit every economically 
distressed community in the country--to pay for what? Political 
priorities or pet projects of the moment in this budget 
request. If that is what we fought to preserve EDA for, then I 
am very disappointed.
    Secretary Daley. If I could, Mr. Chairman, I believe that 
the increase in EDA--first of all, I acknowledge that you have 
led the fight and this Committee has led the fight for 
reauthorization and for increased strengthening of EDA. It is 
one of the more important parts of our Department. The increase 
for bringing broadband to rural communities of America we think 
is an important part of the change in what one would 
traditionally think as public works, the infrastructure of 
America. It is as important--it is going to be as important to 
bring some of these technologies and resources to rural America 
and very urban, probably more rural America than very urban 
America, as it was to bring the road or a bridge. And the need 
to address some of the serious concerns of the Native American 
community and the Mississippi Delta we think accomplishes the 
goal of EDA, a part of what you all have intended to do with 
EDA in two areas, again Native Americans and Mississippi Delta, 
that have been seriously negatively impacted over the last 
number of years. So we think it is a continuation of the 
attitude of what EDA is to accomplish and we think the overall 
increase in the EDA request is a continuing sign of how strong 
we believe that EDA is.
    Mr. Rogers. We have--I have a meeting at the White House at 
4:00 o'clock that I must attend. We want to get the Secretary 
out as quickly as we can, but I will let Mr. Miller add some 
questions that he would like to ask.

                               Free Trade

    Mr. Miller. I have a couple more noncensus questions if I 
may. One is a trade issue. I believe in free trade but it has 
to be fair trade. I think that you have a similar philosophy. 
This is about a manufacturer in my district. I sent you a 
letter and tried to exchange calls about it. It is a bandage 
company. I have very little manufacturing in my area. My area 
is mainly retirees down in the Sarasota, Florida area. This 
manufacturer is the largest domestic manufacturer of bandages. 
They sell them to K-Mart, Wal-Mart, the brands in hospitals. 
This company is actually a Japanese owned company. The problem 
is that bandages are duty free coming into the United States. 
This company has to import tape to make the bandages and there 
is a duty on the tape. They are at a disadvantage. They are 
possibly going to close down their operation or leave it as 
just a distribution center and get rid of all of the 
manufacturing business and ship it to their operations 
overseas.
    That is not what we want. That is not what your goal is 
either. This is a real concern. What they want to do is create 
a subzone to be able to allow the tape to come in duty free. 
And to be consistent--I guess one of the arguments has to be 
consistency--if the bandages are free, why can't the components 
be free? Otherwise you can't compete with the imported 
bandages. I don't know if you are prepared to make any comments 
about this or not.
    Secretary Daley. I am. We are reviewing your request for 
this, Congressman. One of the problems as we review these 
requests for this designation is whether or not the designation 
could have a negative impact on competitors, American 
competitors, who would be disadvantaged by virtue of giving an 
advantage to a company such as this. But we will hopefully be 
back to you very shortly with an answer and talk it through. 
Historically as I say, we have taken a position when other 
competitors would be disadvantaged we would not do such a 
specific sort of zone.
    Mr. Miller. The final product, bandages, are duty free 
coming into the United States. We would like to have them made 
in the United States. That is our goal. This is a company that 
already has a plant in the Philippines so it won't be that much 
trouble for them to shift their production.
    Secretary Daley. There are competitors who are also making 
the bandages here who may be in the area, or somewhere else in 
the country, who will make the case that designating this 
company gives them a competitive advantage over those American 
companies. Now, whether we could run around and make all 
three----
    Mr. Miller. Or drive them all overseas.
    Secretary Daley. That is not our goal either.
    Mr. Miller. That is happening. I guarantee that is going to 
happen. I guarantee it is going to happen because this policy 
makes no sense. If the final parts are duty free, the 
components should be duty free or else you can't compete on a 
level playing field. It is a fairness issue. I have heard that 
the FTZB is only talking about a partial exemption. That 
doesn't really do much good and that is not much effort. This 
really is a fairness issue and a jobs issue in my district.
    So I appreciate your looking at it, and if there is any way 
that you could find a way to help I would appreciate it.
    Let me switch to another quick issue.
    Mr. Rogers. We are running out of time.

                                  OSHA

    Mr. Miller. Okay. A really quick issue on OSHA and other 
Federal Government regulations. You represent the business 
sector, commerce and such. Every one sees regulations proposed 
by the government. We were talking about some home regulations. 
Now OSHA has backed off on that one. Ergonomics is another one, 
and the decision to treat stock options in the overtime 
calculations. Do you get involved in those decisions? Do they 
ever ask you for advice or input or does the Labor Department 
just move ahead on it?
    I would assume that proposals like the work home office, 
which will affect e-commerce issues, would be very significant. 
You should be very defensive.
    Secretary Daley. I think on the home issue, everyone was 
caught rather by surprise. I think the Labor Department may 
have been, from publications and from public comments, somewhat 
caught by surprise. We do weigh in on issues like ergonomics 
and----
    Mr. Miller. Do you support ergonomics?

                               Ergonomics

    Secretary Daley. We have expressed a feeling, an opinion 
that the final proposals were adequate and can be worked with. 
We were very involved in the process of pushing back other 
ideas and we think we came to a conclusion that is not going to 
be detrimental to the American work force.
    Mr. Miller. My last comment would be in ergonomics. The 
Labor Department estimates one cost factor and industry says it 
is going to be dramatically higher. Is there any reason why the 
Commerce Department wouldn't look at it? Are those costs really 
going to be the true costs that the Labor Department claims or 
will it be closer to what the private sector says, where the 
cost is much greater? As an advocate of commerce and business 
you should have someone else double-check those numbers because 
the private sector doesn't agree with the Labor Department.
    Secretary Daley. I don't know if we have done analysis of 
the Labor Department's study or the private sector's. We have 
weighed in, as I said, very heavily on that issue. On the home 
issue, the problem was after the fact, but we expressed very 
strong concerns about that decision. And the stock options, we 
also gave our opinion. At times there is a regulatory process. 
Obviously OSHA is a regulatory process that cannot be violated 
and so where we believe it is a policy decision we will weigh 
in, not a regulatory decision.
    Mr. Miller. Thank you. Thank you, Mr. Chairman.
    Mr. Rogers. Mr. Secretary, thank you for being here today.
    Secretary Daley. Thank you, Mr. Chairman.
          [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 



                                          Wednesday, April 5, 2000.

                   UNITED STATES TRADE REPRESENTATIVE

                               WITNESSES

AMBASSADOR CHARLENE BARSHEFSKY
JOHN HOPKINS, ASSISTANT U.S. TRADE REPRESENTATIVE FOR ADMINISTRATION
    Mr. Rogers. The Committee will be in order.
    This morning we are pleased to welcome to the Committee the 
United States Trade Representative, Ambassador Charlene 
Barshefsky.
    Ambassador, you are the U.S. trade negotiator at a very 
critical time. As all nations struggle to compete in the new 
global economy, the United States will be presented with both 
opportunities and challenges. Your office is critical to 
ensuring the global playing field is level, so the United 
States can compete. We look forward to hearing your thoughts on 
these and other issues. We are very pleased to have you with us 
this morning. Welcome back to the Subcommittee.
    Mr. Serrano, any opening thoughts?
    Mr. Serrano. I just want also to welcome you. I know you 
more than ever in the next couple of days and weeks will be at 
the center of the news. We look forward to your comments.
    Mr. Rogers. We will make your written statement a part of 
the record. We welcome your oral remarks.
    Ms. Barshefsky. Thank you so much, Mr. Chairman, 
Congressman. I appreciate the opportunity to testify on the 
President's fiscal year 2001 budget request for the Office of 
the U.S. Trade Representative.
    [The information follows:]
       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 

    Ms. Barshefsky. Let me begin, if I may, by thanking you 
both for the support that you have given us in the past 7 
years. Our close working relationship has helped to 
fundamentally change the trade environment for the better.
    Let me just take a moment to review the record. We have 
completed nearly 300 trade agreements that open markets and 
strengthen guarantees of fairness. These include agreements 
with all of our major trading partners: 38 with Japan, 17 with 
Europe, 20 with Canada, 13 with South Korea, 20 with the ASEAN 
countries, and 17 with China. They also include the full range 
of issues: 28 agreements on intellectual property rights, 272 
bilateral investment treaties, and so on.
    We have also, looking ahead, placed a special focus on high 
technology. We opened the first major discussions on the links 
between trade policy, environment, and labor issues; and we 
have launched major regional trade initiatives in Africa, Asia, 
Europe, Latin America, and the Middle East.
    We have strengthened the trading system through the 
creation of the WTO, more recent agreements there on 
information technology, basic telecommunications, financial 
services, and duty-free cyberspace; and now our historic 
agreement on China's WTO accession.
    We have used the WTO's strong settlement mechanism in 49 
cases we have brought to enforce our rights. This work is 
continuing as we pursue 30 prospective new WTO members, the 
opening of global talks on agriculture and services, and the 
prospect of them broadening these into a new round.
    Thus, we have expanded trade.
    To illustrate this, in January 1993, when President Clinton 
was inaugurated, our two-way trade totaled $108 billion. By 
January 2000, it had grown to $196 billion. In 1999, our 
exports reached a record total, an expansion of nearly 55 
percent over the 1993 levels and two-way trade now tops 
approximately $2 trillion.
    Together with fiscal discipline and strengthened support 
for education, this has made a substantial contribution to the 
record of growth, job creation, and rising living standards 
America has built these last 7 years.
    As we look ahead, we have a full agenda for 2000. Our top 
priority is completion of China's WTO accession and the 
granting of permanent Normal Trade Relation status. This is an 
agreement, as you know, Mr. Chairman, that is one-way 
concessions by China, under which China will open its 
industrial, agricultural and services markets more fully than 
at any time in the modern era. Strengthened guarantees of 
fairness for American workers and businesses address import 
surges and dumping and other unfair trade and investment 
practices by China, and subject China's adherence to its 
commitments to full enforcement and WTO scrutiny.
    Beyond this, we are working towards completion of 
legislation to strengthen trade ties with Africa and the 
Caribbean; we are working closely with Congress on the 5-year 
review of the WTO; and we are carrying on negotiations to 
remove barriers and open markets with all of our major trade 
partners including Japan, Latin America, Europe, Canada, and 
others.
    My written testimony lays this out in detail, but for 
purposes of the discussion this morning, I would like to focus 
specifically on our budget request, because when I look ahead 
to the responsibilities of USTR in fiscal year 2001 and 
succeeding years, the budget now is of decisive significance.
    USTR is, by tradition and preference, a small and lean 
agency. Each of our officers has great responsibility and feels 
it keenly. I neither envision nor wish to see any change in 
this historic identity. But as I look ahead, our current 
staffing level of 178 full-time equivalent staff is simply no 
longer enough to meet the responsibilities we will encounter in 
the coming decade, not when we are looking at two-way trade 
flows of $2 trillion.
    As our trade volume, the network of agreements and issue 
responsibilities have grown, our annual operating budget has 
remained virtually level. From fiscal year 1991 until fiscal 
year 2000, our staffing increased by only seven full-time 
equivalent employees, and funding barely kept pace with 
inflation. Many of our offices have only two or four permanent 
professionals. These include, for example, our China office 
with four people. Our Japan office has four people; our Africa 
office, covering 52 countries, two people. Our office in Geneva 
has the same staffing we devoted to the much-less-comprehensive 
GATT agreement, except now our trade responsibilities have 
increased in many ways.
    So, too, as the GAO has observed, our responsibility for 
monitoring and enforcing agreements grows substantially each 
year. Since 1993, we have brought over 100 enforcement actions, 
including 49 cases we have brought in the WTO. But we are 
involved currently in 91 cases at the WTO, either as plaintiff, 
defendant or third-party complainant.
    This past year, we made over 500 filings in WTO disputes. 
That is in 1 year. My monitoring and enforcement unit for this 
has seven attorneys and three support staff. This is an 
untenable situation.
    The number of professionals I can assign to compliance in 
other USTR organizational units is fewer still. For example, 
our Office of Economic Affairs which, in addition to its duties 
supporting the building, must carry out in-depth research to 
quantify and improve economic damage in many dispute settlement 
cases, has only two professional staff. This staffing level 
risks leaving USTR unable to meet the high expectations of 
Congress and the public.
    So the President's 2001 fiscal year budget requests the 
first significant increase of funding and positions for USTR in 
many years with an increase of $4.1 million, which includes 25 
new full-time career positions. This would be a minor increase 
for almost any other agency. It is a rounding error for most 
agencies, $4 million; but for us, this is a decisive amount of 
money and has decisive significance.
    The additional staff would come in two main areas. The 
first is staffing for multilateral functions in our regional 
offices. We would like 11 new career negotiator positions, 
three for our work at the WTO, two for agriculture, one for 
China, one for Japan, one for the Western Hemisphere, one for 
Africa, one for our environmental office, and one labor 
specialist.
    Each of these negotiators would also have responsibility 
for enhancing our outreach to the public at large.
    Second, we request 13 new professionals dedicated full-time 
to monitoring, compliance, and enforcement of agreements. This 
would include three new positions in the Office of General 
Counsel, two in our Office of Economic Affairs, one at the USTR 
office in Geneva, and seven in our geographic and sectorial 
offices, including one for agriculture, two for China, one for 
our WTO office, one for Asia-Pacific, one for Industry and one 
for the Services Area.
    This broad distribution will ensure the compliance 
resources are integrated at each phase of the monitoring and 
enforcement process. It will give us strength in the monitoring 
of country compliance, it will improve our research 
capabilities, and it will give support on the litigation side 
as we present cases to the WTO and as we defend cases at the 
WTO.
    Finally, we request one full-time equivalent to create a 
security officer at USTR to plan and manage USTR's internal 
security programs, whether building-related or computer or 
personnel security or document security. This has become an 
increasingly difficult issue for the agency to handle on an ad 
hoc basis.
    Beyond the new positions, our fiscal year 2001 budget 
proposes several forward-looking initiatives with immediate 
benefits in fiscal year 2001 and beyond. For example, we seek 
$60,000 to upgrade the fire wall that protects our computer 
system, $25,000 to improve password security.
    Other requests would help automate our classified cable 
system, improve the use of video-conferencing, which we believe 
will save significantly travel expenses over time, the phased 
replacement of hardware that is now old generation.
    These are modest investments, but we believe they will 
improve efficiency, strengthen security, and yield long-term 
budget savings.
    In conclusion, may I say, Mr. Chairman and members, it has 
been a great privilege for me to work with you and with the 
career negotiators at USTR as we form trade policy and assert 
America's interest in an increasingly open world trade 
environment. I think we can take pride in a strong bipartisan 
record of accomplishment, and we can look forward to a decade 
of new challenges, new opportunities, greater demand for 
outreach, and more dedication than ever before.
    It is my hope that the Subcommittee will approve a request 
which is terribly small in financial terms, $4.1 million, but 
which we believe is essential if USTR is to meet the challenges 
in the years ahead. Thank you very much.
    Mr. Rogers. Thank you, Ambassador. It is good to welcome 
you back here--for the seventh time?
    Ms. Barshefsky. Indeed. Time goes quickly.
    Mr. Rogers. Time does go quickly when you are having fun.
    Now, you are asking for a 15 percent, 15.6 percent, 
increase over the current year. That is the largest budget 
request USTR has made in 20 years.
    Ms. Barshefsky. Yes.
    Mr. Rogers. Including increases for such areas as $600,000 
for computer equipment, $1.2 million for pay raises and other 
inflation costs, and $2.3 million for these 25 new positions 
that you described.
    Ms. Barshefsky. Yes.
    Mr. Rogers. Eleven of them strengthening core negotiating 
capabilities, 13 to enhance trade compliance.
    How many new trade agreements do you anticipate in fiscal 
2001 that would justify such an increase?
    Ms. Barshefsky. I think that it is hard to project, except 
to say that we are already embarking upon global negotiations 
in agriculture and in all service sectors that will ripen 
certainly by fiscal year 2001, and probably well before, into a 
new global round of negotiations. The FTAA process is ongoing, 
and by fiscal year 2001 is going to be pretty far advanced in 
terms of negotiating overall a free trade agreement in our 
hemisphere. There will certainly be very active, even at that 
time, bilateral and regional negotiations with other trading 
partners around the world, as well as the more classic market 
access exercises, whether in Japan, whether China, whether in 
Latin America, Africa, and elsewhere.
    I think we can anticipate not only a large number of 
agreements as the years go on, but anticipate increasingly 
complex agreements as the years go on, including in higher 
technology fields.
    Mr. Rogers. At last year's hearing, you asked for $225,000 
for security-related issues.
    Ms. Barshefsky. Yes.
    Mr. Rogers. And you know we have been concerned obviously 
with ensuring the security overseas of our American people. A 
large portion of that request was for security-related projects 
in Geneva.
    Ms. Barshefsky. Yes.
    Mr. Rogers. We found out later that those costs were 
actually being paid for by the State Department. Also in last 
year's request was funding to close off an area to public 
parking outside of your annex building on F Street here in D.C.
    Ms. Barshefsky. Yes.
    Mr. Rogers. You made the request due to security concerns. 
We provided the $25,000 that you requested. You still have 
those spaces now?
    Ms. Barshefsky. We have been working with the city, with 
Federal Protective Service. Right now the meters are scheduled 
to be removed, and that is the first step, in June. So we would 
hope by the end of this calendar year to have that entire strip 
of parking spaces no longer open for public use at all.
    Mr. Rogers. But that will be June?
    Ms. Barshefsky. Yes, that will be June. This has taken much 
longer than we thought it would take.
    Mr. Rogers. Not in time, should you become a target of 
demonstrators on April 16th and 17th.
    Ms. Barshefsky. Well, we are, in that regard, working with 
the local police authorities and the Federal Protective Service 
and the Executive Office of the President.
    Mr. Rogers. What about this money we gave you----
    Ms. Barshefsky. May I ask John Hopkins to respond to that?
    Mr. Hopkins. With respect to the State Department----
    Mr. Rogers. Identify yourself.
    Mr. Hopkins. John Hopkins, Assistant U.S. Trade 
Representative for Administration.
    With respect to your question, Mr. Chairman, on Geneva 
security, the committee staff was of enormous help to USTR in 
working out an arrangement with the State Department to have 
the State Department use its embassy security and related 
funding from the fiscal year 1999 supplemental to help us 
employ guards to protect the Bontanic Building and our 
occupants in the building in Geneva. We are grateful for that. 
As we speak today, that protection still exists and will 
continue to exist through fiscal year 2001.
    We will look at that situation and talk to the Diplomatic 
Security Office at the State Department over the course of the 
next year, and if we do need to return to the Committee to get 
continuation funding, we will approach that in the fiscal year 
2002 budget cycle.
    So through the committee staff's efforts, that was 
something that we were pleased to accomplish.
    Mr. Rogers. The question though was we gave you $225,000, 
but the costs were covered by State Department.
    Mr. Hopkins. In the final appropriation action, as it 
passed through conference, we did not get all of the $225,000. 
We got a portion of it. We used that portion to help provide 
additional protection in Washington, D.C., hiring a guard in 
one of our buildings and also getting funds to pay the District 
of Columbia Government for the parking spaces on F Street, 
which are adjacent to the Winder Building.

                             Trade Deficit

    Mr. Rogers. Now, in 1998, the U.S. broke the record for the 
largest trade deficit in history, $164.3 billion. But now that 
is old news. We now have a $267.6 billion trade deficit for 
1999, a 62 percent increase.
    Year after year, we hear how progress is being made in 
opening the markets of Japan and China to U.S. goods. Your 
testimony states that you have concluded nearly 300 separate 
trade agreements, including 38 market-opening agreements with 
Japan and 17 with China. But, unfortunately, that progress is 
not reflected in these statistics.
    Are these statistics wrong, or can you explain why the 
deficit is so huge in view of your agreements with them?
    Ms. Barshefsky. Let me say that of most relevance from a 
trade policy point of view is our export performance, not our 
import performance. Our exports have increased by 55 percent 
since 1993. But for the Asian financial crisis, we would now be 
exporting far in excess of $1 trillion in goods and services 
annuity. As it is, we were very near $1 trillion as of the end 
of last year, and we will certainly top $1 trillion this year. 
That is a 55 percent increase over where we were.
    Our deficit has grown largely because our economy has been 
so strong, we are buying so much from abroad, when most of the 
rest of the global economy in 1997 and 1998 and early 1999 was 
in deep recession. Over 40 percent of the world was in deep 
recession during that period. So we, on the one hand, have had 
very strong growth rates. Our major trading partners, on the 
other hand, were in deep recession and were not buying. The 
result is an increase in the trade deficit.
    But even with that global recession, even taking that into 
account, our overall exports are up 55 percent. Part of that is 
due to the market-opening trade agreements we have concluded. 
That certainly is not the only factor obviously, but it is one 
of the factors.
    Mr. Rogers. Can you anticipate for us what the deficit will 
be for the current year?
    Ms. Barshefsky. I can't. I could provide for the Committee 
an estimate working with the Treasury Department, if you would 
like.
    [Clerk's note.--Subsequent to the hearing, the following 
information was provided to the Committee:]

    It is too early to say with any precision what the size of 
the trade deficit will be in 2000. We so far have actual data 
for only the first two months of the year. The Administration 
does not yet have a forecast for the trade deficit for 2000. 
There is, however, wide consensus that the trade deficit will 
be substantially larger in 2000 than in 1999. The recently 
released global economic forecast of the International Monetary 
Fund (IMF) projected a 2000 U.S. trade of $419 billion, as 
measured on the current account (the broadest measure of 
international trade, including trade in goods and services, 
foreign investment earnings and unilateral transfers). This 
figure is 23.6 percent higher than 1999's actual current 
account deficit of $338.9 billion. The IMF's projection of $419 
billion for 2000 is also very close to a recent figure of $416 
billion for 2000 reported by a consensus of private 
forecasters.

    Mr. Rogers. Is it more or less than the rate last year?
    Ms. Barshefsky. My general sense is that the rate of 
increase will slow. Our export performance the last 4 months of 
1999 picked up. It seems to be brisk again, and that should 
have a positive influence on the trade balance.
    Mr. Rogers. So what can we do to bring more balance?
    Ms. Barshefsky. Well, I think some of this is not that much 
a function of trade policy per se. In other words, trade policy 
is most effective in removing specific barriers in foreign 
markets to our exports, and agriculture or goods, whether in 
services. But the aggregate trade balances are largely a 
reflection of natural economic factors, including, most 
particularly, differences in growth rates and GDP between the 
United States and its major trading partners.
    Consider over the last 3 years, for example, while our GDP 
went up 13 percent, Japan's was negative; and the difference in 
that growth rate shows up immediately in the overall trade 
balances, putting aside market access issues entirely. Just put 
them aside for a moment; the difference in those growth rates 
of that magnitude shows up immediately in the trade balances.
    Similarly, with respect to Europe, whose growth rate was 
less than half of ours over the last 3 years; Canada, 
similarly.
    So what you have is a massive increase, as you know, in 
U.S. business investment, probably the largest increase we have 
had in our history, fueled in part by the kinds of numbers that 
you are seeing.

                       Trade With Japan and China

    Mr. Rogers. Finally, on this round let me ask you, are we 
getting our products into Japan and China easily now? Are there 
still barriers?
    Ms. Barshefsky. There certainly are still barriers. The 
Japan situation is complicated by the fact that the Japanese 
economy has been essentially in recession now for a number of 
years, and we have seen, as you know, last year, negative 
growth rates in Japan. If you have seen recent reports, you 
know that their economy is still in recession.
    This has altered what had been a very positive series of 
developments in the trade balances with Japan, up to and 
through about the first half of 1997, when we saw the deficit 
coming down, and we saw significant increases in our exports.
    Up to that time, if you look at the areas in which we had 
market-opening agreements in goods with Japan, our exports in 
those goods for which we negotiated agreements were two-and-a-
half times higher than our overall rate of export growth to 
Japan. Then, sort of the mid- or beginning of the last quarter 
of 1997, recession hit pretty deeply in Japan and everything 
was thrown askew from that point on.
    So we continue to work on trade barriers with Japan, but I 
am not sure that the current export capabilities are not 
hampered far more at this point by the continuing recession in 
Japan.
    With respect to China, our exports have increased 
significantly over the last 7 years, but in the aggregate, they 
are ridiculously small for the size of China's economy. 
Congressional Research Service did a very interesting study of 
the bilateral WTO accession agreement we negotiated with China, 
and CRS estimates conservatively that within 5 years, under 
that agreement, our exports could nearly double to China, which 
would be welcomed and much needed.
    Mr. Rogers. What is our trade imbalance with China?
    Ms. Barshefsky. Very substantial, nearing $60 billion. It 
is substantial.
    It is slightly above $60 billion.
    Mr. Rogers. Can you tell me the value of our exports to 
China?
    Ms. Barshefsky. About $14 or $15 billion, in that range. I 
think CRS is estimating in 5 years, under the agreement, we 
should hit somewhere between $26 and $28 billion.
    Mr. Rogers. And what do they anticipate our imports from 
China to be in that same period?
    Ms. Barshefsky. Quite honestly, I don't know. I would have 
to look, and if I can, provide that to you.
    [Clerk's note.--Subsequent to the hearing, the following 
information was provided:]

    The Congressional Research Service's February 14th 
Memorandum to the Trade Subcommittee of the House Committee on 
Ways on Means reports estimates of increases only for U.S. 
exports resulting from unilateral trade concession to be made 
by China as part of its possible accession to the WTO. It does 
not report on estimates of increases in U.S. imports from 
China's accession.

    Mr. Rogers. Mr. Serrano.
    Mr. Serrano. Thank you, Mr. Chairman.
    Just to follow up on that, there is a question I would like 
to ask you that is probably more a quick course on how certain 
parts of our economy work. But on the one hand, we read every 
day how this is the best economy we have ever had, the best of 
times, and, in some cases, there are even industries actually 
looking abroad for people to work because they say there are 
not enough people here available to work.
    Yet we have a desire and, I guess, a need to sell even more 
of our products abroad.
    If that were to happen, if all these markets opened, we 
were able to get everything we wanted out of them, do we have 
the capability right now to produce at that level?
    Ms. Barshefsky. Certainly the extent to which more and more 
business opportunity presents itself, companies that need to 
expand would be in a position to expand because those 
opportunities are there.
    We have the most productive economy in the world. Our 
output is extraordinary. Today, one in every three agricultural 
acres is planted for export, not planted for sale here at all 
any longer. We see a similar pattern in many industries that 
are now increasingly dependent on a very vibrant export 
performance.
    We are 4 percent of the world's population, 4 percent; we 
have 22 percent of the world's wealth. If we are going to 
maintain, let alone increase, standards of living here, we have 
to have access to the other 96 percent of the world that 
doesn't live here. Eighty percent of all global consumption is 
outside our borders.
    So business can respond well to the opportunities 
presented. There is no question in many industrial sectors we 
are at operating capacity. But it is terribly important, in 
order to continue the kind of growth rates we have seen and in 
order to increase living standards, that we pursue these market 
access opportunities.

                         USTR Staffing Increase

    Mr. Serrano. So we could meet those demands in spite of 
what we read every so often that we can't seem to find certain 
markets?
    Ms. Barshefsky. Certainly we could. Certainly, in some 
industrial sectors, there is a view that there is a labor 
shortage. This goes to the H-1B visa issue and so on. We have 
no doubt that American workers and businesses could take 
advantage of further opportunities.
    Mr. Serrano. Ambassador, you are requesting an increase of 
25 FTE's.
    How many people do you have now at the Agency and how does 
this level compare with staffing levels in recent years?
    Ms. Barshefsky. We have 178 FTEs. That covers $2 trillion 
in two-way trade. We have the most enormous workload, I think, 
of any agency imaginable. What we produce is 100 percent 
tangible. Most of our agreements are reported in the newspaper; 
if they are not front section, they are front page business 
section. It is very tangible, it is very concrete output.
    The staffing level increase is the first major increase in 
years. We had one other increase since roughly 1990, and that 
was approximately 14 people. This is simply not enough to fully 
carry out the kinds of functions we have, the volume of work 
that has increased so extraordinarily.
    Mr. Serrano. So the 25 new positions would put you where 
you want to be?
    Ms. Barshefsky. Yes. We think that our request would for 
fiscal year 2001 bring the Agency, frankly, up to a realistic 
staffing level.
    We don't operate on a realistic basis now. Nobody comes in 
at 9 o'clock, nobody leaves at five o'clock. We have people who 
are there all the time. At some point, this is no longer 
sustainable. Certainly, as we look ahead to fiscal year 2001, 
this is barely sustainable now, let alone then.

              Permanent Normal Trade Relations With China

    Mr. Serrano. Let me ask you a question on the issue of the 
vote on permanent Normal Trade Relations with China which is 
scheduled for May. This vote, like the last two major trade 
votes, will put people like me, who are both strongly pro-labor 
and opposed to extraneous political barriers to trade, in a 
very difficult position.
    It is unlikely that labor protections would be incorporated 
in individual trade agreements. In any case, it is probably 
preferable that they be addressed on a broader multilateral 
basis, that is, through the WTO. However, many underdeveloped 
countries view protecting their workers from exploitation as a 
barrier to exporting their products.
    In addition, it has been reported recently that China has 
pledged to join India and others in preventing inclusion of 
labor protections in the world trading system. What then is the 
Administration prepared to do to get labor, as well as the 
related human rights and the equally important environmental 
issues, addressed in the world trading system?
    Ms. Barshefsky. Environmental issues are currently included 
in the WTO. There is a working group on trade and environment. 
We don't think it has produced enough and we have proposals 
pending to revamp that committee. But there is greater global 
comport generally among our trading partners with environmental 
issues.
    The labor issues arouse great suspicion on the part of 
developing countries, in particular that the U.S. will use 
differences in labor standards as a barrier to their imports 
and as a means of keeping their development prospects dim. But 
we also have opposition to our labor proposals in the WTO from 
Europe, from Canada, and from our developed country partners. 
They find that our proposals go too far, interject too much of 
the work of the ILO into the WTO and are therefore not 
appropriate.
    We do have consensus with Europe and Canada that there 
should be a dialogue on labor issues in the WTO, but all 
members of the WTO, including Europe, reject our proposals for 
a working group on labor. So this is not merely a developing 
country issue, this is also a developed country issue.
    Europe tends to take the view that their labor system is a 
more generous system than ours and is adequate, and the WTO 
need not become too enmeshed in these issues. So, implicitly, 
Europe criticizes our domestic policies, to be frank; and their 
implicit claim is, we are trying to compensate for less than 
adequate domestic labor policies by incorporating labor into 
WTO arrangements.
    Mr. Serrano. You are saying now, labor in this country, 
organized labor, feels there are not enough provisions and some 
of our partners feel there are too many.
    Ms. Barshefsky. Correct. Indeed the International 
Confederation of Trade Unionists, of which the AFL, for 
example, is a member union, opposes our proposal in the WTO for 
a working group on trade and labor.
    We are going to keep fighting for this, because we believe 
that this is the right way to go. But it is very difficult to 
persuade countries that our motive in this is to get a dialogue 
going to ensure that labor policies and trade policies are 
mutually supportive and not a protectionist device.
    Mr. Serrano. Let me ask one last question. Your agency 
certainly knows that this vote coming up has created quite 
heavy lobbying on both sides of the issue. Members--we get paid 
to feel pressure, but it has been a long time since there has 
been this kind of pressure, and it will keep mounting.
    Is there anything the administration can do in this case, 
for instance, to alleviate the fears of the labor community? 
Otherwise, we are heading towards a major confrontation.
    Ms. Barshefsky. Well, we are----
    Mr. Serrano. I may say, a major confrontation not based on 
people having to succumb to any special interest group, but 
people very much distressed as to what is the right vote, what 
is the right thing to do.
    Ms. Barshefsky. We think the right thing to do is to 
provide permanent Normal Trade Relation status for China on the 
basis of the agreement we negotiated. This agreement is good 
for labor; it is good for workers and farmers in the United 
States. Because this is not the typical trade agreement.
    Take NAFTA, for example. We lowered barriers in exchange 
for Mexico lowering barriers. This agreement is not like that. 
We don't change anything. We don't change a tariff, we don't 
change a market access policy toward China. They make all the 
concessions.
    This is a series of one-way concessions to open China's 
market in many areas not open since 1940, whether in 
information industries, in the service industries, in the goods 
industries, and for agriculture. There is virtually no sector 
left out of this agreement as to which China doesn't have to 
open its market.
    Apart from the market opening, which should enhance 
significantly, as CRS has said, our export performance, which 
is good for Americans, we also have incorporated the agreement 
protections for workers here. We have negotiated a special 
anti-import surge mechanism for imports from China. This 
doesn't exist in current U.S. law. This will allow us in any 
way, area, sector--any area where Chinese imports are surging 
into the U.S. and disrupting the U.S. market, it allows us to 
block those imports for a 2-to-3-year period, to impose higher 
duties or other barriers. This is a protection we negotiated to 
doubly ensure people would feel comfortable moving forward in 
this direction.
    We have negotiated with China the use of special dumping 
rules for 15 years, following their accession to ensure that we 
have the most rigorous rules against unfair trading practices 
by the Chinese. We have also negotiated rules to which labor 
most strenuously was concerned, that is, China's forced 
technology transfer policy. That will now be prohibited.
    China's requirements for local content and local production 
in China in order to get your product into China, that is now 
prohibited.
    So we structured this agreement in a way, first off, to 
keep our eye on what we view as the price, which is from our 
economic viewpoint, enhanced U.S. export performance: You make 
the product here, you can sell it there. And we also negotiated 
extra protections against imports into our own market from 
China. Even though our market access policies don't change, we 
felt, while we are at it, we ought to have a mechanism like 
that. Why not? And we got it.
    All of that, all of that in exchange for making permanent 
the trade treatment China has received every year--year in, 
year out for the past 22 years, ever since Jimmy Carter 
normalized economic relations with China in 1979. Every year 
they have gotten this trade treatment; it is de facto permanent 
as a practical matter.
    What we need to do under WTO rules is to legislatively make 
that permanent, as every other country in the world already 
has. We are the only holdout--legislatively make the treatment 
we have given to China every year since 1979, permanent.
    That is all we do. We make no changes in our policies 
toward China in terms of market access. None.
    Mr. Serrano. Thank you.
    Thank you, Mr. Chairman.
    Mr. Rogers. Mr. Kolbe.
    Mr. Kolbe. Thank you, Mr. Chairman.
    Ambassador, welcome. I started to get a little heartburn 
when you started talking a lot about antisurge and antidumping 
provisions, but then I am a little more of a free trader than 
you are. We are on the same team, and I want to be very 
positive.
    I was late this morning because I came from a press 
conference with the Speaker of the House. You will be happy to 
know he announced that the vote on PNTR for China would take 
place the week of May 22nd. I was with him for that. So we are 
committed to having this debate and having this vote, and I am 
confident we can be successful on granting permanent trade 
relations with China.
    Let me just ask you a couple of questions about that, and 
then I do want to ask you one about your budget.
    Some people have said that we really don't need to have 
permanent NTR. The arguments for this position fall into two 
camps. Some say that we can have the annual vote on Jackson-
Vanik and still get the benefits of China's accession to the 
WTO. Sure, they come into the WTO and we can have the annual 
vote; and I don't know what happens if we one year have a vote 
not to grant them permanent trade relations. I guess we just 
drop out, or our trade with them drops out of the WTO. I am not 
sure how that would work.
    Some argue that even if it is not the case, we can still 
get all the benefits of China's accession because we have a 
1979 bilateral agreement, the one that you referred to that 
Jimmy Carter, President Carter, had negotiated.
    First, can you comment on whether or not we can have our 
annual review process and still get the benefits of China's 
accession to the WTO?
    Ms. Barshefsky. The basic WTO rules--let me start by saying 
it this way.
    China is going to accede to the WTO regardless of the 
congressional debate on PNTR.
    Mr. Kolbe. That was one of my questions. They will, whether 
or not we do this, they will be in the WTO?
    Ms. Barshefsky. Yes. Yes. Yes. The only question is, will 
we get the benefits of the deal we negotiated? That is the only 
question. Will we get the benefits of their accession? Everyone 
else in the world will. I would hate to see a situation where 
we open the China Market to the rest of the world, but our 
workers don't get the benefits of the deal.
    Under WTO rules, every member must give to every other 
member unconditionally--unconditionally, the same benefits, 
privileges, rights, immunities. Unconditionally.
    Mr. Kolbe. Couldn't you argue that you could do that each 
year, vote that each year?
    Ms. Barshefsky. No. That is a condition applied to China 
different from every other trading partner in the world. That 
is not unconditional.
    Mr. Kolbe. Therefore, it is not unconditional?
    Ms. Barshefsky. That is not unconditional.
    Mr. Kolbe. What about the 1979 agreement?
    Ms. Barshefsky. No, it is absolutely, without question, not 
adequate to secure for us the benefits of our agreement. There 
is an argument to be made that we could get some of the tariff 
concessions that China was willing to make, but what good is a 
tariff concession if you can't have the right to trade your 
product, distribute your product, advertise your product, 
provide after-sales service to your product, finance your 
product?
    The tariff concession doesn't mean anything in that regard. 
And the 1979 agreement does not apply to services, what happens 
to our telecom access, construction, engineering, banking, 
insurance, the full range of services. And it does not cover 
the protocol issues, the antisurge mechanism, the antidumping 
mechanism and the other special rules. And it doesn't cover 
dispute settlement in the WTO.
    There is no legal argument to made, none, that the 1979 
agreement secures for us the benefits of the bilateral 
agreement we negotiated. Congressional Research Service just 
did an exhaustive legal analysis and came to the same 
conclusion. GAO did a legal analysis and came to the same 
conclusion.
    Mr. Kolbe. Thank you. In answer to Mr. Serrano's question, 
you talked about the unilateral tools that you have available 
to you, the ones that I just referred to as giving me some 
heartburn for enforcing our agreement with China. Let me focus 
on what I think is something that has not been talked a lot 
about.
    It seems to me the agreement gives us some new multilateral 
mechanisms that we didn't have before to resolve our disputes.
    Ms. Barshefsky. Yes.
    Mr. Kolbe. Would you describe that and tell me whether or 
not you believe that is true?
    Ms. Barshefsky. Yes, it is true. This agreement has more 
enforcement mechanisms in it than any other accession agreement 
we have ever done. This includes all 135 members of the WTO. We 
have--for the first time will have dispute settlement rights 
with China to which China will accede. China has never 
submitted itself to impartial dispute settlement in any area, 
in any area. This is really quite historic. Number one.
    Number two, we have of course our own trade laws.
    Number three, we will create in the WTO a special 
multilateral review mechanism specific to China so that we can 
ensure constant oversight on compliance by China with its 
commitments. That has never existed before.
    We also for the first time will have oversight of 134 other 
countries that have the same interests in market access in 
China as do we.
    When we have done all of our agreements with China--take 
intellectual property rights, for example; no other country 
helped us with those agreements, no other country has helped us 
enforce those agreements. But in the case of the WTO, since 
what China does for one country under the rules it must do for 
everyone, if China does not adhere to its commitments, 
everybody is blocked from access to what they thought they had. 
So this will be the first time we have ever had unified 
pressure, unified pressure, on China. That is a fourth 
mechanism.
    Fifth, as you know, we are seeking more money for 
monitoring and enforcement. A lot of that will be China-
devoted.
    Last, the antisurge mechanism, the antidumping mechanism, 
while those are import relief remedies, we know from practical 
experience they also provide powerful leverage on the export 
side, as well from our point of view.

                    Trade Monitoring and Enforcement

    Mr. Kolbe. Thank you.
    Mr. Chairman, if I might ask just ask one other question 
here, and it relates to the item that you spoke about, the 
monitoring. That brings us to their appropriation request, 
which is really what this Subcommittee is all about.
    I agree with you, I think your office is extraordinarily 
lean, and I think that is the way it should be. I don't think 
you want a Department of Commerce kind of trade-related 
bureaucracy. I don't think you want a Department of Agriculture 
bureaucracy dealing with agriculture. The whole advantage of 
USTR has been that it has been very small and very specialized 
and highly professionalized. I think that is the key to your 
success.
    But it is rather extraordinary, while you were talking 
about it, I was doing some mental calculations. When you think 
about it, we have $2 trillion of two-way trade. We spend about 
$300 billion a year on defense. That is six times more in trade 
than we spend in defense, and the ratio of people involved in 
defense is 5,000 versus one in your office that is involved in 
trade.
    Now, I recognize that analogy is not exactly a perfect one, 
fortunately. You don't have to manage every aspect of trade; 
the private sector does that. Nonetheless, I think it is 
important to keep in mind that it is a very small office and 
trade has increased very dramatically. The number of countries 
we trade with has increased dramatically.
    Let me ask you on your budget there, what portion of the 
additional funds that you are asking for is going to be used 
for monitoring and compliance and what portion is going to be 
used to negotiate other trade agreements? How much of what you 
are asking for is for this trade compliance initiative? How 
much did USTR get out of that?
    Ms. Barshefsky. Out of the trade compliance initiative of 
the President, we would get $1.3 million out of $22.0 million.
    Mr. Kolbe. That is not much.
    Ms. Barshefsky. I am glad you said that. With respect to 
the 25 new career positions, we would like, out of that, 11 of 
those positions as core negotiators; and the remainder of the 
people----
    Mr. Kolbe. Assigned to regional offices?
    Ms. Barshefsky. Yes. China is one; 2 billion people, and I 
have a four-person China shop. We haven't done badly even with 
four people, but this is crazy.
    That is a term of art.
    Of the remainder of the positions, 13, we would spread 
between our General Counsel Office and other offices, and those 
13 would essentially be monitoring compliance and litigation-
related and we would use one to establish a security specialist 
position. So of the $2.3 million in the aggregate for the 25 
FTE's, you are talking a little more than half of that for 
monitoring, compliance, and the remainder for core career 
negotiators and security position.
    Mr. Kolbe. Thank you, Ambassador.
    Thank you, Mr. Chairman.

                  Film Production Industry Incentives

    Mr. Rogers. Mr. Dixon.
    Mr. Dixon. Thank you very much, Mr. Chairman.
    Madam Ambassador, about 25 or 30 members in October of 1999 
wrote you about runaway film production, and you were kind 
enough to respond almost immediately. You said that you are 
closely examining the Canadian system of financial incentives 
and that when you identify what the problem is, you would 
consider possible solutions.
    So I am wondering if you have identified what the problem 
is, and do you have any suggestions for possible solutions?
    Ms. Barshefsky. We are still working on this. This is a 
very complicated issue because, with respect to the movie 
industry in particular, there is no question that Canada, 
through various means, provides incentives for the location of 
film production in Canada. So do our States. One of the things 
that we have looked closely at is not just Canadian programs in 
this regard, but our State programs in this regard.
    To the extent we take on Canada on these issues, we are 
very vulnerable.
    Now, we are still working, particularly with the 
screenwriters, on the question, are there specific portions of 
funds that are not replicated here, but which may constitute 
subsidies? But we are quite vulnerable. I think those who are 
complaining of the issue need to think very carefully, and we 
have said this to several groups that have come in, the 
ramifications of pursuing this matter with Canada and the 
ramifications of Canada deciding, as a counterclaim, to pursue 
those issues against our States.
    So this is quite muddy water here, but we are continuing to 
work with the groups that have come to us on this. I think that 
our concern about what the States do has given them some pause, 
and that is where the situation rests, you know. They have not 
come back, to my knowledge, not in the last month or two, come 
back to us on this issue yet.
    Mr. Dixon. Let me see if I understand what you are saying.
    You are saying, the fact that certain States offer 
incentives is a vulnerability as it relates to the United 
States and Canada relationship in this?
    Ms. Barshefsky. No, it may be a vulnerability under 
international trade rules, just as they would argue what Canada 
is doing is vulnerable under international trade rules. Both 
nations provide tax incentives, one may be at the Federal 
level, one may be at the State level--it does not much matter--
but provide tax incentives and other forms of assistance to 
attract, particularly film production, either in a particular 
province in Canada or a particular State in the United States.
    Mr. Dixon. Have you raised that issue with either the 
Directors Guild or the Screen Actors Guild, and do you know 
what the response to that is?
    Ms. Barshefsky. Let me get back to you.
    I know several groups have been in. I don't want to say it 
was the Director's Guild if that is not the name of the group. 
Let me get back to you on the Directors Guild and Screen 
Actors.
    Mr. Dixon. Thank you, Mr. Chairman.

                              Citrus Trade

    Mr. Rogers. Mr. Miller.
    Mr. Miller. Madam Ambassador, thank you, first of all, for 
what you are doing to get citrus into China. We appreciate 
that.
    Ms. Barshefsky. I am excited about that.
    Mr. Miller. As we get ready to enter the next round of 
negotiations on agriculture trade, is every commodity and 
product on the table? Is there anything that is off limits or 
any preconditions? Was this a problem in Seattle?
    Ms. Barshefsky. Yes. Well, by and large, most delegations 
agreed there would be no a priori exclusions. That countries 
would not start on the agenda by pulling products out because, 
you know, you basically pull out agriculture. On the other 
hand, we are not obliged to be fully responsive to requests of 
other countries.
    In other words, everybody has sensitive agricultural 
sectors, and to the extent countries want to protect some of 
their sensitive agricultural subsectors, they will be less 
responsive to requests made to reduce barriers on those sectors 
and programs more responsive in other areas.
    So right now there are no a priori exclusions, but we are 
going to have to develop--and we have just issued a Federal 
Register notice on this--we are going to have to develop a 
pretty detailed set of negotiating proposals, what we want to 
lay on the table. We are going to need to think through where 
we think we are going to be on requests that come in from other 
countries. I want to get that work done this year.
    Mr. Miller. How do you establish priorities? Is it based on 
the importance of a product in our country? I will get to the 
issue of sugar.
    Ms. Barshefsky. No. I think the priorities are established, 
in part, by our exporters who are trying to sell and by those 
in the U.S. who are concerned or feel potentially vulnerable. 
In other words, it is a bit of a give-and-take. You know, when 
we ask for input on negotiating objectives, we ask for input 
from the public at large, and we take into account all of the 
comments.

                              Sugar Trade

    Mr. Miller. On sugar, we are not an exporter, I don't 
think. We are an importer.
    Ms. Barshefsky. Correct.
    Mr. Miller. I am a supporter of free trade. I am a safe bet 
for the normal trade issues with China. But sugar has caused a 
lot of headaches in this negotiation process. Is that the one 
you have to defend the most?
    Ms. Barshefsky. It is one of the ones.
    Mr. Miller. It is one that has to cause a lot of grief, 
because we restrict imports and we have this quota system. The 
sugar program is imploding right now, and the price of sugar 
has come down, and so the government has claimed for the past 
decades that, it doesn't cost us a dime; and now they are 
getting ready to have to buy $550 million this year alone 
according to the AP wire service. It is a huge sum of money.
    One of the options right now is buying 250,000 tons of 
sugar and donating it somewhere in the world, if we can find 
someone that would accept it. Some people might call that 
dumping.
    What would happen if we get 250,000 tons of sugar with the 
idea to prop up local prices in the United States, and we 
donate it elsewhere in the world? What does that do for your 
negotiating ability and the Europeans' and everybody else's? We 
yell about dumping.
    Ms. Barshefsky. First of all, food aid, if it is considered 
food aid, is typically considered sort of in a separate 
category, because you are not in the ordinary course of trade. 
You are not considered to have fallen within----
    Mr. Miller. Donating 250,000 tons of sugar is okay?
    Ms. Barshefsky. It is probably okay.
    Mr. Miller. Our tomato people get mad with Mexico dumping 
tomatoes in the United States, so I see the argument about 
dumping. It seems like, if we are going to donate that much 
sugar somewhere in the world, we are going to have a hard time 
arguing against Mexico dumping tomatoes in the United States.
    It puts us in an indefensible situation, don't you think? 
You have a tough job.
    Ms. Barshefsky. I have a tough job. It is a tough job.
    Let me say this: We are happy to develop negotiating 
proposals in concert with everyone. I think in this particular 
case, Europe has never complained about our sugar program. Our 
ability to deal with European agricultural export subsidies----
    Mr. Miller. What about Australia?
    Ms. Barshefsky. Even Australia. The focus of most 
countries--by ``most,'' I mean of 135 countries--the focus of 
130 of the 135 countries is on European agricultural export 
subsidies and European domestic supports. That is the focus. 
That is the single largest distortion in global markets.
    You don't have----
    Mr. Miller. In the United States, isn't sugar one that 
really stands out as a worst case? For a country that believes 
in the market system, we don't have one in sugar. We prop up a 
price that is three times the world price. We are losing jobs 
in this country because Canada is one-third of the price here, 
so our users go to Canada, just to try to prop up our prices.
    Another thing that is going to happen, come October 1 under 
NAFTA, Mexico gets to send another 250,000 tons. Is that on top 
of what is allowed in the country already, do you know offhand?
    Ms. Barshefsky. Let me get back to you on that.
    Mr. Miller. Another problem is this quota system under 
sugar. Every time you give certain quotas--the quotas were set 
decades ago--it is like the Dominican Republic gets a big 
quota, but South Africa doesn't get hardly any quota because it 
was set back in apartheid times. How do we deal with that? It 
is not fair for South Africa, or sub-Saharan Africa, who wants 
to sell more sugar.
    Ms. Barshefsky. Certainly the allocations to countries may 
be something looked at again in the agriculture talks, because 
for some countries those allocations represented conditions of 
trade that changed radically since the time. But right now we 
are bound by those allocations under WTO rules.
    Mr. Miller. Let me switch.
    You set the import quotas, and you are required by law to 
set them by October 1. Last year you didn't get them set until 
mid-November, and it caused havoc with the refiners and such. 
What was the cause of that and is it going to happen again this 
year?
    Ms. Barshefsky. We had some delay, as I understand it. We 
don't set quotas until USDA gives us the figures on the 
allocation that is appropriate for that quarter. Then we just 
apply the quotas on a basis--based on the Uruguay Round 
commitments. We were late in receiving the aggregate number 
from USDA. I am not sure why that was, because normally that is 
done on a very timely basis.
    Mr. Miller. I want to try to protect the industry from 
delaying it, because it really causes havoc. So I hope this 
year we meet the deadline set by law for October 1.
    The sugar program is an old Socialistic program that needs 
to go away and allow for a market economy. You can't keep 
propping it up. It is going to get worse. We have increased the 
production of sugar by 25 percent since 1997. Everybody is 
shifting to that, it is going to be a $1-billion-a-year 
subsidy.
    Thank you, Mr. Chairman.
    Mr. Rogers. Mr. Latham.

                           Agriculture Trade

    Mr. Latham. Thank you for that sterling endorsement.
    Ambassador, welcome. I had the opportunity to attend the 
Seattle fiasco. There were two things that happened that I 
would like your comments on.
    Number one was when, on Tuesday morning, the President here 
in Washington said that the thugs on the street out in Seattle 
should be at the negotiation table. That statement totally 
changed the whole atmosphere out there. To cower to those 
people who were in the midst of some of the worst civil 
disobedience I have ever seen is outrageous.
    Number two, we sat through meeting after meeting before we 
went to Seattle, and we were told by Mr. Scher and yourself 
that there was going to be no early harvest, that everything 
was going to be negotiated together, that we weren't going to 
separate our telecom or financial industries and agriculture 
because you know, we wouldn't have any leverage left in 
agriculture, that has been traded away. When, we got to 
Thursday night, everything else had been cut. Agriculture was 
left, and there was no leverage, nothing; the EU laughed at us 
and everything blew up.
    I would just like to know your thoughts on that. It really 
is to this point, when I think about it, my blood pressure 
raises dramatically, because what we were told and what 
actually happened were two entirely different things. When the 
President made that statement here, it just totally changed the 
atmosphere out there, and we were helpless.
    Ms. Barshefsky. Let me take the second issue first, because 
what happened was, I believe, what Members of Congress were 
told would happen in the following sense. We said from the 
beginning the centerpiece of a new round would be agriculture, 
and we would agree as sort of a unit to take agriculture, 
services, tariffs, a bunch of other issues, so you would have 
kind of a universe from which to trade, because we don't have 
that much leverage on agriculture, and the European programs 
are a big target for us.
    When the ministerial was convened, I said at the 
ministerial meeting on the first day, the litmus test is 
agriculture. If we cannot get together on agriculture, there 
will not be a round, period. We couldn't get together on 
agriculture. In other words, there was nothing else cut with 
agriculture left at the end.
    We started with agriculture; that is what we started with. 
We negotiated line by line, word by word, a text which I think 
was good for our producers; and even though Europe, Japan, and 
Korea were in the room, participated in these negotiations. 
After 6\1/2\ hours, each of them said, oh, we don't agree; no, 
we don't agree to that text.
    That was it. That is when everything ended.
    I said at that time, then we are going to call a pause, 
because we are not going to move on to other issues if we don't 
have agriculture resolved, because the centerpiece would be 
agriculture. If you are telling me you can't agree to an 
agriculture text, which we just spent 6\1/2\ hours negotiating 
in a room of 50 participants, there is no round.
    So that is what we had told Members of Congress. That is to 
say, agriculture will be the center, it will not be left out 
there hanging alone. Here, Europe, Japan, Korea said no the 
agricultural text that was negotiated. That was the end of the 
story. No round.
    Mr. Latham. What you just told me is exactly opposite of 
what we were told going in, We were told we were not going to 
negotiate agriculture in a vacuum, that we were going to use 
everything else as leverage to help with agriculture. You are 
just saying we negotiated agriculture and then we brought 
everything else in.
    Ms. Barshefsky. I am sorry, no.
    Mr. Latham. That is exactly what you said you weren't going 
to do.
    Ms. Barshefsky. I am sorry. When we said, we aren't going 
to negotiate agriculture in a vacuum, we meant the substantive 
agriculture negotiations.
    In terms of the agenda, the issue for Europe was that 
Europe would not agree to language on export subsidies in 
agriculture, and in addition, wanted a very bloated agenda. Two 
negatives; they offered nothing on the positive side.
    We offered to move toward them in exchange for movement on 
the export subsidy issue. They refused. Europe walked away. 
Europe walked away. The European Commission lost support of 12 
of its 15 member states, who said, we are not negotiating 
agriculture.
    So I believe we were completely consistent with what we 
said--completely, absolutely. Europe would trade nothing. There 
was no trade to be made.
    Mr. Latham. Without any leverage, you are exactly right. 
But there was no pressure put on them, there was no leverage 
used from anywhere else, like we were told, to bring them to 
the table. That is exactly the opposite of what you are saying 
today.
    Ms. Barshefsky. No----
    Mr. Latham. And told at the meetings we had three and four 
times a day while we were there.
    Ms. Barshefsky. Let me just say--I think there is sort of a 
fundamental misunderstanding. Let me just say that there was 
tremendous pressure put on Europe. We had every other country 
in the room with us, every other country, and we had indicated 
and signaled to Europe there were other areas as to which we 
could make compromise. But they had to say to us, we will 
accept the agriculture text negotiated. And Europe said no, 
there is nothing--no, period. No.
    So rather than--rather than sort of continue these talks 
with Europe, Japan, and Korea saying they would not take the 
agriculture text, we suspended, because in any event, you see, 
under the built-in agenda of the Uruguay Round, agriculture and 
services talks have now been initiated. We always had that as a 
backstop. We always had that as a backstop.
    The issue was, could we get a more fulsome agriculture text 
by way of an agenda. It is only an agenda, that is all it is, 
it is not the negotiation itself, could we get something more 
fulsome in the context of a round? The answer is, in Seattle, 
Europe was not prepared to go along. They simply weren't.
    Mr. Latham. Now you have a more limited negotiating area. 
When we had a broader area, we had some leverage with some 
other issues we lost that opportunity. Now we are basically 
just talking about agriculture again in a vacuum. Why would 
they change their position now?
    Ms. Barshefsky. Well, I think a couple of points. First 
off, I think Europe is rethinking somewhat where they are on 
the issue of a round. I don't think they came to Seattle 
prepared to engage in a round. I do think they are rethinking 
that position.
    Second of all, you have not only agriculture pending now, 
but services.Which covers all services, which is massive in 
size, far in excess actually of agriculture.
    Third, we are still working with our trading partners to 
see if we can rebuild consensus for the launch of a broader 
round, which would then be the subject some of these talks that 
are going on now in agriculture and on services.
    Mr. Latham. Nothing you have said today convinces me there 
is any incentive for them to negotiate anything on agriculture.
    Being there, I will tell you the whole atmosphere, Mr. 
Chairman, changed when the President said the thugs in the 
street should be at the table. It was like school was out.
    Ms. Barshefsky. Well, let me just say, I don't believe that 
that is what the President said or meant to say. The President 
was very clear when he came to Seattle that he disapproved of 
the violence.
    Mr. Latham. Yes, he revised and extended when he was out 
there. But the point he made in Washington with the people 
rioting in the street there, that they should be recognized and 
be part of the negotiations, totally blew things up.
    Ms. Barshefsky. Let me tell you what the President's 
position is.
    His position is certainly that the WTO has to be a more 
open, transparent institution. I don't think it is arguable 
that if should not be. In other words, it needs to open up 
more, it needs to be more transparent.
    Further, there needs to be a means of civil society input. 
There isn't at the OECD and some of the other multilateral 
institutions; there should be in the WTO.
    He was not in any way condoning, and he does not in any way 
condone the violence that occurred, and that he was very 
explicit about condemning. But he does believe, as a general 
matter, that the message of the peaceful protests was a message 
of inclusion and a message for greater transparency at the WTO, 
and we do agree with both of those points in general.
    Mr. Latham. We will have to see. After having been pepper-
sprayed when you get in the hotel and being locked in the hotel 
and watching the riots outside my window destroying businesses, 
I didn't see a lot of peaceful protests.
    If I may, one more question. We obviously have a real 
concern with the genetically modified seeds and products. Where 
are we with Europe? A lot of effort has gone into trying to 
resolve this issue. One of the issues at Seattle was the social 
preference portion of the negotiations, saying they preferred 
not to, that that was justifiable for tariffs and restrictions.
    Where are we? Do we have any hope for the people?
    Ms. Barshefsky. This has been a very tough issue, and we 
have worked very, very hard on it. There clearly is a kind of 
vicious cycle in Europe--governments whipping up the consuming 
population, which, in turn, whipped up the governments. You 
have this very vicious cycle, the backdrop of which in Europe 
is, in part, protectionism with respect to agriculture and, in 
part, a very strong green movement, a very strong organic foods 
movement, much stronger actually than in the United States.
    So the situation is a complicated one. Where we have 
focused at USTR--and USDA does a lot of work in this area as 
well--where we have focused is on trying to persuade Europe to 
make its approval process for bioengineered products open and 
transparent and science-based.
    Now, there are three licenses pending for biotech products 
which we had hoped Europe would grant. This was several weeks 
ago. The fear of our producers was that Europe would turn down 
these licenses; it didn't. It went back to the producers, asked 
for more information, and as we understand it, this will then 
come up again for a vote in the European Commission.
    So we are still--we have some hope. I am not overly 
optimistic, but we have some hope we may be able to get these 
three varieties approved.
    There are two other pending applications which will come up 
in the fall, I believe, mid- or late fall, and we are already 
trying to lay the groundwork for those, including with the 
producers involved, to try and maximize the chance for 
approval.
    Certainly trade policy cannot compel consumers to buy what 
they don't want to buy. But here we are talking about Europe 
not letting the products in, and that is not acceptable.
    Mr. Latham. Thank you, Mr. Chairman.

                                Seattle

    Mr. Rogers. Thank you.
    Now, about Seattle, a recently completed GAO study 
concluded that none of the ministerials' anticipated outcomes 
were met.
    Could you give us your views on what you learned as a 
result of the failure to meet the goals out there?
    Ms. Barshefsky. I think Seattle followed on a long line of 
similar meetings which we hoped we could avoid, but we didn't.
    Before the Uruguay Round was launched in 1986 there was a 
failed ministerial in 1982. We tried to close the Uruguay Round 
in 1990. That failed. Another big ministerial in 1992. That 
failed.
    We ditched the global telecom talks after most countries 
thought there was an agreement; that was in 1996. We then came 
back, got a better agreement.
    We ditched the global financial services agreement which 
most countries thought was ripe for conclusion, but we weren't 
satisfied.
    Here, as in 1982, the main stumbling block proved again to 
be agriculture. The 1982--what would have been the Uruguay 
Round in 1982 failed to launch because there was no agreement 
on an agenda for agriculture. The same problem here, same 
reason the Uruguay Round had two unsuccessful attempts to 
close; it was all agriculture-related.
    I think, in this instance, a couple of points: As a general 
matter, countries, particularly Europe, were not ready to make 
the political leap at Seattle, for whatever internal reasons, 
for whatever other reasons. I do think in the future one has to 
be sure that the preparatory work is adequately conducted. The 
Geneva process conducted by the WTO did not produce a usable 
text, so that in Seattle we had to start from scratch. This is 
exactly what happened also in 1982 and in 1990 with similar 
failures.
    So I think there has to be a much closer handle by the WTO 
on the preparatory process and how that is conducted, and then 
I think that will result perhaps in a better outcome. But at 
the end of the day--at the end of the day, countries just 
weren't prepared to take the leap.
    Mr. Rogers. Well, should we have anticipated that a little 
earlier and canceled the meeting or postponed it before things 
came to a head?
    Ms. Barshefsky. I think it was not realistic to cancel, 
since funds had already been committed, contracts had already 
been signed, which would make that very, very difficult to do. 
I do think--and this has been my experience now in 300 trade 
agreements--you often don't know if you have a deal, regardless 
of the amount of planning, until you get in the room.
    This was planned for a year-and-a-half before the event 
occurred. Geneva didn't produce a usable text, but most 
delegations had met on a very routine basis, privately. You 
figure out, there is a jigsaw puzzle in these things, you know 
where every piece fits, but sometimes--I think in all 
instances--you never really know if an agreement is going to be 
reached until you get in the room and you see that the other 
side is as serious as you are. In this instance, the pressure 
of being in the room simply did not produce an agreement.
    Mr. Rogers. What is next? Is there another ministerial 
scheduled?
    Ms. Barshefsky. There is not. The built-in agenda of the 
Uruguay Round on agriculture and services was launched in 
Geneva. We are still working with our trading partners, first 
among the quad group, with Canada, Europe and Japan; but also 
beyond--Egypt, India, Brazil, a number of countries--to see if 
it is possible to rebuild consensus for the launch of a round.
    I can't give you a time frame on that except to say that I 
think countries do not wish to see a vacuum develop, and 
countries plainly are in the process of rethinking the 
negotiating positions they brought to Seattle, and that is to 
the good. Whether that will result in an early relaunch or not, 
I can't tell you.
    Mr. Rogers. Now, back to China and the WTO a minute.
    Even if China pledges to take a whole host of steps to gain 
entry into WTO, what reason is there to believe that China will 
follow through on those promises once it becomes a member, when 
we all know in the past they have not lived up to the promises 
they have made heretofore?

                         Intellectual Property

    Ms. Barshefsky. I think that while their record on 
compliance is mixed, it is certainly no worse than most of our 
other trading partners. If I take intellectual property rights 
as an example, we negotiated two agreements with China to force 
them to seize the exportation of pirated CDs and CD-ROMs. They 
no longer export pirated CDs and CD-ROMs. The objectives of 
that agreement--you can speak to the industries involved in 
that, the copyright industries--absolutely were met.
    We have a retail piracy problem in China now, something of 
the law of unintended consequences. We forced them to close so 
many factories, they are a net importer of pirated product from 
Taiwan, largely from Taiwan, Hong Kong, Macao, and Thailand. So 
there is an irony in that. We do have a retail piracy problem, 
and there is a series of piracy crackdowns now going on in 
China.
    But with respect to the objectives of the agreement, we 
negotiated, those objectives absolutely were met.
    Mr. Rogers. Let me get this straight. Let me get this 
straight. They are importing pirated----
    Ms. Barshefsky. CDs and other things.
    Mr. Rogers. So when you buy one now in China, even the 
promise that it is not a fake is not right.
    Ms. Barshefsky. Well, it may be a product that you are 
buying that is from Taiwan.
    Mr. Rogers. So it is a fake?
    Ms. Barshefsky. Or Hong Kong or someplace else.
    It is not unlike the retail piracy problems we have here. 
We have a tremendous retail piracy problem in this country, as 
in most countries. Piracy rates at the 50 percent level are 
considered good. Piracy is a serious problem, because it is 
such a lucrative business. So it is a very popular business, 
unfortunately.
    Mr. Rogers. Let me ask you now, do you plan to release the 
text of the agreement that we have negotiated with China?
    Ms. Barshefsky. We already have. Yes, sir, we already have.
    Mr. Rogers. To the public?
    Ms. Barshefsky. Yes. We already have done that, sir.
    Mr. Rogers. Now, last year you mentioned that many WTO 
members anticipate that China and Taiwan would enter WTO 
simultaneously. Do you believe that still to be the case?
    Ms. Barshefsky. I think the expectation would be China 
would enter first, followed by Taiwan.

                            WTO Transparency

    Mr. Rogers. Talk about WTO transparency.
    Ms. Barshefsky. Yes.
    Mr. Rogers. The World Trade Organization, by its very 
nature, arouses suspicions here because it is an international 
body making decisions that directly affect U.S. trade policy, 
and some fear, the exportation of control over our economy.
    One of the issues that affects how WTO is viewed here is 
how open and transparent its proceedings are. Everyone is in 
agreement that it needs to be made more open, accessible, 
transparent, and open to the world, as you say in your 
statement.
    Last year, you told us that you agreed that dispute 
settlements should be more transparent and open to the public. 
What steps have we taken to open up WTO, and what steps still 
need to be taken?
    Ms. Barshefsky. We just put a document on the table--
actually, I announced this yesterday--going through a series of 
steps we want the WTO to take with respect to making documents 
more available, with respect to further symposia and 
consultations with various interest groups; with respect to 
using the Internet more fully; with respect to broadening the 
range of meetings and events that will be open to the public; 
with respect to internal improvements, how the WTO functions 
internally among the members; and then also recommendations 
with respect to the dispute settlement process, to open panel 
hearings, to allow for the filing of amicus briefs, and to 
allow for the immediate publication of all the submissions 
made.
    Now, while we are supported in many of the areas of making 
documents further available, in general, even Europe will not 
support the opening of dispute settlement panels to public 
view. This is astonishing, given Europe's legal culture and the 
fact that Europe is very due process oriented and certainly 
public scrutiny oriented. They refuse, and we have gone round 
and round with Europe on this because we feel so strongly about 
it.
    We have made progress, however, with Europe, Canada and New 
Zealand on making submissions that were filed in dispute 
settlement proceedings public. In the case of Canada and New 
Zealand, those submissions will be made public, as are ours 
when we file them. The day we file them, we also put them on 
the Net.
    Europe has agreed it will make submissions public when the 
case closes. We are obviously not satisfied with that, but it 
is a first movement on the dispute settlement issues related to 
transparency that Europe has made.
    We continue to challenge our trading partners to open up 
dispute settlement proceedings to public view, in any case, in 
which we are involved. No country has as yet agreed. We are 
hoping that Canada is willing now; we think they are willing 
now to review their position on this issue, and it would be 
very, very welcome if all disputes between the U.S. and Canada 
were then open to public view.
    By ``public view,'' I mean as in any courtroom in the U.S., 
you can walk in as a citizen, you can walk in in the back of 
the room. You don't participate, but you can observe. That is 
what we mean by opening it to public view.
    But so far, as of today, none of our trading partners have 
agreed to do that. The European argument against it is that 
this would somehow disturb the government-to-government 
character of the proceedings. But this is not a gentleman's 
club anymore. This is litigation. That is what it is. You have 
a hearing, you have briefs, you have rebuttal, you have claims, 
you have counterclaims. It is litigation. It ought to be open 
to public view.
    These are not settlement proceedings or discussions of 
confidential data. This is plain litigation, protections on 
confidentiality, as in any court, can be made by the panel if 
there is some data that is business-confidential for some 
reason. But, other than that, this stuff should be absolutely 
open to public view.
    Mr. Rogers. It certainly should. What chances are there 
that that will eventually take place?
    Ms. Barshefsky. Well, I do think we will, now that we have 
broken the logjam on submissions, I think we will see more 
countries agreeing to put their submissions out for public view 
in these cases.
    I am much less optimistic in the near term on opening panel 
proceedings to public view, and I am much less optimistic on 
any short-term solution to the amicus brief issue, that is, 
allowing for friends-of-the-court, if you will, friends-of-the-
panel submissions by interested groups. So I am less optimistic 
on those internationally, at least in the short term.
    I am more optimistic on the submissions that go into 
dispute settlement being available. I am quite optimistic on 
more and more WTO documents being immediately made publicly 
available.

     Lack of U.S. Strategy to Monitor and Enforce Trade Agreements

    Mr. Rogers. Finally, let me ask you about a GAO report 
which concluded that the U.S. Government does not have an 
overall strategy to monitor and enforce trade agreements. 
Shortly after the audit work is completed on the report, the 
Administration forwarded a budget amendment for $22 million to 
fund an interagency trade compliance initiative.
    Why should we entertain such a sizable request when the GAO 
has just concluded that there is no enforcement and monitoring 
strategy in place to ensure current resources are allocated 
correctly, let alone additional resources for 2001?
    Ms. Barshefsky. I think that the President's budget request 
first of all, it is based on the fact that the agencies 
involved in his request--USDA, Commerce, USTR, State--don't 
have current resources adequately to monitor agreements within 
their own purview, let alone agreements that may have an 
interagency component. But within their own purview, we 
certainly feel that, acutely, putting aside interagency 
coordination, we have statutory responsibility for a variety of 
agreements we negotiate and we need the resources adequately to 
monitor them.
    I think that the interagency coordination on monitoring and 
enforcement is better than what it used to be, but I think it 
needs still to be significantly improved. That work can readily 
proceed simultaneous with the President's budget request moving 
through the Congress.
    Mr. Rogers. Mr. Serrano.
    Mr. Serrano. Just following up on the issue, I agree with 
both you and the chairman that these meetings should be open to 
the public, but there are a lot of communications between 
governments that even members of the government don't know 
about. Members of Congress don't know about a lot of contacts 
that take place between our government and other governments.
    Ms. Barshefsky. Right.
    Mr. Serrano. Why would these contacts, if you will, be 
different?
    Ms. Barshefsky. Because these are not contacts; this is 
litigation.
    For example, we allege that a European producer is 
subsidizing the sale of widgets. Typically, the complaint is 
brought to us by a private widget maker in the United States. 
We realize, under WTO rules, there may be a violation. Parties 
cannot litigate directly in the WTO, you have to go through 
your government; so we take on the litigation.
    But the issue is widgets. It is a litigation before a 
panel, a dispute settlement panel. You file briefs, there is 
oral argument, and there is an appellate procedure before an 
appellate body. So this is classic litigation.
    Now, the two litigants are governments, because that is the 
way the system works. But the underlying claims are claims 
related in most instances to private parties. There is no 
reason this shouldn't be open to the public.
    Mr. Serrano. I notice the person keeping our record did 
look at you when you said ``widgets''--if he knew how to spell 
that.
    Just one last question. What big ``e-issues''--with all 
this technology worldwide, one of the issues in trade--do you 
see and are we dealing with?
    Ms. Barshefsky. The biggest issue in trade is not to do in 
e-commerce what we did in the case of goods trade. If you look 
at trade policy the last 55 years, ever since the creation of 
the multilateral trading system in 1947, all we have been 
doing--for example, in the area of tariffs--is undoing what 
government policy imposed during the Smoot-Hawley tariff acts. 
We are still reducing tariffs that were hiked in the period 
between World War I and World War II, and which only started 
coming down after World War II when it became clear what a 
disaster the economic policies, the protectionist policies, 
were in the intervening periods between World War I and World 
War II.
    E-commerce is sort of this pristine environment. You tend 
not to have--right now you have no tariff barriers. Standards 
barriers are, so far--not yet a problem. It is a pretty open 
environment. You want to keep it that way.
    So, first off, we embarked on a duty-free cyberspace 
initiative in the WTO, which is a moratorium on the part of all 
WTO members from imposing Customs tariffs on electronic 
transmissions on the Net. So no one--no one does the tariff 
equivalent of what Smoot-Hawley did in goods in the 1930s by 
upping tariffs. No one does that.
    There are no Customs duties on electronic transmissions on 
the Net.
    We also have opened up telecom trade dramatically, and the 
provision of telecom services through international agreement, 
and we want to expand those agreements, because you want people 
to have access at cheap rates, very low interconnection fees. 
So you disseminate the technology and you defuse the spread of 
the technology.
    So we have undertaken efforts of that sort. In addition, we 
have created a duty-free situation with respect to all 
equipment associated with the Net. Phones, faxes, modems, 
display screens, integrated circuits, semiconductors, all of 
that is duty free around the world. So we are not taxing the 
creation of networks, if you will.
    These are all things we spent a lot of time on because we 
are really moving into a new kind of economy. Right now, we 
think of e-commerce as a subset of a good or a subset of 
services. I think they are going to incorporate goods and 
services. Those goods and services will be subsets of e-
commerce at the rate we are going. It is a very different 
world.
    So the key point here is, as a trade policy matter, defuse 
the technology, make it as readily available as possible by 
keeping barriers low, not impose Customs duties on electronic 
transmissions, and keep the environment as productive and as 
vital as possible.
    Mr. Serrano. One last quick question, Mr. Chairman.
    We are known worldwide--and thank God for this--as a 
country that can feed its people. But what percentage of the 
food we consume do we import and is that because it is things 
we can't produce here or grow here?
    Ms. Barshefsky. No. Of course, a lot of our imports in 
agriculture are seasonally based--strawberries in the winter, 
things of that sort. But let me get--I don't know the answer to 
your question offhand. Let me get for you what we do import in 
terms of agriculture and whether those----
    [Clerk's Note.--Subsequent to the hearing, the following 
information was provided:]

    The United States imported 4.5% of our food in 1999, $38 
bilion of food and agricultural products imported in 1999 and 
$848 billion in food and beverage expenditures. Many of the 
products we import are not in competition with U.S. products, 
either because we do not produce them at all or we produce tham 
only in certain seasons. Non-competitive imports are 
significant at 21% of total imports and include such items as 
tea, tropical spices, and cocoa. There are also many products 
in which the United Staets is both an importer and an exporter 
such as wine and beef, due to consumer preferences for specific 
attributes.

          U.S. AGRICULTURE IMPORTS FROM THE WORLD, CY 1997-1999
                        [In billions of dollars]
------------------------------------------------------------------------
                                       1997         1998         1999
------------------------------------------------------------------------
Competitive......................         26.9         28.1         29.9
Non-competitive..................          9.4          9.0          8.0
                                  --------------------------------------
      Total......................         36.3         37.1         37.9
------------------------------------------------------------------------
Source: USDA, Economic Research Service Imports: Foreign Agricultural
  Trade of the United States. http://www.econ.ag.gov/db/fatus/
  Expenditures: http://www.econ.ag.gov/briefing/foodmark/expend/data/
  data.htm.

    Mr. Serrano. We are still basically a country that feeds 
itself, right?
    Ms. Barshefsky. Yes. We are a net agricultural exporter. We 
export about one-third of everything we produce. But we do 
import in agriculture as well, and let me get you those 
figures. But, yes, we produce far more, far more than we 
consume in every area. There is no area where we don't, unless 
we just don't grow it in the U.S. at all.
    Mr. Serrano. Okay. Thank you.
    Mr. Rogers. Madam Ambassador, thank you for your testimony 
today and your time. We wish you well. This is probably the 
last opportunity we will have to host you before the 
subcommittee. But you have had a good run. You have always 
leveled with the subcommittee and been above board and 
transparent with us. That is a great compliment. We wish you 
well in the balance of this year and in the future.
    Ms. Barshefsky. Thank you so much, Mr. Chairman. It has 
been a great pleasure working with you.
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                                           Thursday, April 6, 2000.

            NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION

                               WITNESSES

D. JAMES BAKER, PH.D., UNDER SECRETARY AND ADMINISTRATOR FOR OCEANS AND 
    ATMOSPHERE
SCOTT B. GUDES, ASSISTANT SECRETARY AND DEPUTY ADMINISTRATOR
JOLENE LAURIA SULLENS, DEPUTY CHIEF FINANCIAL OFFICER/DIRECTOR OF 
    BUDGET
    Mr. Rogers. The Committee will be in order. We are pleased 
to welcome Dr. Baker, again, of the National Oceanic and 
Atmospheric Administration. He is appearing on behalf of the 
fiscal year 2001 budget request.
    This year's request presents a very, very ambitious agenda 
proposing a total of $2.9 billion, a 20-percent increase over 
current year. The job ahead of us is to get you to tailor the 
needs to the budget realities that we are facing again this 
year. And that will be the focus, I suspect, of our spring.
    Mr. Serrano.
    Mr. Serrano. Thank you, Mr. Chairman. I also want to 
welcome Dr. Baker. As you said, these are difficult budget 
times. But we are here to try to help, and we are very much 
interested in your testimony.
    Mr. Rogers. Thank you. We will make your written statement 
part of the record, and we invite you to summarize it for us.
    Dr. Baker. Thank you, Mr. Chairman. I appreciate the 
opportunity to be here to testify on our 2001 budget. We 
continue, thanks to this Committee, to be a world leader in 
weather and climate research and forecast, environmental 
monitoring and research, fisheries management and sustainable 
use of the coast.
    We want you to know that this Subcommittee and the support 
that you have provided in approving investments in these key 
areas have helped us maintain that lead. Our request this year 
is predicated on the need to ensure continued delivery of 
essential science, technology and services to the Nation. It 
also allows us to perform an essential role in a number of 
departmental, interagency, presidential and congressional 
initiatives.
    These initiatives constitute a request in natural disaster 
reduction of $110 million to provide technological assistance 
aimed at reducing the impact of natural hazards arising from 
severe weather or geophysical activity that actually threatens 
lives, property and the stability of local and regional 
economies throughout the United States. A large and diverse 
group of partners continues to depend on NOAA and the 
Department of Commerce to provide leadership to reduce the 
costs and risks associated with these natural disasters. Our 
Climate Services Initiative is $28 million. It represents a 
fundamental change in the activities of NOAA to add to climate 
observations and data management.
    Another priority program for us relates to our 
infrastructure needs for our satellite operations. An advance 
appropriation of $15.2 million is requested to be available in 
October of 2001 to construct a new satellite operations 
facility. This facility is needed to address the severe 
environmental deficiencies in our Suitland facility resulting 
from an asbestos contamination and general age-related 
deterioration. This advance appropriation supplements the 2000 
final appropriation amount of $2.7 million that is providing 
the necessary funds to initiate facility planning and design 
process.
    We have a Lands Legacy Initiative that addresses some of 
the most serious challenges facing U.S. coasts and oceans. We 
are requesting here $263 million in order to continue many 
critical environmental programs, including the National Marine 
Sanctuaries, our National Estuarine Research Reserves and the 
33 Coastal Zone Management States.
    The budget request includes funds that help States address 
polluted runoff and other problems related to increasing 
populations that stress coastal regions. There are also 
resources to maintain and protect our critical estuaries, map, 
monitor and protect fragile coral reefs and to implement the 
recommendations of U.S. Coral Reef Task Force. In addition, we 
are asking for funding to assist the recovery of threatened and 
endangered coastal salmon and provide grants to coastal States 
with existing off-shore oil and gas production to protect and 
sustain use of coastal resources.
    We have a Clean Water Initiative, and we are requesting an 
increase of $7 million to support that. Implementation will 
help coastal communities deal with polluted runoff, which is 
now the major source of coastal water pollution and one of the 
major factors associated with outbreaks of harmful Algal Blooms 
like Pfiesteria and the spread of hypoxic zones in the U.S. 
coastal waters. Approval of this request will strengthen and 
enhance critical research monitoring and resource trustee and 
coastal management capabilities of the National Ocean Service.
    We are also working on the South Florida Ecosystem 
Restoration Initiative. We have an increase of $2 million to 
address issues related to the South Florida ecosystem 
restoration effort. It is an integrated among Federal, tribal, 
State and nongovernmental partners to halt the degradation and 
restore the function of the South Florida ecosystem.
    Finally, we have an America's Ocean Future Initiative, 
which combines and continues much of the work that we have done 
in the past on ocean and resource protection initiatives. We 
have a requested increase of $51 million to continue the focus 
on those actions to explore, protect and restore America's 
vital ocean resources.
    As part of the Commerce-wide effort, we also request $17 
million to continue joint educational training relationships 
with a consortium of minority-serving institutions. These 
efforts will not only result in the education of new marine, 
atmospheric and environmental scientists, but also assist 
coastal communities in the development of new business and 
environmental engineering alternatives to support sustainable 
economic development.
    In conclusion, Mr. Chairman, our highest priority continues 
to be to ensure that critical services are provided and that 
employees are given the support necessary to meet their 
personal career goals, as well as the NOAA mission.
    I would like to take this opportunity to applaud one of our 
scientists, Dr. Susan Solomon, who was recently awarded the 
National Medal of Science. We believe that our budget is 
investment for the 21st Century. We thank you for the 
opportunity to appear. We are pleased to answer questions.
              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 

                         NOAA PROGRAM INCREASES

    Mr. Rogers. Well, thank you, Dr. Baker. There are numerous 
problems in your budget proposal that we will have to work 
through because it calls for an increase of some $490 million 
at a time when it looks like our Subcommittee's allocation may 
be 4 percent below a hard freeze unless things improve.
    Fourteen million dollars that you ask for in navigation 
fees as NOAA's share of a Coast Guard fee on navigation and 
vessel traffic services that has been proposed and rejected 
three times now; a fishery management fee system of $20 
million, proposed four times in the last 7 years, rejected by 
the authorization committees; a $102 million enhancement to an 
unauthorized program for Pacific salmon recovery for grants to 
four States and tribal communities--we funded that program this 
current year for 1 year only, and yet you come back to us still 
without an authorization; a $106 million increase over a $64-
million Coastal Zone Management program. That is a 60 percent 
increase over current year. Again, no authorization for the 
program. And on top of this Coastal Zone Management request, 
you are requesting another $100 million for another CZM-type 
program to provide grants to coastal States to implement their 
CZM plans.
    I am not sure where we should begin here with these huge 
increases, most of which have been rejected in the past in 
terms of fee generation. Where can we start?

                          NOAA FEE COLLECTIONS

    Dr. Baker. Mr. Chairman, we have worked in the 
Administration on this fee issue. I think we have passed on 
this message to our leaders about the fact that we have 
legislation prohibiting us, in fact, from collecting fees in 
navigation, and yet we have been told to include that fee. So 
we have it there.
    I think that the view of the Administration has been that 
those who use natural resources should pay part of the costs of 
managing them, and so those numbers are included in our budget. 
But I want you to know that your very clear message to us both 
on navigation fees and on fisheries fees has been passed on to 
the Administration, and I regret to say that we continue to 
have those added in our budget in spite of the congressional 
direction.
    Mr. Rogers. I gather you did not request that of OMB in 
your budget submission.
    Dr. Baker. I think we felt that the Magnuson-Stevens Act 
does allow us to collect some fees, and we are collecting some 
fees there, and we have operated within the congressional rules 
there. And as I say, that is not something that we requested, 
but it is a view of the Administration that there should be 
some sharing of the cost of use of natural resources, and that 
is what you see reflected in our budget.

                 NATIONAL WEATHER SERVICE MODERNIZATION

    Mr. Rogers. I remember in the eighties when we were dealing 
with NOAA, this Subcommittee started working at that time to 
fund a massive modernization of the National Weather Service 
and a great deal of money has been invested, and I have to say 
successfully, to achieve a more uniform Weather Service across 
the Nation, by improving forecasting, providing more timely and 
reliable predictions of severe weather and flooding, and no 
doubt saving many lives. Have we achieved, do you think, the 
intended results at this stage?
    Dr. Baker. Yes, sir, we have. And I appreciate your 
personal involvement in the modernization of the Weather 
Service and your help particularly with the Advanced Weather 
Interactive Processing System (AWIPS)and the caps that were 
placed on that program. It was very helpful from a management 
standpoint. I can give you many examples, but I think the best 
was just last year, in the first week of May, when we had a 
series of very devastating tornadoes hit Oklahoma City and the 
surrounding areas. We used every piece of the modernized 
Weather Service to provide warnings that range from 15 to 30 
minutes. Only 34 people died there. It would have been closer 
to several hundred if we had not had the modernized Weather 
Service and all of the pieces in place. We can see this every 
day, what we have achieved, in terms of the Weather Service, 
from the satellites to the new computer systems to the 
automated weather systems. And we appreciate very much the 
support of Congress in helping guide that program and put it in 
place.
    Mr. Rogers. In your 2001 budget submission, you are asking 
increases totaling $53.2 million for National Weather Service 
operations, pay and inflationary costs, operation and 
maintenance costs, new weather radios, new weather radars. We 
have been upgrading Weather Service capabilities for many years 
through this Subcommittee. How much longer are we going to have 
to see these enormous increases in the Weather Service?
    Dr. Baker. Mr. Chairman, I have to be honest about this. I 
think you are going to see us come back each year asking for an 
increase in the Weather Service. There are two reasons for 
that: One is that we all got into trouble in the early nineties 
when we were not funding, and this was really joint, not 
funding the base operations of the Weather Service. And I came 
back to you, and I said we have a problem with funding that, 
and you were able to help us work that. We have to fund the 
base operations of the Weather Service. We have to continue to 
fund the increases in salaries if we are going to do that.
    But I think one of the things that we are funding is, as 
population grows and there is a higher standard of living, our 
society is more vulnerable to weather. And as we get more 
vulnerable, we need to have better weather forecasts. And the 
increases that we request are the ones that we think are the 
necessary ones to give you that improved weather forecast. Now 
maybe not all of that is something that can be funded at any 
one time. But we think that as we go forward, the improved 
weather forecasts are the place where it is the best investment 
that we can make for improving our society in terms of putting 
people out of harm's way.
    Mr. Rogers. How much of this $53.2 million increase are for 
base requirements as opposed to enhanced capability?
    Dr. Baker. In terms of adjustments to base, it is about $15 
million. This is the cost of increased salaries. In order to 
continue our Weather Forecast Office maintenance and repair, 
that is a couple of million dollars. Our operation and 
maintenance of our radar and our Advanced Weather Interactive 
Processing System, it is about $7 million. The total base 
funding is about $34 million.
    Mr. Rogers. Well, the likelihood is we will not be able to 
fund all of those increases. So we need to talk to you about 
your absolutely essential list, and perhaps that is a 
conversation we can continue over the next few weeks or months 
even. Would you be willing to talk with us about prioritizing 
the increases that you have asked?
    Dr. Baker. Absolutely, Mr. Chairman. And as I say, our 
highest goal is to make sure that we are providing the best 
possible weather service and continuing our current services. 
And so we are very happy to sit down with you and work that out 
within budget constraints.
    Mr. Rogers. Well, we know that most of them are legitimate 
requests, and in a perfect world perhaps we would fund all of 
them or most of them. But this is not going to be a perfect 
world this year, budgetwise, and we are interested in seeing 
that your most important priorities are addressed, and you can 
do that now or you can do it for the record or at a later time.
    Dr. Baker. Let me just say a couple words about that. As I 
said to you when we met before, our highest priority is to make 
sure that we are paying for our people, that they are in safe 
facilities and that they have the tools they need to do their 
job right. And as we go through and make priorities, given the 
budget constraint, that is something that we will do. And as I 
said to you also, our highest priority is to make sure that we 
have sufficient funding to operate our weather and satellite 
service so that, in fact, we are providing the kinds of 
services that we have done before.
    As you know, we are also a major player in the 
administration's Lands Legacy Initiative. And as we work 
through the budget process, we hope we can get some support in 
that area also.

                        AWIPS Build 4.2 and 5.0

    Mr. Rogers. Well, the linchpin of the National Weather 
Service modernization, the so-called AWIPS program, has 
encountered big cost overruns and delays. We had to cap AWIPS 
spending for AWIPS 4.2 to get it under control. The final cap 
was $550 million through AWIPS 4.2. That has been fully 
deployed, I understand, at 152 sites now, correct?
    Dr. Baker. Yes, sir.
    Mr. Rogers. Now the big increases are for operation and 
maintenance in 2001, $6.68 million, for a total of $38.6 
million. As of February 29th, I am told you have only spent 
28.7 percent of operations and maintenance that we gave you in 
fiscal year 2000.
    How is AWIPS coming along now?
    Dr. Baker. AWIPS is working beautifully. All of the 
promises of the AWIPS program have been delivered. It has cost 
us more than we originally planned. It took a longer time to 
put in place, but at every point the program actually delivered 
the technical specifications that were required. And so I can 
tell you that that is a program that actually is providing the 
weather forecaster with the tools that he or she needs in order 
to do this job.
    Mr. Rogers. Are we still on track with 5.0 AWIPS?
    Dr. Baker. We have a proposal to fund the second year of 
this Build 5.0, and that is on track at the moment. This is 
improving our tornado lead time and also allowing us to reduce 
the number of people we have at our offices. We should be able 
to reduce by about 70 people.
    Mr. Rogers. Just for the record, can you briefly describe 
what 4.2 and 5.0 are?
    Dr. Baker. Let me ask Jack Kelly to give you a summary of 
that, Mr. Chairman. Jack Kelly, the director of the Weather 
Service.
    Mr. Kelly. I am Jack Kelly, director of the Weather 
Service. Could I talk about what 5.0 adds? 4.2 is the basic 
software that allows the forecaster to manage the data, quite 
frankly, I will say create order out of the chaos of all of the 
information and the data that is given to them. But what 5.0 
will allow us to do is, first of all, put more radar data on 
AWIPS. Let us use the Dallas-Fort Worth tornado we saw two 
weeks ago. We had about 8 minutes of lead time before the first 
tornado. We know that we have software that if it were 
available to the forecasters, they would have had better 
precursor information on the onset of that tornado, and we 
believe we would have had more lead time for the tornado than 
the 8 minutes that we----
    Mr. Rogers. How much more time do you figure?
    Mr. Kelly. Pardon?
    Mr. Rogers. How much more time?
    Mr. Kelly. A couple of minutes. And a couple of minutes 
when you are talking about 8 minutes versus a national average 
of 11 is pretty significant with tornadoes. It will also allow 
us to put more data through our satellite broadcast network 
that provides data to the forecast offices. It will also get us 
off of, as you correctly said, Mr. Chairman, in the beginning 
days of the AWIPS program, there were some management 
challenges and some decisions were made that, quite frankly, I 
wish would not have been made, but nonetheless were made.
    We have some proprietary software in there. We want to get 
off of proprietary software. Proprietary software is going to 
cost us more money in the long run to maintain. 5.0 will get us 
out of that proprietary software environment. It will also 
allow us to data compress some of the radar data so we can get 
more radar data out to the field offices. And it will also 
improve the model that we are using for flash flooding. That is 
all with 5.0, and 5.1, and 5.2 will add more.
    The 5.0 software is at PRC right now being integrated. So 
we are on track for the 5.0 development.
    Mr. Rogers. And that completion date was September of 2002. 
Is that still a go?
    Mr. Kelly. I have got to double check, but I believe that 
is still a go. The last briefing I got, all of it is on 
schedule. We have three delivery dates for 5.0, 5.1 and a 5.2. 
5.0 is on schedule.
    Mr. Rogers. And is that September 2002 a completion date?
    Mr. Kelly. Let me double check.
    Mr. Rogers. All right.
    Mr. Kelly. Yes.
    Mr. Rogers. It is?
    Mr. Kelly. Yes, sir. 5.0 will come out in February of 2001, 
5.1 we are projecting in December of 2001, and 5.2 in October 
of 2002. That is the three phases of the AWIPS Build 5 plan.
    Mr. Rogers. And will that then end that particular 
improvement?
    Mr. Kelly. Yes, sir. To echo what Dr. Baker said, the 
question really comes down to we get told by the citizens of 
this country that they want improvements. The systems that are 
going to do it are AWIPS and NEXRAD. And so I think, quite 
frankly, the Administration supports it. You will see us always 
trying to come forward and ask for adequate capability in terms 
to improve the product and services that we put out.
    Mr. Rogers. Any further problems or concerns that we should 
know about, about the buildup?
    Mr. Kelly. I can assure you we are watching it closely. In 
software, I do not know of any problems that we cannot manage 
now. But quite frankly, I monitor it like a hawk, and every 
time you deal with software, you run into the potential of 
having problems. But I do not foresee any problems that we 
cannot solve.
    Mr. Rogers. How much do you anticipate the operations and 
maintenance costs on that system on AWIPS will be?
    Mr. Kelly. About $38.6 million is in the budget. So what I 
am trying to do is answer your question. Do you think it will 
go beyond what is in the budget?
    Mr. Rogers. Yes, I guess that is my bottom line.
    Mr. Kelly. Of course, one of the dilemmas we always have is 
when we put a budget together, convincing people what it is 
going to cost to maintain the software. Since we did not have 
the whole system deployed, people were skeptical. And the 
previous budget amounts that came up here were less than I 
would have liked to see. So now we are trying to catch up. With 
that system deployed, we have got relevant experience on what 
is costing to maintain the software. I think that is what it is 
going to cost us.
    What we are also trying to do is find ways to decrease that 
maintenance cost, which is why we want to go off of proprietary 
software. We also want to reduce our reliance on PRC and use of 
government people to do it. But that number seems about 
correct. What we are going to try do though is reduce it, if we 
can.
    Mr. Rogers. How much have you spent on Operations and 
Maintenance this year and how much do you plan to spend next 
year?
    Mr. Kelly. Let me get my charts.
    Mr. Rogers. All right.
    Mr. Kelly. On the labor side, through the 29th of February, 
we were about 35 percent of the plan obligated; on the nonlabor 
side, about 28.7 percent. That is through the 29th of January, 
which is the last set of charts I have.
    Mr. Rogers. Do you see much of a change from that in 2001?
    Mr. Kelly. In terms of what percent of it we have obligated 
and the pace that we are obligating it or the aggregate 
dollars?
    Mr. Rogers. Aggregate dollars if you have it.
    Mr. Kelly. In 2001, what is in the budget is what we think 
we will need to spend on it.
    Mr. Rogers. Now, we have to anticipate the outyear costs of 
AWIPS. What do you think it is going to run us in the future 
years?
    Mr. Kelly. Accompanying the budget are outyear projections. 
I think those numbers are reasonable on the Operations and 
Maintenance costs for AWIPS.
    Mr. Rogers. Mr. Serrano.
    Mr. Serrano. Thank you, Mr. Chairman.

                     FY 2000 Emergency Supplemental

    The Administration's request, Dr. Baker, for the fiscal 
year 2000 emergency supplemental included a total request of 
about $50 million for NOAA. The House-passed bill provided 
$19.4 million in emergency funds for NOAA to address fishery 
issues resulting from last summer's hurricanes on the East 
Coast and to address a recent disaster impacting the lobster 
fishery on Long Island Sound.
    Now we hear that the Senate majority leadership has decided 
that this supplemental bill is not such an emergency after all 
and that these requirements can be addressed in the regular 
2001 appropriations process. What will this delay cost and what 
impact will it have on the fisheries that we should know about?
    Dr. Baker. Mr. Serrano, we had a number of items, as you 
know, in the emergency supplemental ranging from impacts of the 
hurricanes to lobster, groundfish, a whole set of issues. And 
these are things that will simply not get addressed. They have 
been identified by their own communities, by fishery management 
councils as the highest priority. If, for example, repairs to 
laboratories, repairs to communities, fishery management plans 
that have to be drastically changed because of what had 
happened, what will happen if we do not have the emergency 
supplemental? We consider this to be emergency funds and a very 
high requirement. We will have to go back into our existing 
programs and do the best we can to try to find some support for 
it.
    This is a high priority for us. That is why we identified 
it as emergency.
    Mr. Serrano. Now, you are saying that these requests came 
to you from localities and from the councils you said, from the 
local councils?
    Dr. Baker. We have a whole variety of inputs for the needs 
for the emergency supplemental, but they almost all come either 
from our fishery management councils, from our own 
laboratories, and from local communities looking at what needs 
to be done and asking for additional support. In many cases, 
they have already found some support from their own states; for 
example, in North Carolina.
    Mr. Serrano. Well, but here is my problem: I asked you the 
question because I thought that this was a major problem, and 
now I get a sense from you that these folks can handle this on 
their own. But what has been presented to us was presented as a 
major problem.
    Dr. Baker. I did not mean to leave that impression. What I 
am saying is the communities have come to us and say these are 
major problems. We need your help. That is how we have 
identified the problems. In some cases I think there were one 
or two cases where the State was willing to come up with some 
funds. I think in North Carolina they were able to come up with 
some funds, and we were able to reduce the request that we had. 
In fact, we did that.
    But the fact is that the funding that we are requesting 
here is the highest priority funding for emergencies. And as I 
said, if we do not get an emergency supplemental, we will have 
to look back into our program funds to find a way to get that 
money out to the communities.

             Supplemental Request for West Coast Groundfish

    Mr. Serrano. Now, another area for which you requested 
supplemental funding was to address the West Coast groundfish 
fishery disaster declaration. The House did not provide funding 
in the supplemental bill for this purpose. But we have heard 
from many members representing fishermen in California, Oregon, 
and Washington as to the severe impact of the decline of this 
fishery.
    Would you detail what has happened since the Secretary's 
determination concerning West Coast groundfish, and tell us 
what the next steps are and the time frame associated with each 
step? Also how urgent is the request for funding and what might 
be the impact of not getting the funds in fiscal year 2000?
    Dr. Baker. This is a very important subject. And I would 
like to ask our associate director of Fisheries to address 
that, and we can also provide additional information for the 
record for you. This is Andy Rosenberg, our associate director 
of Fisheries.
    Dr. Rosenberg. The West Coast ground fishery is a major 
problem. There has been very large reductions in the quota 
available to fishermen in Oregon, California and Washington, as 
you noted, of an order in some species of 80 percent. We have 
continued to do cooperative research with the industry, where 
we are actually working with them providing some funds to use 
industry vessels to do that research.
    The emergency supplemental request was to provide 
assistance to the industry to further that cooperative research 
and consider working towards a buyout plan to reduce the number 
of vessels that are dependent upon groundfish, and thereby 
change the harvesting pressure on the stock as a whole. If 
those funds are not available, we will continue to do the 
cooperative research that we can with the program money that we 
have now. In the 2001 request, there is a request for an 
increase for West Coast groundfish to further that cooperative 
research.
    Mr. Serrano. Now, how much did you request in this area?
    Dr. Rosenberg. There is an increase in the 2001 request of 
a million dollars for West Coast groundfisher work, plus $2.3 
million for fishery observer programs, something the industry 
has been asking for. But the supplemental request was----
    Dr. Baker. $10.7.
    Dr. Rosenberg. $10.5 is the supplemental request; $6.2 
million for the buyout and the remainder for assistance 
programs and cooperative research.
    Mr. Serrano. Thank you.

             Supplemental Request for Vieques, Puerto Rico

    Dr. Baker, another item addressed in the supplemental, 
though not in this Subcommittee's section, is funding to 
benefit the people of Vieques in Puerto Rico in connection with 
the agreement between the President and the governor of Puerto 
Rico on Navy training on that island. I understand that some of 
the $40 million requested by the administration and provided in 
the Defense section of the supplemental bill will be used for 
NOAA-related activities. One of the authorized activities is to 
provide payments, to be determined by NOAA's National Marine 
Fishery Service to register Vieques' commercial fishermen for 
days they are unable to use existing waters due to Navy 
training activities.
    Could you tell us the process by which these determinations 
will be made and define for us the term ``existing waters.''
    Dr. Baker. Mr. Serrano, we will provide the specifics of 
that in writing for you, but let me just say that we have, in 
fact, as you said, requested an increase of $1.5 million to 
compensate fishermen for economic disruptions as a result of 
the impact of Navy testing facilities. Commercial fishermen 
will be compensated for the time, which is about 90 days a year 
for 4 years, that the inner range, which is defined by the 
Navy, is off limits to artisanal fishermen due to Navy 
activities.
    The funds would be disbursed over 4 years: $250,000 in 
fiscal year 2000; half a million in 2001 and 2002; and another 
quarter of million in 2003. And we will get you the exact 
details of the shape of the space and so on.
    Mr. Serrano. I would appreciate that.
    [Clerk's note.--Subsequent to the hearing, the following 
information was provided:]

    The National Marine Fisheries Service, in cooperation with 
the Department of Defense as necessary, will work closely with 
the Commonwealth of Puerto Rico to develop the necessary 
determinations and criteria for funding for those areas 
affected by the testing. At present, we believe the most 
effective method of administrating the funds is through grants 
to the Commonwealth based on these jointly developed criteria.

    Mr. Serrano. Related to this, one of the issues that has 
always been brought up around this Navy and fishing and Vieques 
issue, is the impact of the training on commercial fisheries. 
Has there ever been a scientific assessment of the impact on 
volume? Does NOAA have the authority to conduct such a study 
and do you know of any other impacts that Navy activities 
around Vieques have had on the marine environment? Does NOAA 
plan or have the ability to address these impacts?
    Dr. Baker. Mr. Serrano, I do know that we have been working 
with the Navy on the impacts on marine mammals of Navy 
acoustics work, and we are working very closely with them on 
those issues. They have funded research, and they followed the 
rules that we have for scientific investigations.
    I do believe that we have some other activities that are 
ongoing. And let me ask Andy Rosenberg to mention those.
    Dr. Rosenberg. The other activities include looking at 
coral reefs such as they are in the area, looking at the 
possibilities for artificial reefs which would augment 
fisheries, habitat and possibly increasing other areas of 
fisheries' resources available to fishermen, looking at the 
impacts on sea turtles, which also inhabit that area, along 
with marine mammals. With regard to looking at the impacts on 
the fisheries themselves within the areas that the Navy uses, 
we work with the State and with the Caribbean Fishery 
Management Council to try to evaluate those impacts. But most 
of the data is held by the State, so we are working with them 
to try do the analysis possible to evaluate those impacts.
    Mr. Serrano. Just one last question. Is this, Dr. Baker, 
everything you just described to us concerning the Vieques 
situation, is this something that comes as a result of the 
ongoing dispute over the use of this land or is this something 
that NOAA had played a role in before and to what extent?
    Dr. Baker. This is an area that we have been working with 
the Navy on for a long time because the Navy has recognized 
that their activities have an impact on the environment and 
that NOAA has a responsibility for managing that environment. 
And so we have been working with the Navy. I think this was a 
very strong red light that we had to do something more. But we 
have had an ongoing set of activities with the Navy in a 
variety of coastal areas, looking at the impact of their 
activities.
    Mr. Serrano. Very quickly, the Navy is not seen down there 
as a friend of the community on this particular issue, 
everybody knows this. So when they have brought you in over the 
years, did they tell you what to go look at or do they bring 
you in and then you go look at whatever you have to look at? 
Because no one would believe that they would have told you to 
look at what you need to look at.
    Dr. Baker. Well, we are a science agency, and so we set the 
rules under which we are engaged. And the Navy has engaged us 
on those rules. So I think we would say that our cooperation 
with the Navy has been good in that respect.
    Mr. Serrano. Thank you, Mr. Chairman.
    Mr. Rogers. Mr. Latham.
    Mr. Latham. Thank you, Mr. Chairman.
    Welcome. It is good to see you again.
    Dr. Baker. Thank you.

                    Summer Forecast for the Midwest

    Mr. Latham. I guess my biggest concern would be for you to 
play forecaster for me and tell me about the weather in the 
Midwest this summer and the imminent drought situation that we 
are facing, if that is going to continue, and the effect of La 
Nina, those type of issues.
    Dr. Baker. Well, I can tell you that our forecasts are for 
a continued dry period in the Midwest. The La Nina will 
typically give us a dry period. And you know we have had a 
drought both in the southern States, Texas and north central 
States. That forecast, that would continue. The La Nina 
condition in the Pacific, the cold water in the tropical 
Pacific continues. There is a very large pool there. We expect 
that to last at least through the summer. At the moment, that 
is our forecast.
    It has been a long La Nina phase, almost 2.5 years. And 
once again we are seeing a kind of situation we haven't seen 
before in the past. In the early nineties we saw several El 
Ninos in a row. Now we have seen three La Ninas. But the bottom 
line on the forecast is warm and dry. In California, we are 
calling for what they call a bummer summer. It looks like it is 
going to be kind of wet. So that is the forecast based on what 
we know now about the La Nina and about the other long-term 
trends that we are getting a pretty good handle on.
    The drought monitor that we have as of April 4th, you can 
see where we have drought and where we have drought down here. 
And we also know that these drought conditions are very severe. 
Because they are severe, they continue; that is, normal 
rainfall will not bring you back to normal conditions.
    Mr. Latham. If we could just affect the markets today, then 
I think we'd be all happier.

                         Program Authorizations

    I had one other concern, and it comes in various bills that 
I am involved in, this one and energy and water through the 
Bureau of Reclamation and the Ag bill. You have got an increase 
I think of, what, $263 million in the Lands Legacy Initiative, 
and I think the overall request budgetwise is some over $600 
million higher than what it was. First of all, I question how 
much of this is authorized. And it would appear that we are 
just trying to go to every different area we can to try and 
bite off another chunk for the initiative and find less 
accountability I guess throughout than what I would appreciate.
    I read the statement as to where most of the money is going 
to go, but is this your priority? I mean, if we do all of this, 
we are going to have to cut some other things. We do not have 
the dollars to do all of this.
    Dr. Baker. Mr. Latham, I share your frustration in trying 
to come to grips with this set of issues. And I do not know the 
answer either. All I know is we are an agency that is trying to 
deliver a set of services like weather service and fishery 
management. That is always going to be our highest priority. 
But we also have other responsibilities, and some of those are, 
you are absolutely right, are in bills that have expired. And 
if they are not reauthorized, then we do not have authorization 
under those bills. We have had authorization in the past. Bills 
are currently pending in Congress, and we believe that 
eventually those bills will be passed, and we will have 
authorization. But these have been part of our activities.
    But what we face is a general problem of environmental 
stress on resources, communities coming to us asking for help 
under our Coastal Zone Management program or other authorities 
that we have had under existing bills, and we are trying to 
address that. We are asking for more money. To the extent that 
the Congress can provide that money, I think it will be well 
used. We have used the money well in the past. But I recognize 
that it is additional money in tight budget years, and that is 
something we will have to work out.
    Mr. Latham. I would just ask, and it is something we ask 
every agency and department that comes before us on every one 
of the Subcommittees that I sit on, was this your asking? Was 
this, when you went to OMB, is this what you asked for?
    Dr. Baker. We traditionally ask OMB and the President to 
increase the funding in our Coastal Zone Management programs 
because the communities like these programs. We have 33 States 
that are involved. They are continually saying to us we want to 
have these programs. We want to have the numbers raised.
    Mr. Latham. What was your request?
    Dr. Baker. This was the request. The request----
    Mr. Latham. To OMB for this amount?
    Dr. Baker. Both of them----
    Mr. Latham. This amount of increase?
    Dr. Baker. We are saying that because we actually have the 
things that we sent up to OMB so we can show that to you.
    The Coastal Impact Assistance Fund was not in our original 
request. The Coastal Zone Management Fund was in the original 
request that went to OMB.
    Mr. Latham. How much was that?
    Dr. Baker. The Coastal Impact Assistance Fund is $100 
million.
    Mr. Latham. Thank you, Mr. Chairman.
    Mr. Rogers. Mr. Miller.
    Mr. Miller. Good afternoon. As someone who represents a 
coastal community on the Gulf of Mexico, I have a lot of 
interest in what is happening in the marine research areas of 
NOAA in particular. I am a big supporter of all types of basic 
research the federal Government does, and I am concerned about 
funding for all of the basic research that is done in the 
national fisheries service and other areas of NOAA.
    We have gotten an increase in the total NMFS research 
funding, but the Southeastern United States' portion of that 
funding has been declining, although the total NMFS budget and 
research funding has been going up. How do you allocate the 
money by region? How is it being proposed here in 2001? And why 
is the Southeastern Region getting a raw deal?
    Dr. Baker. I did not think you were getting a raw deal. 
[Laughter.] If that is the case, we should go back and take a 
look at our budget.
    Mr. Miller. Well, NMFS Southeastern Regional funding for 
example is going down relative to other NMFS Regions, when the 
total budget goes up.
    Dr. Baker. We are certainly willing to take a look into 
that. We have paid I think a lot of attention to South Florida 
and the Florida ecosystem with our South Florida Ecosystem 
Restoration Initiative, but we are very happy to take a look at 
funding programs in the Southeast and, in fact, to see if there 
is something we can do about reversing that.
    Mr. Rogers. We get the bummer summer, and now we are 
talking about the Florida panhandlers, right? [Laughter.]
    Mr. Miller. Kentucky is not getting its fair share of 
marine resources either. [Laughter.] But my knowledge and 
understanding is the Southeastern United States, not just 
Florida, but the entire Southeast from Southern most Texas on 
the Gulf of Mexico and to the Atlantic Coast of North Carolina 
with the greatest diversity of Marine Species and habitats, are 
getting shortchanged, while the total NMFS budget and other 
NOAA research dollars are going up, and places in the 
Northeastern United States and Alaska are getting a 
disproportially large share that money. I have inserted one of 
NOAA's own charts into the record to illustrate this 
phenomenon.
    [The information follows:]
           [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 

    Mr. Miller. So I am concerned about that. It is not just 
Dan Miller. There are a lot of us from the whole region 
concerned about this trend.

              Funding for Fishing Vessel Buyback Programs

    How much money do you propose to spend both mandatory and 
discretionary on various fishing vessel buyback programs in 
2001? Can you contrast that funding for vessel buybacks with 
how much you have proposed to spend on fishing research and 
enhancement programs?
    Dr. Baker. The buyback program is about $10 million. How 
does that compare to the research money, Andy?
    Dr. Rosenberg. It is relatively small compared to the 
overall research.
    Dr. Baker. But the other----
    Mr. Miller. Fisheries research and stock enhancements, how 
is that----
    Dr. Rosenberg. Included in stock enhancement programs, the 
salmon stock enhancement program would be very small. But stock 
enhancement in other aspects, our agriculture funds, are about 
$10 million between OAR and National Marine Fisheries Service. 
The research funds are rather broader, particularly if you 
include both biological, as well as economic research. And 
there is a substantial increase in economic research in both 
sides, new money for economic research in this budget.

                        Net and Long-lining Bans

    Mr. Miller. What is your opinion about equipment bans, 
particularly the sources of Florida's net ban and the prospects 
for the proposed ban on long lining off the Gulf and Atlantic 
coast of Florida? Are these effective at restoring species?
    Dr. Baker. Let me ask my Associate Fisheries director here.
    Dr. Rosenberg. Well, the effectiveness of the net ban is 
two-fold. Of course, it affects the people who have been 
fishing with nets, but it has reduced the fishing pressure in 
the near-shore zone, particularly. Of course that is a State 
ban.
    The long lining that you are referring to addresses bycatch 
problems in the long-line fisheries, particularly for a species 
such as billfish, as well as for turtles. There are a variety 
of proposals that have come forward, and we have a proposed 
rule up now with regard to both the Gulf of Mexico and the 
South Atlantic. But the intent there is to reduce bycatch of 
nontarget species; in other words, other than swordfish and the 
targeted tuna species in those fisheries. And we think they 
will be very effective. We are working through the rulemaking 
process now towards the final, and I believe there is also 
legislation that is considering similar kinds of proposals.
    Mr. Miller. The net ban in Florida, I know it is a State 
law, but have you measured the effectiveness of that? And I 
hear anecdotal evidence all the time but do you have any data
    Dr. Rosenberg. We measure the effectiveness in terms of our 
overall stock assessments for species that are both in State 
waters and in Federal waters. In a net sense, it has reduced 
overfishing pressure on some species. Of course, there is an 
economic impact on parts of the community from doing that.
    Mr. Miller. Do I have time to ask one more question, Mr. 
Chairman?
    Mr. Rogers. Sure.

                         Coral Reef Task Force

    Mr. Miller. Your request for the coral reef research and 
how that will be disbursed, how does this relate to the work of 
the Coral Relief Task Force? And are there plans to further 
curtail or ban importation or export of coral reef species?
    Dr. Baker. The Coral Reef Task Force has put together an 
overall plan. And the funding that we have requested is fully 
consistent with the recommendations of the Coral Reef Task 
Force: the mapping, the monitoring, the research functions. And 
it is my understanding that we are working on legislation on 
the banning of the importation of coral and coral products.
    Mr. Miller. So such a ban would require legislative action?
    Dr. Baker. I think that is where we are at the moment, yes.

                             Shark Research

    Mr. Miller. I am pleased that Secretary Daley took actions 
which curtailed overfishing of the spiny dogfish, which is a 
small species of shark. Because of their slow reproductive 
rate, sharks are particularly vulnerable to overfishing and 
bycatch. What are you requesting in fiscal year 2001 to fund 
shark research, and do you plan to designate a National Center 
for Shark Research?
    Dr. Baker. Andy, can you answer that?
    Dr. Rosenberg. I do not think in the request there is 
specific money for shark research, but there is a substantial 
increase for expanding our stock assessment activities, which 
includes shark research. There is a 2.7 increase in expanding 
annual assessments. Some of that will go towards shark 
research. We have continued to fund the marine lab to do shark 
research with us.
    And I am sorry, I missed the last part of your question on 
the National Center for Sharks?
    Mr. Miller. Do you plan to designate a National Center for 
Shark Research?
    Dr. Rosenberg. I am sorry. I do not know the answer to 
that.
    Dr. Baker. At the moment, no. [Laughter.]
    [Clerk's note.--Subsequent to the hearing, the following 
information was provided:]

    However, we have an excellent working relationship with the 
Mote Marine Lab's Center for Shark Research. In support of this 
program, we have stationed a Southeast Fisheries Science Center 
shark expert at the lab and intend to continue this important 
cooperative program in the future.

                         ECOHAB Program Funding

    Mr. Miller. One final question here. What is the funding 
request for ECOHAB and other Harmful Algal Blooms programs in 
2001? Are these at the maximum authorized level and is this 
research turning into a monitoring system?
    Dr. Baker. We are, in fact, using the research to do 
monitoring. We currently have $8 million in our base. We are 
asking for a $2.4 million increase to look at Harmful Algal 
Blooms. We know this is a serious problem. We are looking at 
ways to expand our NOAA State partnerships for increased 
monitoring. One of the things we do not know is whether the 
number of Harmful Algal Blooms is increasing or decreasing. We 
seem to be seeing more, but the baseline, the accurate baseline 
is not there.
    We are also doing a number of studies about the Harmful 
Algal Blooms themselves. For some reason, it appears that the 
changing chemistry because of pollution around the coast 
preferentially leads towards toxic substances. Scientists do 
not know exactly why that is, but it is something that we are 
seeing. And so part of the money that we are using is for going 
and doing the research to try to understand why that happens so 
that we do have a pollution change in the nitrogen or 
phosphorous content. We will have an opportunity to understand 
exactly how that might lead to this theory or other kinds of 
Harmful Algal Blooms. But we are trying very hard to establish 
a coastal monitoring network with the funds we have so that we 
can start to answer some of the questions that you just asked.
    Mr. Miller. You know it is obviously more than just a Gulf 
of Mexico problem. It is Long Island Sound and all of the way 
to the other side, of the United States on the Pacific Coast.
    Dr. Baker. It is worldwide.
    Mr. Miller. Right.
    Dr. Baker. Every time you go out and measure, you see an 
increase in Harmful Algal Blooms. I think it is one of the most 
serious problems that we are facing.
    Mr. Miller. Well, I am a big supporter of all types of NOAA 
research, and the federal rule is going to continue. So thank 
you for what you and your agency are doing.
    Thank you, Mr. Chairman.
    Mr. Rogers. Thank you.

                           Satellite Funding

    Dr. Baker, you are requesting an additional $47.5 million 
for the operation of satellites. As you know, this Committee 
has struggled over many years to find the money for satellite 
procurements. How much of the request is for the current series 
of satellite operations and how much is for the next generation 
satellites, the new programs?
    Dr. Baker. Just one second, Mr. Chairman. I will get you 
those numbers.
    [Pause.]
    Dr. Baker. Mr. Chairman, for the new series of satellites, 
we are requesting a total of $76 million, and for our GOES 
satellite, we are requesting a total of $232 million for the 
ongoing GOES. And for the current series of polar satellites, 
we are requesting an amount of $136 million. That is the total 
number for procurement, acquisition and construction costs for 
those satellites.
    So that flies out the current series of satellites. That 
starts us on the next series, the converged series, with the 
Department of Defense, and it provides the adequate amount of 
money for the geostationary satellites. We have those two sets 
of satellites, which are the critical satellites for weather 
forecasting.
    Mr. Rogers. Well, the increases you have asked for--$47.5 
million--$6.5 million of that is for the continuation of the 
current series of GOES satellites, correct?
    Dr. Baker. Yes, that is right. That is for the polar 
satellites. $6.484 is for the continuance of the polar K 
through N series.
    Mr. Rogers. Yes. And $16.9 million of the increase is for--
--
    Dr. Baker. That is for the new satellites.
    Mr. Rogers. The converged DoD/NASA/NOAA satellites.
    Dr. Baker. Yes, sir, the new ones.
    Mr. Rogers. And the $25.2 million increases for the next 
series of GOES?
    Dr. Baker. That is the net. That is right. We are asking 
less for one series and more for the following satellites.
    Mr. Rogers. Now, given our financial constraints, tell me 
your highest priority: new programs or these base requirements?
    Mr. Baker. Mr. Chairman, the ongoing programs, in this 
case, the new programs have equal priority, I regret to say. 
Because if we do not fund the new series at the level that we 
have required, we run a very high risk of not having the 
satellites in orbit at the time we need them in the roughly 
2010 time period. We need to spend the money now to make sure 
that we do not end up with a gap in the satellites in the later 
part of this decade.
    Once again, we would put this at a very high priority. If 
we have to cut other things to do it, we would do this, just to 
give you a sense of our feeling about it.
    Mr. Rogers. Well, sometimes these numbers change during the 
year.
    Dr. Baker. I have noticed that. [Laughter.]
    Mr. Rogers. And before we head for markup, and we will be 
marking up sooner this year than usual, we will need to 
confer----
    Dr. Baker. We will stay in very close touch with you on 
those numbers.

                    Pacific Coastal Salmon Recovery

    Mr. Rogers. Now, let me touch briefly on the Pacific 
Coastal Salmon moneys. You are asking for an increase of $42 
million, for a total of $100--to fund salmon habitat 
restoration, stock enhancement and research. Is there a process 
in place that spells out the allowable uses of these moneys to 
ensure the effective use of moneys towards salmon recovery?
    Dr. Baker. Yes, sir. We have, in fact, been working very 
hard to put in place Memoranda of Understanding with each of 
the States to make sure that, as we transfer the money, we have 
both agreements on how the money will be spent and review 
mechanisms to make sure that the money actually gets spent in 
that way. And I am happy to say that we are very close, if not 
complete, with the MOUs with the States, and we are going to be 
very close to transferring that money shortly.
    Mr. Rogers. Give me some idea of the time.
    Dr. Baker. Let me ask Andy Rosenberg. Can you give me the 
time? The last briefing I had was that we were very close to 
doing it.
    Mr. Rosenberg. We have four proposals. We have seven 
Memoranda of Understanding in place. We have four proposals 
that we are currently reviewing, and we expect to be able to 
complete those four and another three by the end of the fiscal 
year, certainly. But those four are very close. We have been 
working back-and-forth with the States to try to finalize any 
questions concerning the proposals.
    Mr. Rogers. So you can tell us that the money will all be 
paid out to the States and tribes before the end of this fiscal 
year?
    Dr. Baker. Yes, sir.
    Mr. Rogers. Is it true that all funding to States would 
require a match of 25 percent local dollar for every Federal 
dollar?
    Dr. Baker. That is true for the States, but not for the 
tribes. The tribe money does not require matching; is that 
right?
    Dr. Rosenberg. That is right.
    Dr. Baker. But the States, it does require that match.
    Mr. Rogers. Now, are these problems that we are trying to 
address with this money, are they sudden-onset problems, as in 
an emergency, or are these ongoing problems that have evolved 
over the years?
    Dr. Baker. I would say that these are ongoing problems 
which have gotten worse in recent years. I think we know more 
about how to address them than we have known in the past. There 
is no question that the causes of the problems are causes that 
have been there for many years.
    Mr. Rogers. And what are those causes?
    Dr. Baker. Well, we call it the four H's. The hydropowered 
system, which blocks the salmon going up and down river; the 
harvest of fish, the commercial, the recreational and the tribe 
harvest; the hatcheries that we have used to try to enhance the 
fish; and the habitat of the fish. As we destroy the habitat, 
it makes it harder for the fish to spawn, and so they decline. 
So all of these have to be addressed together.
    Mr. Rogers. It has nothing to do with the weather. 
[Laughter.]
    Dr. Baker. Well, I am glad you asked that question because 
we have to have adequate water supply in the Columbia River 
system in order to get the water to flow down and provide the 
salmon with the adequate flow. When we have drought years, they 
have severe problems. And so one of the things we try to do 
with the salmon recovery groups is to try to give them some 
long-term outlooks of drought in the Pacific Northwest. 
Fortunately, it has not been that dry recently. But when it 
does get dry, they have some serious problems.
    Mr. Rogers. How much have you spent to support the 
Endangered Species Act this year and how much of that is for 
salmon recovery?
    Dr. Baker. I think we can tell you how much we have spent 
for salmon recovery, but let me get the numbers on the 
Endangered Species Act. Do we have that?
    Dr. Rosenberg. For salmon or for everything?
    Dr. Baker. Salmon and everything is what we are looking 
for.
    Dr. Rosenberg. For salmon is $30 million and the request is 
level.
    Dr. Baker. Mr. Chairman, last year you asked me about the 
governmentwide total for salmon recovery. I do have a number 
for that. The number that the Government spent, all agencies, 
all agencies--I want to emphasize this is not just a NOAA 
expenditure--it is about $731 million. This is not all NOAA.
    Mr. Rogers. And can you tell me how much of that is Pacific 
salmon or the percent?
    Dr. Baker. This is all Pacific salmon.
    Mr. Rogers. That is all Pacific salmon?
    Dr. Baker. Northwest Pacific salmon. That includes Corps of 
Engineers, Bureau of Reclamation, Fish and Wildlife, Bonneville 
Power, and Bonneville Power expenditure is an estimate of 
Oregon Power in order to mitigate salmon issues. That is the 
largest piece of that. That is about $400 million.
    Mr. Rogers. That is quite a bit.
    Dr. Baker, we have a series of four votes on the floor that 
will take a few minutes, and we will briefly recess and come 
back to you. So the committee will stand in recess.
    [Recess.]
    Mr. Rogers. The hearing will come to order.
    Dr. Baker, we apologize for the delay, but we had an 
unexpected series of five votes that took some time. But we 
will conclude soon.

              Coastal Impact Assistance Fund Authorization

    Your request includes $100 million now for a new Coastal 
Impact Assistance Fund for seven coastal States with existing 
offshore oil and gas production: Alaska, Alabama, California, 
Louisiana, Mississippi, Florida and Texas. Is that program 
explicitly authorized?
    Dr. Baker. No, Mr. Chairman, I do not believe it is 
explicitly authorized. But we believe that the expenditures 
that we propose under that program are authorized under the 
existing Coastal Zone Management program and that if the H.R. 
701 is passed, we believe that the program would be fully 
consistent with what is called the Conservation and 
Reinvestment Act.
    Mr. Rogers. Do you intend to propose an authorization 
specifically for this?
    Dr. Baker. It is not our intention to propose an 
authorization specific to that because we do intend to work 
very closely with the House on H.R. 701. And we believe that 
the bills are so close to what the Administration is proposing 
that we should be able to come to agreement, work with Congress 
and find a way to address these issues.
    Mr. Rogers. How would you allocate the $100 million to the 
set of States?
    Dr. Baker.Do we have an allocation of that?
    There is a formula, Mr. Chairman. It is similar to those 
that are proposed in the existing CARA legislation. It is based 
on the coastal population, the length of coastline and the 
production level in presently leased tracts that are not 
subject to the January 1st, 1999, moratorium.
    Mr. Rogers. Now, are you saying that you think this is 
authorized by the CARA?
    Dr. Baker. Mr. Chairman, we believe that the Coastal Impact 
Assistance Fund that we have proposed is authorized under the 
Coastal Zone Management Act, which has currently expired, but 
it is currently under discussion in Congress for 
reauthorization. If, in fact, agreement is reached on H.R. 701, 
we believe that authorization would be there for this kind of 
Coastal Impact Assistant Fund, since we are trying to do the 
same thing.
    Mr. Rogers. Is there a review system in place to monitor 
the funding that is given to the States?
    Dr. Baker. This is something that is potentially available; 
is that correct?
    Dr. Baker. This is Sally Yozell, who has been working on 
this for us, our deputy assistant secretary.
    Ms. Yozell. It would have to be consistent with the States' 
Coastal Zone Plan. And there are some principles which the 
Administration has laid out that would govern it to be 
environmentally sustainable, consistent with the States' 
Coastal Zone and not creating new oil and gas activities 
incentives.

                  Global Disaster Information Network

    Mr. Rogers. Now, you have requested $5.5 million for the 
initial development of a new Disaster Response Network. It 
sounds very similar to existing capabilities that you have in 
the Weather Service. Can you explain the functionality of this 
new system?
    Dr. Baker. Yes, sir. We are trying to put in place an 
overall system of networks and work stations that would allow 
us to make routine what is today an ad hoc process of pulling 
together satellite and other information on natural disasters. 
Right now we do not have a routine way and systematic way of 
pulling in the information, not just from our satellites, but 
also the classified satellites that the intelligence community 
flies, so that we can provide these for natural disasters. We 
do this on an ad hoc basis. It has worked reasonably well in 
that format. We provided information on Hurricane Mitch, for 
example, to Guatemala, I mean, to Honduras in that way.
    But what we are looking for is a way to make this routine. 
The data is there. We have the satellites, we have the 
information. We are trying to make sure this is available to 
emergency managers. And this money is designed to make the 
first steps on that program.
    Mr. Rogers. What other agencies would be involved?
    Dr. Baker. The Department of Interior and FEMA are the 
primary agencies that would be involved. The State Department 
is looking at ways that we could make sure that we are 
providing this information internationally. We now do that on 
an ad hoc basis. It is not something that we would pay for 
internationally, but we would like to have other countries 
involved in helping set the standards and context in which we 
can provide this kind of information.
    Mr. Rogers. And I assume the Defense Department would be a 
participant.
    Dr. Baker. The Defense Department would also be a player, 
since they provide those satellites.
    Mr. Rogers. And the National Guard?
    Dr. Baker. Yes.
    Mr. Rogers. And then I assume State emergency management 
organizations?
    Dr. Baker. Yes, and State emergency management 
organizations have been part of the planning team.
    Mr. Rogers. Now, this was something that OMB placed in your 
request, did they not?
    Dr. Baker. Well, let me say this is something that I have 
personally been involved with. I have urged the White House to 
find a way to fund this program. Last year, we had funding in 
the NOAA budget, and there was funding in the Department of 
Interior Budget as we went forward.
    This year, we felt that we could make the best case for 
this funding, and so we agreed that the funding for the 
program, the full funding, would be put in the NOAA budget. But 
part of the money that we have asked for would go to other 
agencies. Not all of that money is requested for NOAA. It is an 
interagency program.
    Mr. Rogers. But no other agency is contributing to the cost 
of it, are they?
    Dr. Baker. At this point, there is no other request. But 
the request from NOAA is a request also for the Department of 
Interior and for FEMA.
    Mr. Rogers. You know, as we have been talking, we may not 
have enough money to fund your base operations and probably not 
even at the level you are at now. How could we expect to add on 
another new program here?
    Dr. Baker. Well, I think we have to give you this in a list 
of priorities, which we would be prepared to do.
    Mr. Rogers. On a rating of one to ten, one being the 
highest priority, where would you place this one?
    Dr. Baker. I would put it at a five.
    Mr. Rogers. Now, in the past, we have provided moneys to 
give ship captains the tools they need to ensure safe 
navigation, improving the competitiveness of U.S. ports, 
decreasing risks to the environment and the like. We take that 
very seriously, as you do. It has been a core function of the 
Government well before NOAA was even around.

                       Nautical Charting Backlog

    You are asking for very generous increases this year 
overall. How much of your increase is to enhance this 
navigation survey work to address the 20-year backlog in 
nautical charts?
    Dr. Baker. We have a request, Mr. Chairman, of $18 million 
for 2001, and we had a revised enacted amount in 2000 of 
$18,828,000. It is a slight decrease from what we asked for 
last year.
    Mr. Rogers. So out of the $490 million in increases for 
NOAA, you did not believe any significant additional funding 
was necessary to address the navigation safety issue?
    Dr. Baker. We have increases in other parts of our 
navigation services that involve helping digitized charts and 
provide other services to the ship captains as we go forward. 
We recognize the importance of addressing the survey backlog. 
It is an area that has grown very rapidly in the last few 
years. And we felt that this was a somewhat more balanced 
approach, appropriate for this year, not in previous years, and 
we rapidly increased the backlog. But we still consider the 
backlog to be critical.
    Mr. Rogers. Mr. Serrano.
    Mr. Serrano. I have no further questions.
    Mr. Rogers. Dr. Baker, thank you very much for your being 
here with your staff. We appreciate your being a little bit 
flexible on the time to allow us to do our chores downstairs.
    As we started out saying here, it is going to be a tough 
year, probably tougher than last year even, because the budget 
is tight. In this era of so-called budget surpluses out there, 
we are still living under the budget caps of 1997 and the 
Balanced Budget Act restrictions on spending that extends 5 
years. So we are in the ironic predicament of seeing a lot of 
money laying there, but unable to touch it--like a kid in a 
candy store someone said. But nevertheless we are bound by 
that, and it is going to be a very tough year to address your 
needs, and you certainly have them.
    So as we have said before, we want to continue to work with 
you to pick out your highest priorities so that we can try to 
fund the things most important to you and delay the others 
until a more fruitful time. So we will work with you, as you 
wish, over the next few weeks to try to prioritize how we best 
spend the money.
    Dr. Baker. Thank you, Mr. Chairman. We appreciate your 
support.
    Mr. Rogers. Thank you very much. The committee is 
adjourned.
                                           Thursday, April 6, 2000.

                          BUREAU OF THE CENSUS

                                WITNESS

KENNETH PREWITT, DIRECTOR, BUREAU OF THE CENSUS

                    Chairman Rogers' Opening Remark

    Mr. Rogers. The Subcommittee will come to order. We are 
pleased to welcome Dr. Kenneth Prewitt at very opportune time. 
Census Day was last Saturday and we are at a crucial phase of 
the proceedings. As we both know, it is critical that people 
participate in the Census and I join you, Dr. Prewitt, in 
encouraging everyone to mail back their Census forms post 
haste.
    From this Subcommittee's perspective to a large extent the 
ball is now in your court. We have provided you the resources 
you requested in fiscal year 2000 to conduct the Census. You 
now face the challenge of actually conducting that count and we 
all hope for a great success.
    The 2000 Census is a Constitutional duty, a duty we take 
very seriously. So, I hope that this hearing will help us to 
understand how we are doing on the Census and what challenges 
you envision as we go through the year.
    The fiscal year 2001 budget request is a total of $719 
million for all Census Bureau programs, including $421 million 
for the additional costs of the 2000 Census. Excluding the one-
time bump in fiscal year 2000, you are requesting a total 
increase of $66 million for non-decennial programs and 
activities. Before we hear from Dr. Prewitt, let me yield to my 
friend, Mr. Serrano.
    Mr. Serrano. Thank you, Mr. Chairman.
    It is with great pleasure that I join you in welcoming Dr. 
Prewitt today. He has had a challenging year, to say the least, 
and I am very interested in what he will have to say about how 
the Census is going and how the mail response rate is looking. 
Before we turn to his testimony, let me do a little public 
service announcement here.
    To anyone who is watching or listening to this hearing who 
has not filled in and mailed in his or her Census form, please, 
do so now! And we mean, now. There is still time. If you don't 
have a form, if you have a question, call the Census Bureau at 
1-800-471-9424. So much depends on the answers you give for 
roads and schools to stores and jobs. this is your future and 
don't leave it blank.
    Dr. Prewitt, I know that you have a tough job, you have had 
a tough job, but I certainly respect the work that you are 
trying to do and the importance of it and I am anxious to hear 
your testimony.
    Mr. Rogers. I think perhaps the best way for us to 
encourage people to mail their forms in is if they don't, a 
Government agent is going to come see them, at their home, 
right?
    Mr. Serrano. That may happen anyway. [Laughter.]
    Mr. Rogers. Dr. Prewitt, you are recognized.

                    Opening Statement of Dr. Prewitt

    Mr. Prewitt. Yes, sir. We actually described that as 
Americans counting America, rather than Government agents.
    If I could just preface my opening comment with just a 
quick update on Census 2000, then you can return to that in the 
question period. The really important good news is all of the 
major systems are functioning as we had hoped that they would 
be. Our address file work, for which this Committee provided 
some supplementary, very important supplementary money; at that 
time we said we hope to get an address file which would have no 
more than 1 percent error rate. We have every reason to believe 
that we accomplished that.
    Our payroll system, about which there was serious concern, 
in some quarters as little as six months ago, is functioning. 
Over 150,000 people are now being paid on schedule and I think 
when we ramp up to closer to half a million that we will find 
the same thing.
    Our data capture system, about which there was considerable 
concern, understandable because it is a very important part of 
the Census process, is capturing forms at a higher rate of 
productivity than we had anticipated and, indeed, at a higher 
rate of accuracy than even we had expected. So, we are 
extremely pleased with that system.
    Our recruitment number, nationwide, is over target, three 
weeks ahead of schedule. There were many people who expressed 
real reservations about whether the Census Bureau would be able 
to meet its recruitment target for the decennial and we have 
done so. Every operation that has been fielded has been fielded 
with adequate staff. And with respect to the key issue of 
nonresponse follow-up, we are ahead.
    And, finally, and most importantly, we will be announcing 
later today that the current response rate is 58 percent and we 
are expecting, hoping that by the weekend we will cross the 61 
percent mark which is so critical, of course, to this 
Committee.
    With those introductory comments, I will say just a few 
words about the 2001 budget. We are seeking, in order to 
fulfill our Constitutional and legal obligations, additional 
funding, as you have just said, sir. We are seeking funds to 
modernize the Census Bureau so that we will continue to play a 
leading role in establishing the information infrastructure of 
our knowledge society.
    I will talk briefly and then answer any questions that you 
have about the budget in detail. Although we will complete data 
collection activities for Census 2000 this fiscal year, this 
Census will not be over. Through fiscal year 2000 we will have 
invested $6.2 billion in planning and conducting Census 2000. 
The payoff for our investment will come when we process, 
tabulate and disseminate quality and timely data for 
reapportionment, redistricting, the allocation of Federal 
funds, rebenching household surveys, community planning, and 
the myriad of other important purposes for which we conduct the 
Census and we will begin in fiscal year 2001.
    By the end of this calendar year, we will build a 
storehouse of information with billions of bytes of data about 
our people and our housing. And the funding we are requesting 
for the decennial census in 2001 will allow us to organize and 
quality check this valuable data and make certain that it flows 
where it is needed.
    While much critical work for Census 2000 remains to be 
done, the diminishing level of Census 2000 activities will 
allow the Census Bureau to focus on modernization projects that 
will position us to collect, process and deliver timely, 
relevant, and cost-effective data about the economy and the 
American people through our other programs.
    Economic growth is high and the rate of social change is 
increasing. So, we are requesting new funding to position 
ourselves to be responsive to growing demands from policy 
makers for relevant and timely data.
    Canals, shipping lanes, railroads and highways have been 
the infrastructure of our industrial society. Today, in the era 
of information superhighway, information is an essential part 
of the infrastructure for a knowledge society or knowledge 
economy. In determining how much we, as a society, should 
invest to improve this infrastructure we must realize that 
Census data are a public good, critical to the functioning of 
our economy, as well as to our polity.
    As a public good, Census data are used for important 
Constitutional and political purposes and economic measurement 
and planning, funds allocation and community planning. These 
are the Governmental uses of our data. But the data also 
contribute widely to the overall well-being of our economy 
through a variety of private sector uses. While the data 
provide broad private sector benefits, only the Government can 
organize and support the collection of these data, ensure their 
quality and lend them credibility. And that is why, in order to 
meet these larger public responsibilities, we are requesting 
funds to begin the process of modernization.
    In this regard, the American Community Survey (ACS), part 
of our continuous measurement program, is our single most 
important improvement in Federal household statistics since the 
middle of the last century and I believe it is the cornerstone 
of our effort to keep pace with the ever-increasing demands for 
timely and relevant data.
    If the Census Bureau is going to remain a major contributor 
in this knowledge society, we must invest in full development 
of the ACS. In our web-based society of the 21st Century, where 
information is instantly available at everyone's fingertips, it 
is no longer acceptable that planners and policy makers must 
wait 10 years for the data they need to do their work.
    Not only will the ACS provide more frequent, detailed data 
for small geographic areas, it will also revolutionize the way 
that we take the decennial census. There are a few other 
elements of our modernization effort that I will describe in 
more detail later, but I just mention here, new updated 
coordinated samples for the major reoccurring household surveys 
that will improve the accuracy of the surveys without 
increasing their cost; improving the way we conduct business by 
taking advantage of modern, efficient technologies; measurement 
improvements for electronic commerce, minority owned businesses 
and U.S. exports; and improved measures of economic well-being. 
These are not glitzy initiatives but they are the nuts-and-
bolts components of an improved information infrastructure.
    Then, sir, I would like to speak about infrastructure in 
the older sense of that word. The Census Bureau's talented, 
dedicated staff are the key to our effort to keep pace with 
society's demand for data. They deserve a modernized and safe 
environment to work in. I am referring to the nearly 60-year 
old shabby Suitland facility where most of our headquarters 
staff now work. Leaky roofs, bursting pipes, asbestos, 
contaminated water supply, these are just some of the health 
and safety concerns that Census Bureau employees face daily. We 
are seeking funding to cover some of the internal planning 
effort essential for clearly and fully identifying our space 
and technology needs. The General Service Administration will 
need this input in order to complete its full renovation or 
reconstruction of our facilities.
    The Bureau, therefore, sir, is requesting, as you said, 
approximately $719 million for domestic discretionary spending; 
of that $174 million is for current statistical programs and 
$545 million is for periodic census programs as presented in 
Exhibit A.
    I will be happy to answer your questions.
    [The information follows:]
           [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 


                              Census 2000

    Mr. Rogers. Thank you, Dr. Prewitt.
    In the 2000 Census we are trying to do something we have 
never done before. You are trying to do a two-number Census, an 
idea that was yours, not ours. For years, many of us questioned 
whether you could pull off a one-number Census that was better 
than 1990, not to mention a two-number Census. Two numbers, 
meaning an actual count, which the Supreme Court says you must 
do, for the purposes of redistricting and reapportionment among 
the Congressional districts in the country; and two as you have 
told us, you will use statistical sampling then to adjust the 
actual count numbers, as you say, ``for other purposes.'' So, 
there are two numbers that you are seeking out. But here we 
are, and I must say I am still very concerned about it.
    Your national mail response rates are tracking pretty close 
to your expectations, I gather. But that really doesn't tell 
the whole story. GAO said and I am quoting them, ``It is 
important to go beyond the national level data when gauging 
progress in the Census. The national trends can mask successes 
or challenges occurring at the regional and local levels.''
    And in many States, including my own, the response rates 
for some of the hardest to count areas are lagging far behind. 
In my own district, for example, in Southeastern Kentucky, the 
latest figures I show per counties, in my area, the 26 counties 
of my area, the response rate is like 48 percent. The State 
average is 57. National average, I think at that time, which 
was a day or two ago, was 57, I think.
    So, even though nationally, you are approaching your curve 
on the completion rate; for some areas like mine and many 
others, we are way behind.
    Second, you have an extremely optimistic schedule to 
complete the actual count after the mail responses are 
finished. In fact, when compared to 1990, you will have four 
weeks less time to follow-up on 12 million more households than 
we had in 1990. A shorter time, more people to count. And we 
all know that 1990 was a disaster.
    Third, as was demonstrated in the dress rehearsal in 1998, 
the quality of the actual count may be sacrificed in the 
interest of time. Let me say that again. The actual count, the 
quality of the actual count may be sacrificed because you have 
to finish by a certain date. The Census Bureau met its schedule 
for completing the Census in the dress rehearsal but it was at 
the expense of the accuracy of the actual count because you 
used proxies to enumerate a large number of occupied housing 
units.
    In fact, all three sites in that dress rehearsal failed to 
meet the goal very miserably. In Sacramento, proxies, that is 
to say, a proxy is someone you go to-the next door neighbor-and 
get information about the person rather than the person 
themselves. In Sacramento, proxies were used to enumerate 20 
percent; in South Carolina, proxies were used to enumerate 16.7 
percent of all occupied households and the major driver was 
lack of time.
    So, my question is-do you really believe that you can pull 
off your current schedule for completing the actual count 
without sacrificing the quality of that count?

            Census Schedule For Completing The Actual Count

    Mr. Prewitt. Yes, sir. If I could then do as you did, sort 
of move through the larger argument. First, on the two-number 
Census. We actually prefer to describe that as a progressively 
more accurate Census and we believe that is what it is.
    Indeed, this country has been functioning with respect to 
its economic statistics for eight years with a second number, 
i.e., the adjusted number. Every economic statistic this 
country has is calibrated back to the adjusted data set. So, 
the country is actually functioning quite well economically 
with a number somewhat different from the number that we used 
for apportioning and redistricting in 1990. So, yes, there will 
be a corrected number. We believe that will be a more accurate 
number.
    You also referenced the variation around national trend 
lines. And you are absolutely correct. Indeed, I think we all 
know that in any large numbers there is something called a 
normal distribution. There is a bell-shaped curve of almost any 
phenomena and one extreme of that are places that are 
performing extremely well and the other are places performing 
rather less well.
    In an operation of the complexity of the Census, we would 
expect always to find local variations. The important question 
it seems to us is, can we identify those and take action? Where 
we found local Census offices who were lagging in their 
recruitment, we put in place emergency systems and we corrected 
for those. There will always be, out of 520 offices, half a 
dozen, maybe even a dozen where we are still--but that is, you 
know, well under a percent-where we are still making things 
happen.
    So, yes, sir, I think that GAO is correct to say that there 
is always local variation but that isn't itself, a judgment on 
the Census, that is simply a recognition of the way that social 
phenomena pattern themselves.
    The real question is, can we identify those problems and 
correct them? And as I say, every major operation that had to 
be fielded was fielded, fully staffed and on schedule, whether 
it was update leave, whether it was remote Alaska, whether it 
was the mail-out system, every operation was performed on 
schedule with adequate staffing. So, we believe we will have 
the staff.
    I focus on recruitment, sir, because I think that is what 
the GAO was talking about was the recruitment numbers, not 
anything else--and as I said, all the big systems, data 
capture, payroll systems, response rate, are all where we told 
you they would be at this stage.
    You referenced the scheduling issue. It is certainly a 
serious schedule, a tough schedule, and I would slightly 
correct the record though. In 1990, our actual scheduled field 
time for nonresponse follow-up was six weeks. We didn't finish 
it in six weeks. That was our scheduled time. And, so, our 2000 
schedule is actually four weeks longer than our scheduled time 
in 1990.
    Mr. Rogers. But it took them 14 actual----
    Mr. Prewitt. Oh, absolutely. It took some 14, not all, some 
14.
    Mr. Rogers. In the hardest to count areas, it took 14 
weeks.
    Mr. Prewitt. Absolutely.
    And we fully expect there will be variation around the 10-
week period this time. That is some areas will get finished in 
5 or 6 weeks and some LCOs will take 14 weeks and we will not 
leave the field until every one of our procedures has been 
exhausted. Our procedures call for 6 follow-up efforts, 3 phone 
calls, 3 visits. And we will not leave the field until we have 
finished that for every household. That is our operational 
plan. If it takes 14 weeks, it will take 14 weeks; if it takes 
4 weeks, it will take 4 weeks.
    Mr. Rogers. And what is--sorry, go ahead and finish.

                             Census Quality

    Mr. Prewitt. Well, I was just going to quickly get to the 
quality issue. We simply will not sacrifice quality under any 
circumstances. The entire reputation of the Census Bureau 
depends upon high-quality data. We feel so strongly about that 
that we simply would not--I cannot believe that there would be 
any circumstances in which we would sacrifice quality.
    Obviously, at a certain point you cannot count some people. 
They will say, no. They will not be home. And you have to go to 
proxy interviews if you want any kind of data. Mr. Rogers, we 
are going to have people slamming the door in our face. We have 
already had people all over the newspaper saying, I am going to 
refuse to cooperate with this thing. So, we know that is going 
to happen in nonresponse follow-up. It happened in 1990, it 
will happen in 2000.
    We go to proxy to get some kind of information. So, that if 
we can get a housing count that is reasonably reliable we can 
put that in your reapportionment number, your redistricting 
number. If we don't go to proxy, we have nothing. So, we would 
much rather go to proxy than have no data.
    Mr. Rogers. What percent of the proxy rate is acceptable in 
your mind?
    Mr. Prewitt. We have set for ourselves--there are two 
different dimensions of the proxy rate which is an imputed rate 
as well as proxy rate. I think if I could leap ahead to where I 
think the question you are getting to, there is no doubt that 
the proxy rate in the dress rehearsal was larger than what we 
will tolerate in the decennial.
    Mr. Rogers. Well, your goal in the dress rehearsal was no 
more than 6 percent.
    Mr. Prewitt. Right.
    Mr. Rogers. And, yet, Sacramento wound up being 20 percent, 
South Carolina, 16.7 percent. And again, the major driver there 
was time. Then you have to complete and deliver to the States 
by March 2001 your statistically adjusted numbers, as you say, 
or else they can't be used for redistricting. So, that is your 
bottom line, deadline. And some of us are nervous that in order 
to reach that deadline, because you arbitrarily, in our 
judgment, decided to go with statistical adjustment which 
requires a certain span of time leading up to your deadline 
that that will compromise the actual count, which is what we 
are determined to get.
    Mr. Prewitt. Yes, sir. Well, I can only repledge that I 
would say a word about the dress rehearsal date, as I 
understand it. That, in our judgment, should not have happened. 
And we went back to study why it happened. And it happened 
because of some inaccurate or not well understood instructions 
that we had sent to our local offices. You do a dress rehearsal 
to find mistakes and correct them. And that set of instructions 
had been corrected. There were people in Sacramento who closed 
out too soon, who should not have closed out and we know that. 
And, so, we use that as a way to tighten our instructions on 
exactly that procedure.

                              Proxy Rates

    Mr. Rogers. So, am I to take it that you think that a proxy 
number of 6 percent is an acceptable number?
    Mr. Prewitt. Well, sir, at a certain point we have 
exhausted our budget. We have budgeted for 6 follow-ups; 3 
personal visits and 3 phone calls. Plus a final attempt, which 
is done by a crew leader, by our best people. If you are saying 
to me that we should continue to knock on the door endlessly, 
we can do that. But at a certain point we think we are not 
going to get an answer from that household. Either no one is 
going to ever open that door or if they do they are going to 
refuse to cooperate with the Census.
    So, we have, we believe, prudently designed a system which 
gives us the highest probability of getting responses. We go to 
proxy to get some kind of information and we believe that some 
count of that household is superior to no count.
    Mr. Rogers. But in Sacramento it was 1-out-of-5 that----
    Mr. Prewitt. I just said to you, sir, that we think that is 
an unacceptable proxy rate.
    Mr. Rogers. We would have a different word for it. I would 
call it outrageous.
    Mr. Prewitt. We can use the word. But there may well be 
communities, sir, where there will be that many people who 
simply won't answer. And our choice at that stage, is whether 
to try to get some information or no information. And if your 
advice to us is to leave them out of the count, then we won't 
have any proxy interviews.
    Mr. Rogers. Will you add additional time to the schedule 
for nonresponse follow-up if things start to fall behind?
    Mr. Prewitt. Absolutely.
    Mr. Rogers. And you will not let the March 2001 deadline 
for statistical sampling interfere with the actual count that 
we are talking about here?
    Mr. Prewitt. We will not, sir. I have said under oath 
before Congressman Miller's Subcommittee on more than one 
occasion that we will exhaust our procedures, and our 
procedures require us to make at least 6 different visits over 
different times of the day, different days of the week, and if 
we have areas where people are not able to do that on time, we 
will give them additional help. We will do everything we can to 
meet schedule. We take our schedule very seriously. We will do 
everything we can because we know that when you extend 
schedules, you spend more money.
    And, therefore, we have a schedule which hopes to get out 
of the field within budget. But, no, sir, the answer is we will 
not sacrifice quality to get out of the field prematurely.

                 GAO Report Concerning the 2000 Census

    Mr. Rogers. Just four months ago GAO said in a report, 
``significant operational uncertainties continue to surround 
the Bureau's efforts to increase participation in the Census 
and to collect timely and accurate data. These uncertainties 
raise concerns that the 2000 Census may be less accurate than 
the 1990 Census.''
    Are we going to pay $6.8 billion for a Census that is worse 
than 1990?
    Mr. Prewitt. It is possible, sir. And here is what 
happened. I might say that four-month old report has been 
supplemented by other reports. Indeed, the GAO reported 
yesterday to Mr. Miller's Committee saying that they were very 
pleased with where we were on the Census. The question of 
accuracy, sir, is not dependent upon the response rate. It is 
not completely dependent upon the nonresponse follow-up period. 
It is dependent upon how many people finally will not give us 
information. And if 3 or 4 percent of the American population 
will not give us information then it will be less accurate than 
1990 and I can't change that.
    Mr. Rogers. Well, if we have a less accurate actual count 
than 1990, and we have spent $6.8 billion for that, then there 
will be hell to pay.
    Mr. Prewitt. Sir, we will not know if there is a less 
accurate enumeration or actual count unless we do the accuracy 
and coverage evaluation. How will we know it? When we discuss 
the accuracy levels, we are discussing information that the 
Census Bureau presents to you. It is only our quality check 
that allows you to ask me if it is going to be less accurate or 
not.
    Mr. Rogers. Well, there may be other ways to determine 
whether or not it is accurate.
    Mr. Prewitt. What other way would we determine how many 
people are really there?
    Mr. Rogers. There are ways for people other than the Census 
Bureau to sample results so that we will know in the due course 
of time.
    Mr. Prewitt. Yes, sir, maybe so.
    [The information follows:]
            [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 


    Mr. Rogers. Mr. Serrano?

                            Census Long Form

    Mr. Serrano. Thank you, Mr. Chairman.
    Mr. Chairman, first of all, I have a series of questions 
today. I would appreciate if you would allow me to submit 
whatever questions I don't get to ask for the record and have 
Dr. Prewitt respond to us at a later date. So, I would ask that 
of you.
    The other thing is, Dr. Prewitt, I would want to go through 
a series of questions I have on the long form rather than ask 
you one at a time and sort of have you respond in bulk to these 
questions, which have been subject of a lot of controversy 
around here.
    First, there has been a great deal of unfortunate comment 
here, in Washington, about the long form. It is my 
understanding that the questions on the long form are needed, 
not by the Census Bureau alone, but by other agencies to 
administer laws passed by Congress. Is that correct and would 
you explain how questions get onto the long form?
    Second, the Census Bureau made two submissions to Congress 
about the long form before sending forms to be printed; one in 
1997 and one in 1998. The Census Act does not require 
Congressional approval for these questions but these 
submissions give Congress ample opportunity to comment on the 
questions to be asked. Will you summarize the Congressional 
comments you received from these two submissions?
    Third, one of the questions that some of our Congressional 
colleagues have picked to ridicule is the question on plumbing 
facilities. In fact, there are a number of questions on the 
form about housing characteristics, including the amount paid 
for utilities and the amount of the mortgage payment. Could you 
explain to us which agencies use this data?
    Also, Dr. Prewitt, I have heard you say that most of the 
economic indicators that are used to measure the performance of 
our economy depend on one way or another on the Census long 
form. Could you explain that statement for us?
    And, finally, some of my colleagues have indicated that the 
long form questions should be voluntary. Do you agree with that 
suggestion? If not, can you explain to us why these questions 
are required by law? Is that something the Census Bureau 
decides?
    Mr. Prewitt. Yes, sir.
    Your opening comment, sir, you said that not all of these 
questions are needed by the Census Bureau. None of them are 
needed by the Census Bureau. All of them are needed by the U.S. 
Congress. All of them have statutory conditions.
    You asked me to summarize the comments we had when we 
submitted these questions. It is easy to do because there were 
none. Not a single letter came in from a Member of Congress 
about any question. There was a Congressional hearing held by 
Congressman Miller's Committee and at that hearing there were 
Members of Congress who asked for additional questions. But no 
one talked to us about taking any questions off.
    So, zero comments from Congress at that time.
    Mr. Rogers. If the gentleman would yield briefly?
    Mr. Serrano. Sure.
    Mr. Rogers. Long before you sat in this chair as the 
Director of the Bureau, 1995, at least, I know, I was reading 
yesterday, I was pounding the then-Director about the 
difficulty of this long form. That it was going to depress 
turnout response, that they were asking a lot of unnecessary 
questions and the like. So, I have been pounding on this for 
many years. And even had the Director of the Census redesign 
the form in what I would hope is a more sellable fashion and 
brought it up here and displayed it to us.
    So, long before Dr. Prewitt was here, some of us were 
pounding on this a long time.
    Mr. Prewitt. Yes, sir. May I deflect quickly to--you are 
absolutely right, Mr. Rogers. As a matter of fact, I have read 
everything you have ever said about the long form starting back 
in 1990.
    Mr. Rogers. Interesting reading.
    Mr. Prewitt. Yes, very interesting reading. [Laughter.]
    And I am more than willing to acknowledge how prescient you 
have been about the problem with the long form, more than 
willing. And, as you well know, that is why we went to the ACS 
idea.
    I was actually specifically answering the Congressman's 
question about when we submitted the questions two years ago. 
What was commentary at that time was as I summarized it. But 
certainly prior to that, you have been forcefully on record 
expressing concerns about the length of the long form, about 
its intrusiveness, about the fact that it might affect the 
response rate and we heard you loud and clear.
    One, we did make a shorter long form. It is the shortest 
long form in history. In 1940, which was the first year of the 
long form, there were 83 questions. This time there are 53 
questions and it is shorter than it was in 1990.
    And the strong feeling of the Census Bureau is that we 
ought to transit to the American Community Survey. And this 
will be the last decennial in which there will be a long form 
modeled the way we are doing it now.
    Then to revert back, if I may. The plumbing question which, 
by the way, was first asked in 1940, itself--it has been there 
for 6 decades--is used in ways that people may not understand. 
For example, it is used to, obviously, assess the quality of 
housing, it is also used for studies of groundwater 
contamination. If we have a high population density and very 
few toilets, it turns out that the public health officials can 
use that piece of information.
    But the agencies that actually use it include Energy, 
Energy Policy Act, the Federal Energy Administration Act, the 
EPA, Safe Drinking Water, the National Environment Policy, HHS, 
Indian Health Services Annual Report to Congress, Community 
Services Block Grant, HUD, Community Development and Block 
Grant Program, Comprehensive Housing, Public Housing, USDA, 
Rural Development Policy Act.
    So, there are a long list of statutory roots for that 
question. And that is the same as for the mortgage question.
    [Mr. Miller arrives.]
    Mr. Prewitt [continuing].
    Then you ask about the--oh, good, I have help. [Laughter.]
    Mr. Serrano. That makes it sound like I am not on your 
side. [Laughter.]
    I thought I had made that clear by now.
    Mr. Prewitt. Oh, I am sorry, Mr. Serrano. Well, Congressman 
Miller is a strong supporter of the long form. And, indeed, 
made such a set of comments just yesterday.
    Mr. Serrano. And a fine gentleman.
    Mr. Prewitt. And I didn't mean you were not.
    Mr. Serrano. A fine gentleman on this.

                          Economic Indicators

    Mr. Prewitt. Yes, right, exactly.
    You asked specifically about economic indicators. The 
reason that we put in our 2001 budget a very important item for 
sample redesign is every major survey that this Government 
conducts, which includes the CPI number, and it includes the 
unemployment number, with the Bureau of Labor Statistics, comes 
from a statistical process which requires high quality 
decennial data. And if you don't have those high quality 
decennial data you actually can't draw the samples that allow 
you to calculate the CPI and the unemployment index and other 
economic statistics.
    So, that is the connection. There are certain parts of the 
long form that are actually directly connected but for the most 
part it is an indirect relationship. But if you did not have 
decennial data, long form data, you would not be able to 
conduct the surveys that allow you to calculate those rates and 
the stakes are very high.
    All of our pension plans, Social Security, everything that 
is indexed to the CPI will be affected if we have very bad 
long-form data.

                            Voluntary Census

    Finally, you asked about the issue of whether the questions 
should be voluntary? The decennial is not constructed as a 
pick-and-choose survey. The long form is not constructed that 
way. If this Committee or if Mr. Miller's Committee were to put 
us to the task of designing an American Community Survey that 
was voluntary rather than mandatory we would be able to take 
that task up. We know that it would have implications for data 
quality, and we know that it would be more costly. But we do, 
fairly big, complicated surveys which are voluntary. So, the 
Census Bureau knows how to do it.
    Because of the Constitutional roots, of course, of the 
decennial, from the beginning, from 1790, it has been thought 
to be mandatory. And it has been the United States Congress 
that has added other kinds of tasks to it, I say, all the way 
back to 1790. Many people ask me all the time on talk shows, 
pounding the table sometimes, the Founders only wanted a head 
count. Why are you asking all these other questions.
    Well, if the Founders only wanted a head count, why did 
they ask more questions on the short form? They asked about as 
many questions on the short form in 1790 as we are asking in 
2000. They asked family composition, they asked age, they asked 
gender, they asked residency, and we only ask two more--
ethnicity and whether you own or rent.
    That is the only two questions that we are asking today 
that weren't being asked in 1790 on the short form.
    So, it seems to me the Founders, right from the beginning, 
intended the decennial to be more than just a head count. They 
intended to use it to get information about their society.

                    American Community Survey (ACS)

    Mr. Serrano. Well, I agree with Mr. Miller on this, and 
from what you tell me the long form serves a purpose but, 
nevertheless, the long form is going to be replaced by the 
American Community Survey. So, I have a couple of questions on 
that.
    One, what is in your current budget request to conduct this 
survey? Secondly, do you foresee a problem if, since the whole 
intent of the American Community Survey is to kind of spread 
the work out over a 10-year period, at some point in the middle 
of the decade Congress does not respond properly? What does 
that do, for other funding purposes, and what does that do to 
that survey?
    And lastly, as the Chairman has commented, at every hearing 
last year I brought up either Cuba or the Census and there was 
no way I can fit Cuba into this Census. [Laughter.]
    Well, there is. Did Elian get counted in Miami? [Laughter.]
    He would, right? Because he was here on that day. Well, he 
may be counted in the next one, too. [Laughter.]
    If they get their way. But when the ACS is off and running, 
will you include the territories, also?
    Mr. Prewitt. We have put in this budget, for the 2001 
budget, we have put in the amount of money we believe we need 
to test the ability to conduct an ACS in Puerto Rico, not in 
the other territories but in Puerto Rico, where we are trying 
to do the Census exactly the way we are doing it, of course, in 
the other States.
    Mr. Rogers. If the gentleman would yield? Are you referring 
to Cuba as a territory now? [Laughter.]
    Mr. Serrano. I'm sorry, I did stop. I apologize. I said 
that since I couldn't get Cuba in this question, I always then 
have to try to get Puerto Rico.
    Mr. Rogers. I just wanted to clarify that. [Laughter.]
    Mr. Serrano. But I did get Cuba into this question. And the 
answer was Elian was counted in Miami.
    Mr. Prewitt. But, yes, we would like very much to study how 
best we can conduct an ACS in Puerto Rico, and we are using the 
current Census, of course, to learn about that. We also have 
money in this budget to continue that work in 2001. So, that if 
we were to launch the ACS in 2002, 2003, we would be prepared 
to tell you then exactly how we would do it in Puerto Rico. We 
would not do the other territories.
    Mr. Serrano. It is your intent to do it in Puerto Rico?
    Mr. Prewitt. But we certainly intend to do it in Puerto 
Rico. And that will then be a budgetary issue but it won't be a 
technical issue from the point of view of the Census Bureau. 
You also asked, Mr. Serrano, what would happen if we were to--
if we, I don't mean the Census Bureau, I mean the U.S. 
Government and the Appropriations Committee and so forth--were 
to launch the American Community Survey what would happen if 
funding dried up midway through?
    It would be a very serious issue for all of the 
programmatic purposes that rely on Census data. And we would--
the conversation would have to take place at that time. But I 
would urge the United States Congress not to go down that road 
unless it is fairly committed to maintaining the quality of the 
data across the time period that would be required.
    Mr. Serrano. Thank you, Dr. Prewitt, and thank you, Mr. 
Chairman.
    Mr. Rogers. Mr. Miller.
    Mr. Miller. Nice to see you again today, Dr. Prewitt.
    I apologize for running late. We had a press conference 
with Speaker Hastert and our Conference Chairman J.C. Watts, 
encouraging everybody to complete the form and I just came from 
that press conference.
    Mr. Prewitt. That was a better use of your time, Mr. 
Miller. [Laughter.]
    Mr. Miller. I was at the National Archives yesterday. They 
have on display the 1790 Census out of Boston. The book is 
opened up and you see the handwritten names. I think it was the 
page that Ben Franklin actually was listed on. It was hard to 
find his name, but it was interesting. So, the 1790 Census is 
now on display to go back and check. You know, it does become 
public information, after 72 years. And they are about ready to 
let the 1930 Census become public. I believe the National 
Archives has control of that.

                            Privacy Concerns

    But let me focus for a moment on the privacy issue. Despite 
claims that others have made that a few elected officials are 
to blame for this storm over the long form, if we take an 
educated look at the situation it is clear that privacy 
concerns are not the result of a political campaign, but that 
of a longer term phenomenon.
    As you described yesterday in your testimony, the Census is 
caught in the middle of two forces. One, an incredible appetite 
for personal data; and two, the growing realization by many 
that such information is being collected by banks, by 
supermarkets, by retail stores, catalog companies, insurance 
companies, you name it, not to mention the Government.
    Information technology has grown exponentially in the past 
decade. The age of big brother is upon us. With the advent of 
the computer and Internet technology, people know that with the 
click of a mouse very personal information can be transferred 
to third parties without their consent and often for a price. 
We are talking about financial information, medical records and 
even driver license information. My question is, with the 
Census being conducted every 10 years and since this is 
essentially the same long form as 1990, isn't it plausible that 
we may have failed to fully recognize this dramatic change in 
attitudes toward privacy as we approach this Census? What do 
you feel would be the ramifications if Government were to 
ignore these increasing privacy concerns, and how do we address 
these concerns?
    Mr. Prewitt. Yes, sir. In 1983, I believe, the German 
Census had to be cancelled because of widespread privacy 
concerns. They subsequently were able to do it, but they 
actually had to cancel it because the concerns of the 
population at that time were so strong.
    It was largely led at that time by the Green Party but 
there were very strongly voiced concerns. So, it certainly can 
happen in an advanced industrial economy in which the privacy 
concerns of the population can be so strong that you are unable 
to conduct this quite important task.
    No. I am fully in agreement with Congressman Miller that 
the privacy concerns in this country are serious and they are 
growing and they are not sort of focused on necessarily on the 
Census and the Government, but we walked into the line of fire. 
Because there is such a growing concern about data and how it 
is misused and so forth and so on.
    My own thoughts on that right now, Congressman, are that 
the American Community Survey has the important property that 
you spread it out so that you are now talking to a reasonably 
small number of people each month and it takes five years 
before you are talking to the same number of people you do at 
one time in the decennial. And it doesn't make the questions 
less intrusive, if you call these intrusive questions, but it 
does spread the burden out. What that means from the point of 
view of discussing privacy with the American population is that 
you have got the opportunity to be educating the people about 
what these data are.
    Whenever I am on a talk show--I was on one late last 
night--and when you actually say it, well, this is how this 
question is used, this is why you won't have a Veterans 
Hospital in your community unless we collect the information on 
disability and elderly status and so forth, or this is what the 
plumbing information is used for, many people actually pause 
and say, oh, well, I didn't understand that.
    In the American Community Survey environment, you are now 
working with local leaders. You are having town meetings, you 
are using the local press, you are gradually explaining as you 
go and you are trying to make it clear how this information is 
useful to you and the local community. It doesn't just become 
something the Federal Government wants to know, but it has to 
do with local planning, school boards, local Chambers of 
Commerces and so forth.
    We actually think we can go a long way in that environment 
to helping the country understand the importance of this 
information if the U.S. Congress believes that we should be 
collecting it and intends to pay for it. We believe we can do 
that task. It is extremely difficult to do that and the task in 
the environment that the decennial created. As I said, a lot of 
people are using the decennial environment to run with other 
agendas; they just are and that is too bad. That is 
regrettable.
    And, as you well know, I do not include in that sentence 
any reference whatsoever to any political leadership but I do 
have other kinds of organizations and personalities in mind who 
are using the opportunity of the decennial to try to create 
other kinds of agendas.
    It is hard to do that when you are in an environment when 
you are only talking to a quarter of a million people a year. 
It just doesn't have the same kind of cache and so it is much 
harder to sort of drive your points home to the talk show host 
or whatever.
    Mr. Miller. It is a privacy issue. It is medical privacy 
and financial privacy. When I go to the grocery store, I use a 
discount card, so they know everything I buy. They know my 
history of toothpaste I buy, the shampoo I buy. When I charge 
my groceries at home they have a record of everything I buy.
    They can sell that information. So, we are competing in 
this time of privacy concern for--information the Government 
needs for informed decision making--and that is what this is 
all about informed decision making--with, the Safeways, the 
Albertson's and the Eckerts and also the Nation Banks, Bank of 
Americas, First Unions, with their information.
    We have a challenge to get information that is needed to 
make informed, and decisions, and we can justify that. But now 
you are promoting the with American Community Survey, and both 
of us are basically in agreement that hopefully this is the 
last of the long forms as we have historically known.
    What is the history of the ACS? When did the Bureau start 
planning for it? I know you have been working on it for years 
and I know we are going to have a hearing later this summer on 
it. But what was the thought process and the timing of moving 
to that process, knowing that we needed to have this program?
    Mr. Prewitt. The strong statements by Chairman Rogers in 
this Committee. [Laughter.]

                           History of the ACS

    Mr. Prewitt. No. I mean quite seriously, I think the first 
time in which the Census Bureau really began to understand the 
critical importance of a new methodology for getting the long 
form was because of the concerns that were voiced by the 
Chairman. That it is going to get harder and harder to get 
these data in this environment given the growing concerns about 
privacy and so forth, the respondent burden issues, and his 
legitimate concern that if that dropped response rates you 
also, therefore, affect the count and this is what we talked 
about yesterday, of course.
    This is why we have in place procedures, Mr. Chairman, to 
go back to the proxies, procedures to make sure we still get 
the count. We would much rather, as we said to Chairman Miller 
yesterday, we would much rather get that household and the 
right number of people in that household than anything else 
because that is our obligation under the Constitution for 
reapportionment and redistricting purposes.
    So, we do everything we can. Now, as I said to the Chairman 
yesterday, if a form comes in and all it has on it is there are 
99 people living here and no other information, then I don't 
think you want us to put that in that reapportionment number 
because we don't have reason to believe that is an accurate 
count. We don't think there are 99 people living there. We have 
got to go and get enough information to demonstrate to 
ourselves that there are so many people living at this address 
in order to put it in the reapportionment count.
    But, I am sorry, Mr. Chairman, but we actually started then 
and on the basis of that begin to explore--this is in 1996, 
1997--how best we can get this information and that is what 
went into the--in fact, we presented to this Committee the last 
years budgetary resources, you have certainly put it in the 
current budget, roughly $25 million, I believe, for us to be 
doing the testing work we need to be doing of the ACS in the 
Census environment. It is very important to make sure that we 
can come back to you and say, it will work. And we can only 
tell you it will work if we have actually tested it and we have 
been testing it now for two years.
    Mr. Miller. On this ACS, the questions are not that 
different from those on the long form. Correct me if I am 
wrong. And, so, we still have the question of privacy, mistrust 
and, so, why would it be different than the long form? Have you 
focus-grouped this issue yet to see about the concern for this 
type of information?
    Mr. Prewitt. No, you are absolutely right. The questions 
are the same with one exception, Mr. Miller, which I neglected 
to mention yesterday when we were talking about this. You will 
forgive us for redoing the hearing yesterday. But one of the 
questions that came up yesterday was the snowbird problem. You 
got people who are moving and, yet, you know, sometimes they 
are in Florida and they have got to have bridges and tunnels 
and then sometimes they are in the Bronx, let us say, and he 
wants the resources up in the Bronx to take care of these 
citizens or in Eastern Kentucky. The ACS actually allows us to 
do that. The ACS allows us to measure the proportion of the 
time that people are spending in different kinds of regions of 
the country if they are highly mobile and snowbirds.
    So, you will not now be losing out in Florida.
    Mr. Miller. How about the privacy concerns? Won't you still 
have those?
    Mr. Prewitt. Yes, I am sorry. No. The privacy concerns, as 
I say, don't go away. The questions are exactly the same 
questions, if the Congress wants us to ask them. We actually 
are fairly confident that we can explain this to local 
leadership in such a way that you will be able to dampen the 
kind of concerns about--it will never completely go away. But 
you are weighing, as I said before, you are weighing the need 
for information against the demand for privacy. The country 
wants information. The economy wants it. The President, 
yesterday, had a full day meeting on the knowledge economy and 
if you talk to those people they are talking about an 
information superhighway.
    Mr. Miller. Have you focus-grouped this yet?
    Mr. Prewitt. The ACS?
    Mr. Miller. Yes.
    Mr. Prewitt. No. We are actually--well, we have focus-
grouped since we are having town meetings in every community 
where we are having the ACS; we are actually having town 
meetings and talking about it with the local residents.

                              POLLING DATA

    Mr. Miller. Let me ask one brief question to conclude and 
that is yesterday you mentioned about some polling data, about 
attitudes about the Census and the long form and that how it 
has changed. Could you elaborate on that and get me some more 
information, at least my Subcommittee or both Subcommittees, 
about, what polling data you are using and what it is about.
    Mr. Prewitt. Yes, sir. No, very quickly. A firm called 
Inter Survey, which is funded by about 5 or 6 private 
foundations, had decided a couple of weeks ago, and we have 
offered them technical help in this, to actually monitor the 
experience of the Census. To actually measure, you know, what 
happened before we got the advance letter, what happened after 
the advance letter, what happened when the form got there, 
whether the ads are working, whether civic mobilization is 
working, whether they are hearing about the Census in their 
churches, whether their kids are bringing things home from 
school? So, they are measuring the actual experience of the 
Census during the Census period.
    And one of their questions was, do you think the Census 
data are intrusive? And in the first two weeks of the 
measurement, the numbers were about 10 percent and it now, in 
the third week, it has jumped up to 18 percent, which means 
there was a sharp increase in the proportion of the American 
population who believed the data were intrusive after the 
publicity about intrusiveness hit. The 10 percent was always 
there, but it simply went way up.
    That, I should say, is a question about privacy, not 
confidentiality. The portion of the American public that do not 
believe that Census data are confidential is over 50 percent. 
But that is different from privacy, they are really two issues 
and we really will have to sort them out if we have a hearing.
    Mr. Miller. Thank you. Thank you, Mr. Chairman.
    Mr. Rogers. We will have a second round.
    Mr. Miller. Okay. Thank you.
    Mr. Rogers. Mr. Wamp.

                        LONG FORM IN RURAL AREAS

    Mr. Wamp. Thank you, Mr. Chairman.
    Just two questions, Dr. Prewitt. One, I understand that 
people in rural areas may actually get the long form more 
readily or at a higher percentage than people in urban areas 
and, therefore, there are some representatives in the House, 
here, that I understand have even started telling the people 
that are complaining about the long form to just fill out the 
first six questions and send it back in.
    Tell me what happens if they do that? And what advice you 
would give to all the Members of Congress on how to help get us 
through this in as an efficient way as possible because I think 
when people back home think of the Federal Government, even 
though I don't relish this idea, they think of us and, so, they 
come to us and they ask us what should we be saying to them so 
that you get this accomplished and we are not really stepping 
on each other?
    Mr. Prewitt. Yes, sir. First, you are quite correct. The 
sampling ratio, as we describe it, is 1-out-of-6 across the 
country but that sample ratio changes from big cities to small 
communities and you need a higher sample in the smaller 
communities in order to be statistically reliable. So, that 
sample ratio can get as high as 1-out-of-2. That is there is 
going to be very small communities where as many as half the 
people will get the long form. It puts an enormous burden on 
them, no doubt about it.
    There is no other way to get reliable data. If you want to 
know something about the characteristics of those small 
population groups then you have got to sample that many.
    With respect to the second part of your question, we would 
urge Members of Congress, strongly urge Members of Congress not 
to recognize that this is anything other than an obligation to 
complete the entire form. Because the reason we have a high 
sample ratio in the rural areas is that if you want to know 
anything about poverty or veterans status or public health 
conditions or energy patterns, if you want to know anything 
about those things in rural areas and people haven't answered 
those questions, we will not have any way to tell you about 
them. That is just the fact.
    Now, nevertheless, we would much, much prefer to have a 
questionnaire where we can include a person in the count than 
not to have that questionnaire. So, a questionnaire, where the 
first six items are completed is, for us, a much preferable 
questionnaire to one that is thrown away.
    Mr. Wamp. So, you said that one questionnaire that came 
back that said 99 people live here, you can't count that but if 
it said, 5 and it had the basic information----
    Mr. Prewitt. Well, if it had 99 and had the basic 
information we would take it, but if it simply said, 99, if it 
simply said 5 and no other information we have go to out and 
somehow convince ourselves that there are 5 people in this 
household.
    But, no, the answers to the first five or six questions is 
enough for us to know someone lives there and we will then 
count them.

                     EVALUATION OF THE 2000 CENSUS

    Mr. Wamp. Second question, because I am already getting 
this question and I wasn't involved 10 years ago so those of us 
that have just become engaged in the last 4 or 5 years in this 
process. What is the debriefing process in the following year 
that we can assure people that this will even better in 2010? 
So that we can explain how this process will work to improve 
on--and we know what the privacy concerns are and what causes 
these concerns because people want it both ways.
    They want the access to the Internet and information in a 
minute buy they don't want to give up what it takes to get it. 
So, it is just one of those growing pains that we are 
experiencing here. The economy is so good that these are the 
same assets that we are saying are liabilities (the privacy 
issues). How can we explain to them this is going to be 
debriefed, and we are going to make it even better. You guys 
hang with us, we are all still the same country.
    Mr. Prewitt. I welcome that comment, sir. We do have lots 
of evaluation work that goes on that this Committee has paid 
for. We will have many, many studies that show how well we 
believe we did, not just the large accuracy and coverage 
evaluation but other kinds of specialized studies. We certainly 
have studies going on right now about privacy in the field. We 
have a number--when you are doing a Census, because nothing is 
like the Census environment, and, so, if you want to learn some 
things even about privacy you embed inside the Census some 
small experimental work that allows you to make some statements 
about privacy, and we are actually conducting those studies 
right now.
    So, I think when this is over, we will have a lot more 
information to share with this Committee and other Committees 
of Congress about what we have learned from this experience.
    Mr. Wamp. Thank you, Mr. Chairman.

                             RESPONSE RATE

    Mr. Rogers. Thank you, Mr. Wamp, for a good line of 
questions.
    Dr. Prewitt, we fully funded your budget request for this 
fiscal year, roughly $4.48 billion. A big chunk of that, almost 
$3.5 billion, was for the actual count, mostly to hire 
enumerators and nonresponse follow-up. And that budget request 
was based on the assumption that you would get a 61 percent 
mail response rate. Tell me what the lowest response rate that 
you could manage within your current budget?
    Mr. Prewitt. We are there. I mean literally we think we are 
above that threshold. We had said all along that look, if we 
are 1 or 2 percent below that we will try to manage and, as I 
say, we will be announcing 58 tonight, and we have every reason 
to believe that we are now above the threshold.

                             CENSUS FUNDING

    Mr. Rogers. So, that means that you have adequate funds 
with which to complete the follow-up and all the other things 
that must be done to complete the Census?
    Mr. Prewitt. Sir, barring unforeseen circumstances, which 
we don't anticipate, but everything that we told you, 
everything on which we based our Census plan is in place right 
now. That includes the number of enumerators we need, that 
includes the response rate, that includes the quality of data 
captured and so forth.
    Now, there are some productivity issues. We have a 
productivity assumption and if we are enumerating more long 
form respondents than we thought that will have a certain 
effect. We do not believe at this stage that that will cause us 
to exceed budget.
    Mr. Rogers. While your fiscal year 2000 budget request 
assumed a 61 percent mail response rate----
    Mr. Prewitt. Correct.
    Mr. Rogers [continued]. If you exceed that rate, you may 
have an excess funding in your budget----
    Mr. Prewitt. It is possible.
    Mr. Rogers [continuing]. Where you can turn some money back 
over to us?
    Mr. Prewitt. It is possible, yes, sir.
    Mr. Rogers. Well----
    [Laughter.]
    Mr. Rogers. I have always said he is a really nice guy. 
[Laughter.]
    Mr. Prewitt. We would love to do that, sir.
    Mr. Rogers. We would love for you to do that.
    Well, now, do you intend to reprogram that excess money to 
other areas if you have some money and, if so, where?
    Mr. Prewitt. Outside the decennial? I mean reprogram beyond 
the decennial?
    Mr. Rogers. No. Within the decennial.
    Mr. Prewitt. Well, when you are managing something of this 
sort, as you know, we are managing in these eight frameworks, 
and at this stage we do not anticipate having to reprogram. 
There is one issue where we had a productivity problem in part 
of our data capture, which required us to change a procedure. 
And that is going to cost more money than we had anticipated 
and we may or may not find the savings within that framework.
    The important thing about that, Mr. Chairman, is that we 
would give you ample, ample warning time. This will not be an 
emergency reprogramming. We will know that two or three weeks 
ahead of time whether it will be necessary and where we would 
reprogram across frameworks.
    And, so, that is a possibility but that does not exceed the 
cap, that only means some reprogramming conversations.

                     Data Capture System, DCS-2000

    Mr. Rogers. Well, regarding those problems and the data 
capture system, DCS-2000, in fact, we have now learned based on 
a GAO report, not from you, that the system was four months 
behind schedule and there are problems with it, the data 
capture system. In fact, the problems were serious enough that 
without significant changes, the Bureau was going to be unable 
to tabulate the data in time to meet the statutory deadline for 
delivering the counts to Congress for reapportionment. We are 
told the problem is under control and is being fixed but it is 
going to cost some money.
    Mr. Prewitt. No, it is more than under control. We have now 
data scanned nearly 30 million forms at a 99 percent accuracy 
level. This is a very old GAO statement. This is not a recent 
GAO statement. Again, I think GAO testified just yesterday 
before Congressman Miller that they are very comfortable right 
now with our data capture system.
    Mr. Rogers. I am told that the software for the second part 
of it is not----
    Mr. Prewitt. For the second pass.
    Mr. Rogers [continuing]. Is not yet written even? That it 
is only in process.
    Mr. Prewitt. Yes, sir. We are on schedule. We don't 
anticipate any difficulties on that software. This is not 
software that we need until what, in July? August. So, quite 
honestly, we think GAO does not--we are kind of befuddled by 
their concern about this. Right now we have a data capture 
system that is the most technologically sophisticated ever used 
in this country and it is running at 99 percent-plus accuracy.
    Mr. Rogers. Well, but it is not quite yet fixed?
    Mr. Prewitt. No. There is nothing broken. There is nothing 
fixed, there is nothing broken that needs to be fixed.
    I think what you are referring to, Mr. Chairman, is that 
there--when we went to a different way to capture the data, we 
wrote the software for the first phase of that, that is working 
and we will now write the software for the second phase of it. 
We have every reason to believe that will work.
    Mr. Rogers. Well, apparently, the DCS-2000 was four months 
behind schedule. This is per GAO.
    Mr. Prewitt. As of when? What was four months behind 
schedule?
    We can't be four months behind schedule, we are processing 
25, 30 million----
    Mr. Rogers. I don't mean now. I mean at one time you were 
four months behind schedule. The DCS-2000 wasn't actually ready 
until the end of February 2000. Once it was operationally 
tested I am told, you discovered the system couldn't actually 
capture all of the data in time for it to be tabulated to be 
delivered to Congress under the statutory deadline.
    And that you are having to make some changes of this so-
called two-pass approach, splitting the data capture into two 
separate operations. One, capturing all of the data necessary 
for apportionment counts, that is to say the short form, plus 
the first seven questions of the long form, and the second pass 
to capture the additional long form data.
    Mr. Prewitt. Right.
    Mr. Rogers. Am I on track so far?
    Mr. Prewitt. Correct. Yes, sir.
    Mr. Rogers. And so, you had to rewrite the software.
    Mr. Prewitt. Correct.
    Mr. Rogers. But the rewrite is not finished yet.
    Mr. Prewitt. No. It is on--we rewrote the software to do 
the first pass, to make sure we met our statutory obligations 
for apportionment and redistricting number. That is rewritten. 
We have now processed, scanned roughly 30 million 
questionnaires without any problems, therefore, we are clearly 
on schedule to capture all the data to meet that deadline.
    Then there is a second pass which is the long form data on 
which we are still preparing the software. We are on schedule 
to do that and it will be prepared on time. We believe it will 
work very accurately. The long form data are not under 
statutory deadline, nevertheless, we want to get them out to 
the users as soon as possible.
    Mr. Rogers. So, it is not going to cost extra money?
    Mr. Prewitt. Yes, sir. The--no, I never said anything--I 
said from the beginning that there was an additional cost to 
the second pass. There was a productivity issue----
    Mr. Rogers. Well, this is something that we didn't 
anticipate then?
    Mr. Prewitt. Yes. Oh, there are lots of costs that----
    Mr. Rogers. But you didn't ask money for it.
    Mr. Prewitt. No, no, we didn't.
    Mr. Rogers. So, you didn't anticipate it, apparently?
    Mr. Prewitt. That is correct.
    Mr. Rogers. So, it is a change?
    Mr. Prewitt. Yes, sir. We changed lots of things in the 
Census, it is a big complicated system.
    Mr. Rogers. But you told me earlier that this was 
anticipated all along.
    Mr. Prewitt. No, no, not this, sir.
    I did not say this was anticipated.
    Mr. Rogers. Well, it is going to cost more money. How much?
    Mr. Prewitt. That will be $17 million for the second pass.
    But what I said, sir, is that we don't anticipate--there 
are a lot of things in a budget of, as you might appreciate, of 
$4.5 billion that are going to fluctuate a little bit. Some are 
going to be less expensive, some are going to be more 
expensive. We finished several operations already at less than 
what we budgeted.
    Mr. Rogers. Well, are you going to--how are you going to 
pay for this?
    Mr. Prewitt. We are either going to pay within the current 
framework, from other savings in that framework, or we will pay 
for it by transferring across frameworks and we will come back 
to ask your permission to do so.

                     Reprogramming of Census Funds

    Mr. Rogers. You will ask for a reprogramming then?
    Mr. Prewitt. Yes, sir.
    Mr. Rogers. Where would you reprogram from?
    Mr. Prewitt. At this stage, we are not certain. It is not 
an issue that we would try to--it is not a decision we would 
try to make today because a lot of operations are still 
unfolding.
    Mr. Rogers. But can we be assured that the $17 million will 
be a total fix for this unanticipated----
    Mr. Prewitt. Yes.
    Mr. Rogers [continuing]. Problem?
    Mr. Prewitt. Yes, sir.
    Mr. Rogers. I am troubled to some extent. I mean $17 
million in a $5 billion figure surely is not a large number, 
but in terms of what we deal with it is a lot of money. And I 
am troubled that we had to find this out, not from you but 
through somebody else. Why weren't we told sooner about this?
    Mr. Prewitt. I do believe that--I believe that--this is not 
something that we have sort of buried or hidden, this is 
something that has been widely discussed since we needed to 
make this change. I must say, Mr. Chairman, do you want us to 
be reporting to you every day, every time there is variation 
around our budget cost?
    We have got things over-budget and under-budget.
    Mr. Rogers. No. But when you are wanting to spend an 
additional $17 million, you bet your boots I want to hear about 
it.
    Mr. Prewitt. We just told you, sir.
    Mr. Rogers. I know you just did.
    Mr. Prewitt. No. But we told----
    Mr. Rogers. We learned about it through just a happenstance 
with GAO, it came out as we were talking to them about 
something else and we said, what $17 million change? And we 
weren't notified about it.
    Mr. Prewitt. We briefed the staff, sir.
    Mr. Rogers. Pardon me?
    Mr. Prewitt. We briefed the staff on this.
    Mr. Rogers. Monday? Yes, they mentioned it.
    So, if you expect us to go along with this reprogramming 
and others, we are going to expect quid pro quo that we learn 
about it as quick as we can. You have to understand that we 
have a lot of demands for monies and $17 million would fund a 
lot of agencies with nothing else.
    Mr. Prewitt. Mr. Rogers, the soonest we would need this 
reprogramming is in July or August. I think that the way you 
wrote the reprogramming bill was that we had three days to give 
you notice. We will be able to give you three weeks.
    Mr. Rogers. Look, this is----
    Mr. Prewitt. But we are not there, yet. We are not sure. We 
are getting----
    Mr. Rogers [continuing]. This is a major part of the $5 
billion we are spending for the Census. If you don't make this 
change in the software to capture and be able to process the 
data from the long form, the whole long form is unnecessary, if 
you can't process it. So, this is not an insignificant change. 
This is not an insignificant amount of money. And I am troubled 
by the fact that you chose not to reveal this to us at an 
earlier time so that we could plan for it, as well. But enough 
said about that.
    Mr. Latham?

                            Privacy Concerns

    Mr. Latham. Thank you, Mr. Chairman.
    And, welcome. I apologize for being late, I have had 
several other things going on this morning--I am sure concerns 
have been about the concern of privacy and any kind of 
confidence that the information that people allow you to find 
out about them on the Census is going to be used properly. And 
I know the law is there saying giving the citizens some 
protection. However, I honestly believe that with what has 
happened recently with Government, there isn't a whole lot of 
confidence in being honest and straightforward and the American 
people are very, very skeptical.
    And I guess I would like you to reaffirm to my constituents 
that the information that you derive from the Census is going 
to be used as its intended. I will tell you that my mother, who 
is 82-years old, got her Census form and had the right address 
or it said, 205 State Street, Meservey, Iowa. Well, that is 
fine. The address is correct except she lives in Alexander, 
Iowa.
    You know, it doesn't really give a lot of confidence that 
your data is going to be correct when we get done with it 
anyway and then what it is used for when you can't even get the 
right town for an individual. I think it goes to the whole 
confidence issue and if you would maybe give me some ease of 
mind here that----
    Mr. Prewitt. Well, there are two issues here. One is that 
whether the mail is being addressed correctly and delivered 
correctly and I am pleased that, as I said earlier in this 
testimony, that we had told this Subcommittee that we would try 
to create an address file that was within 1 percent accuracy, 
we believe we have done that. That is an enormous task, an 
enormous accomplishment.
    And, indeed, there are many, many things in the addresses 
of this country, including the names of towns, where the Post 
Office uses one set of labels and the other labels work. If the 
letter got addressed correctly and got to her, then our system 
worked.
    And----
    Mr. Latham. Having the wrong address--it is not even in the 
same Congressional district.
    Mr. Prewitt. Well----
    Mr. Latham. I mean it is ridiculous.
    Mr. Prewitt. We will check into that, sir, and get back to 
you if you can give us the exact figures, I mean the exact 
identifier.
    Mr. Latham. Okay.
    Mr. Prewitt. This is John Thompson, the Associate Director 
of the Decennial.
    Mr. Thompson. We will make sure that she will be counted 
where she gets the form. So, if there is a problem with the 
spelling now or a problem with----
    Mr. Latham. One is in Meservey, Iowa and one is Alexander, 
Iowa.
    Mr. Prewitt. But she got the form where she lives, right?
    Mr. Latham. Eventually, apparently, yes.
    Mr. Prewitt. If she got the form where she lives, and she 
fills it out where she lives, she will be counted where she 
lives and that is what we tried to do
    Mr. Latham. Probably in the wrong district. But, yes.
    Mr. Prewitt. No. If that is where she lives, that is--it 
has been geo-coded to that address. And that is where she will 
be counted.
    Mr. Latham. Okay.
    Mr. Prewitt. The larger questions of confidentiality on the 
privacy I can only be as reassuring as we have said many, many, 
many times, that Census data are simply provided in a summary 
statistical form to agencies, to the American public, and so 
forth; individual Census records are never shared for 72 years. 
After 72 years, the National Archives releases individual 
Census data.
    Of course, one wants to remember, starting with the next 
release based on the 1940, that there will be very little 
information in those. A lot of people are going to go back and 
try to do ancestry research and genealogical research and they 
are going to find out that they were not in the long form 
sample and there will be very little information on the data 
file. But that is because we, in the 1940, split the two 
things.
    What I say, Congressman Latham, when I am trying to explain 
this, is I ask people, I say, have you ever read a story about 
Elvis, and how he lived in 1950 before Graceland and then 1960, 
after Graceland? Have you ever read any story about any 
celebrity, any person in the press, based on their Census 
answers. No. Not a single story has ever been written because 
no single individual Census record has ever been leaked or 
shared. And I don't know how else to get people to believe it 
except for those kind of almost anecdotal arguments. Just 
reiterating that there is a law and we go to jail, we pay a 
fine, won't do it.
    So, I am trying to figure out some other way to get the 
American people to understand that it has never happened. Do 
you know if President Nixon completed his form? No. Because 
there is no way you would ever know that fact.
    Mr. Rogers. And if you will yield on that
    Mr. Latham. Sure.
    Mr. Rogers. As much as I admire and love and respect 
Chairman Dan Miller, I wouldn't give you a nickel to know what 
toothpaste he uses. [Laughter.]
    Mr. Rogers. I have been thinking about that.
    Mr. Serrano. Just for the record, let me say that the 
minority side respects Mr. Miller enough to want to know what 
toothpaste he uses. [Laughter.]
    Mr. Prewitt. Well, one of the other things we do say, 
Congressman, frequently is that there is more information on 
your driver's license than there is on the short form. We don't 
ask your weight, your height.
    Mr. Latham. You also have to remember in Iowa it is not 
every sixth person that gets a long form.
    Mr. Prewitt. Yes, I appreciate that. Much higher sample 
rate.
    Mr. Latham. I guess it is 1-out-of-every-2 gets a long 
form.
    Mr. Prewitt. In some parts of Iowa, not across the State. 
Yes.
    I mean because you actually have a lot of----
    Mr. Latham. Well, we have a lot more than urban areas.
    Mr. Prewitt. Oh, yes, sir.

                    Local Update of Census Addresses

    Mr. Latham. Going to the same point, I guess, last year in 
leading up to the Census, the Bureau conducted a program they 
called the local update of Census addresses. The purpose was to 
give the Bureau the information concerning local, location of 
dwellings in order to conduct a more accurate Census.
    In one of my counties, Buena Vista, the auditor said last 
year that your agency wasn't using the information that they 
were giving you. And they have a lot of addresses--I mean the 
information they have is much better than what the Census 
people were using in the area. And I think it goes to the mis-
addresses and everything else, that you don't know where folks 
are.
    Whatever happened to that program? Why wasn't it used?
    Mr. Prewitt. Oh, it was used heavily, sir.
    Mr. Latham. But not in my district.
    Mr. Prewitt. Well, if they cooperated in the LUCA program, 
they were certainly----
    Mr. Latham. It was ignored.
    Mr. Prewitt. No, no, sir. There is an appeal process. If 
they submitted addresses and we didn't use them, because we 
didn't think they were there, there is an appeals process that 
OMB managed, not us, that OMB managed and all addresses that 
were accepted that had an appeals process have now been added 
to the master address file.
    So, if they participated in LUCA, and it would not have 
been our judgment finally. We could have said we don't believe 
those addresses are there, we can't find them.
    Mr. Latham. Well, why would there have to be an appeals 
process? How would you discredit information that they have on 
the tax base and they know where houses are and who pays taxes 
and you know?
    Mr. Prewitt. Surely. I am not talking about your community, 
sir, but I can tell you that we have city governments that give 
us addresses in the middle of parks. They just do. We just get 
addresses. We get addresses of dry cleaners because there is a 
utility bill that goes there. We get a lot of addresses that 
aren't any good and it costs us money, the taxpayer money, to 
go out and try to get a form from an address that doesn't 
exist.
    We do everything we can to get a clean address file. So, if 
they submitted information that identified this as a resident, 
we accepted it and if we thought it wasn't there, it was 
appealed. If every community in the country could give us any 
addresses it wanted, I can tell you the address list in this 
country would be a lot larger than we believe it is.
    We already know there are about 2 million or 1 million and 
a half duplicate addresses in the file because we were so 
welcoming, we took addresses from local governments, we took 
addresses from the Post Office, we took addresses from all 
sources that we could get, which means we have duplicate forms, 
which then creates a different problem because people shout at 
us, why do you send me two questionnaires?
    It is because their address came in from two different 
sources. One said Crescent Drive, and one said, Crescent 
Street. We kept them both in. We didn't think they were both 
there, but we kept them both in. So, now, we get arguments 
about oh, you are wasting taxpayer dollars by sending 
duplicative forms. It is not easy to find 2 in 120 million 
addresses.

                     Electronic Commerce Initiative

    Mr. Latham. Okay. In the Executive Summary of the Budget 
you got efforts to conduct the 2002 Economic Census and as part 
of the department's measuring electronic business initiative, 
you are proposing to change your data collection process as to 
reflect the e-commerce, basically the Internet. Can you give us 
some details how you prepare to measure the economy in a way 
that reflects the recent changes and how are they different 
from previous?
    Mr. Prewitt. Yes, sir.
    Well, you know, there is very much discussion in this 
society, of course, about e-commerce and the rapid way in which 
it is growing.
    Mr. Latham. Right.
    Mr. Prewitt. The only agency of the Federal Government 
trying to measure e-commerce is the Census Bureau. So, in so 
far as we have any information on it whatsoever of a systematic 
sort, it is being collected by the Census Bureau in our 
economic division. And we believe that it is very important to 
upgrade and improve that capacity.
    And we have asked in this budget for $8.5 million to 
measure electronic business. And what we will do, of course, 
working with the Bureau of Economic Analysis, is to actually 
try to develop a methodology for capturing what is a very 
ephemeral part of our economy. Not ephemeral, but it is very 
difficult, electronic commerce is much more difficult to count 
than bricks and mortar.
    And, what we need this money for is, indeed, to work with 
the methodologies that will allow us to give some kind of good 
measure of what is the retail flow, what is the business-to-
business flow, that is generated now by e-commerce.
    And we can certainly provide all kinds of details on that 
if you would like it?
    Mr. Latham. Yes. I would like to learn more about it.
    Thank you, Mr. Chairman.
    Mr. Rogers. Mr. Serrano?

                Restoration of FY 1999 Operating Levels

    Mr. Serrano. Thank you, Mr. Chairman.
    If I may make a suggestion, Dr. Prewitt, the Chairman's 
comments about the $17 million, I think, at least from my 
count, are well taken. And I think we will do all of us a great 
service if you consider us friends as we go along, and if you 
anticipate that there is going to be a problem, talk to our 
staffs, talk to us ahead of time so that nobody feels that we 
found something out at the last moment.
    And I think in that sense you will be helping us and we 
will be able to help you and I think that I am saying that in 
support of the Chairman's concern which I think was well 
founded.
    You are asking for a large increase in your salaries and 
expenses appropriations this year, to $174 million. This is 
almost $34 million on a base of $140 million. Some of this is 
for new initiatives but I understand some of this is to restore 
a $12 million cut you got in fiscal year 2000. What exactly do 
you intend to do with this new allocation?
    Mr. Prewitt. You are correct, sir, part of that is to 
restore cuts that we suffered this fiscal year. And the $12 
million restoration will allow us to implement our important 
new initiative, our NAICS initiative, in our current economic 
surveys. This is a new system to take the old industry codes 
that we have had for this economy in the 1970s and bring them 
up to the 21st Century and we have started that work, this 
Committee has funded it but we weren't able to continue that 
work in this fiscal year at the level we believe it ought to be 
done. So, that is part of the restoration.
    We wanted to revise NAICS for the 2002 period, in part, to 
take advantage of our growing knowledge about Internet-based 
industries. We need to revise the construction sector. But, 
particularly we need to do something on the service sector. We 
are measuring the service sector.
    As you know, in the old industry code, the service sector 
was grossly mis-measured and under-measured. I think one of the 
examples we used is that a barber and a brain surgeon were put 
into the same coding category in 1970. They were both providing 
a service. Well, that is not a very useful set of data for this 
country to have.
    And, so, what our improved methodologies allow us to do is 
put those in the right categories and measure the service 
economy in a more intelligent way. And we also want to improve 
our business register improvements. We have response rate 
issues not just, of course, in our population surveys but also 
when we are conducting, getting information from the 
businesses. And, so, need to continue to work with them and so 
forth.
    So, that is the restoration money. Then we are asking 
additionally $17.5 million for new initiatives, half of that is 
to what I just explained to Mr. Latham is really our electronic 
business initiative. We also would like $1.5 million to change 
the survey of minority-owned business enterprises from what is 
now a every five-year survey, to an annual survey. This is one 
of the most rapidly growing parts of our economy as members of 
the minority races move into entrepreneurial activity.
    We also believe that we are underestimating export data, 
especially small exports, under $2,500. The current 
methodologies and laws read that under $2,500, exporters don't 
have to record that. A large number of exporters now are 
putting a lot of things in boxes that are under $2,500, so, 
they won't be measured and putting them on Fed Ex and shipping 
them out of the country. We believe we are probably 
underestimating exports from anywhere from 3 to 10 percent and 
we need to develop a better methodology if the country wants to 
know about exports.
    We also have an initiative to improve our measurement of 
economic well-being in this country, which we have been trying 
to do this. Our important measures of poverty do not include, 
for example, the in-kind payments. It is just income measures. 
And we know that is inadequate. So, we would very much like to 
improve that survey of income and program participation survey. 
And that is part of our new initiatives.
    So, the total number is $17.5 million for our new 
initiatives.
    Mr. Serrano. The in-kind payments; you are talking about 
health benefits or whatever?
    Mr. Prewitt. Yes, sir.
    This country draws its poverty line based only on cash. 
That is a 35-year-old measure. It is like the problem with the 
industry classification where we are working with measures that 
are 35 years old.
    Mr. Serrano. I understand that, but my question is how fair 
is that? Do we measure wealth the same way? In other words, do 
we say--I mean we assume that a millionaire can afford the best 
hospital and doctor in the nation, but we do factor that into 
how wealthy a person is?
    Because what I am afraid of is this will show that a person 
is less poor than they really are, simply because they can go 
to the local emergency room.
    Mr. Prewitt. No, no. By putting in, whatever we put into 
the measure it will move across the entire income sector. That 
is if we measure in-kind payments of any sort, which include, 
can include, you know, free membership to a health club at the 
corporate level, that becomes part of the measurement of income 
then.

                      Suitland Maryland Facilities

    Mr. Serrano. Okay. Dr. Prewitt, I have a question here 
which is partly the kind of question I ask so that I can score 
points with my brother. Mr. Chairman, I have one brother and no 
sisters, and he works for the Census Bureau. He has been there, 
incidentally, for the record, since way before I was a Member 
of Congress. In fact, he worked for the Census Subcommittee 
here, in Congress, and then went on to work for the Census 
Bureau. And he doesn't know about this question, but I know 
that this will interest him. [Laughter.]
    Mr. Serrano. You have $3.2 million in your budget for 
design work to fix up the Census Bureau headquarters out in 
Suitland. Can you describe what the problem is out there and 
the extent to which GSA has been involved in putting together 
your recommended fix?
    Secondly, how does this tie in to NOAA's desire to do 
something with some buildings out there? And I guess the big 
question for the kid brother is does this mean he gets a 
window, finally? [Laughter.]
    Mr. Rogers. Oh, and by the way, the water machine doesn't 
work on the second floor. [Laughter.]
    Mr. Prewitt. As I quickly alluded to in my opening 
comments, the conditions at the Suitland facility are serious. 
They are not just old and decayed, but they really are serious 
health risks. We only use bottled water now. We have lead and 
bacterial contamination in the water supply. We are taking air 
samples on a regular basis. We have a very antiquated 
ventilation system, inadequate air circulation. And we have 
numerous complaints of respiratory problems. We certainly have 
leaking and improperly functioning heating and cooling 
equipment.
    We have extreme pressure changes. I mean temperature 
ranges. And, therefore, when people get cold and they plug in 
their little local heater they bought in the drug store you get 
power outage problems. We have enormous problems of rupture of 
water and steam pipes with flooding. I have had to vacate my 
office twice in the last six months, once for three days and 
once for five days, while we repaired it because of flooded 
pipes. It is not a very productive way to run an organization. 
But, nevertheless, it happens.
    We have had sewage pipe leaks, and we have pigeon 
infestation and we are very concerned about the health 
implications of that.
    Mr. Serrano. What infestations?
    Mr. Prewitt. Pigeon, pigeon dropping infestations.
    Mr. Serrano. Talk about outdoors, that is----
    Mr. Prewitt. No, no, no. They are, you know, in the roof, 
roosting in the roof. And we have asbestos, serious asbestos 
issues. We also simply have a leaky roof. It is beyond fixing, 
you know, it has been patched and patched and patched and it 
won't patch any more. It needs to be replaced.
    So, the issues are quite serious from both a productivity 
point of view as well as from a health point of view. The GSA 
has been working with us on this. The NOAA issue that you bring 
up, in building four, they actually want a new building in 
order to house their computers and we are coordinating, of 
course, closely with them.
    What we had proposed to the GSA is we either renovate, 
seriously renovate or we replace. We, obviously, have old 
buildings that are very hard to maintain the right environment 
for advanced electronics. Yet, we are supposed to be running 
one of the most technologically sophisticated Censuses ever in 
history. And that will only get more technologically 
sophisticated.
    We are not only trying to measure e-commerce, we are trying 
to use e-commerce methodologies to measure e-commerce. We want 
to allow the businesses of this country to file electronically 
because that will mean enormous cost savings for them and they 
want to file electronically. That means we have to have the 
equipment to allow them to file electronically. It all has to 
be encrypted and so forth and so on.
    So, there are health issues, there are productivity issues, 
and there are really modernization issues. We feel very, very 
strongly about trying to do something about the conditions 
under which we are trying to work and live, obviously, or I 
wouldn't have said it so loudly.
    Mr. Serrano. Thank you, Mr. Chairman.
    Mr. Rogers. Chairman Miller.

                                DCS-2000

    Mr. Miller. Thank you, Mr. Chairman.
    Let me return for a minute to the question that Chairman 
Rogers brought up about the DCS-2000 system and the--going to 
the two-pass system. We found out about it a while ago, I 
forget, a month or so ago, because we talked about it actually 
about a month ago at a hearing.
    But the way we found out was from the Inspector General 
when the minority/majority staff was meeting with them. We are 
also led to believe that there was more than $17 million, a lot 
more than $17 million. So, let me confirm that it really is 
going to cost $17 million and not quite a bit more.
    And, as Mr. Serrano said, this is a fairly significant 
change to go to a two-pass system from a one-pass system, I 
think. It was enough that we found out from other sources and 
you all should have come directly to my Committee and Mr. 
Rogers' Committee.
    So, there is a two-part thing. Is there going to cost more 
than $17 million or is $17 million a fairly comfortable number?
    Mr. Prewitt. Well, let me apologize if we have been 
deficient in bringing this to your attention. We are in the 
middle of a Census, and a lot of things are happening 
simultaneously, and a $17 million variation--we do not see the 
second pass, by the way, as technologically particularly 
challenging, or having many operational implications.
    What it did--just to remind us of what happened. We have a 
productivity estimate, as we do for all of our major tasks and 
one of the tasks is, as forms come in and get scanned, not all 
of them can be read and some of them get kicked out, and they 
have to be hand coded and keyed. And the people who are doing 
that hand-coding or key entry were doing fewer key strokes per 
hour than we thought they would. And, so, when we looked at 
that, we said, we better not put the apportionment number at 
risk. We better make sure that no matter what happens we get 
all of the basic counts done on time.
    So, the change from a one-pass to a two-pass system was 
not--I am not talking about the money but I am talking about it 
from a technological operational point of view--it wasn't a big 
deal. It delays by about two or three weeks the report of the 
long form data, some time next Fall. These are not under any 
kind of statutory deadlines. And, indeed, if we had imagined 
that this was a more intelligent--we may well have put this in 
our operations in the first place.
    But, so, we decided to make this choice. We never, 
ourselves, sir, believed that there would be any software 
problems in this. Indeed, I think thus far that has been 
proven. It is not a complicated issue to do the kind of 
software that we are talking about doing for the second pass.
    We are actually capturing the image of the long form as it 
moves through and then we are going to come back and scan it. 
We are actually capturing the image as it moves through.
    The $17 million is the cost of holding those captured forms 
in storage, so to speak--I mean electronic storage, of course--
for a period of time until we get back to them and scan them 
and holding some employees longer because they are going to be 
working an extra two or three weeks to finish scanning the long 
form.
    Now, and I want to be very careful so you understand. There 
are two numbers. There is another number which is $35 million 
and that is a number based on productivity. It has not to do 
with the two-pass. At any time in this kind of process you are 
making the best estimate you can about productivity on 
interviewers, on data scanning, on update leave, on all kinds 
of operations, two years ago and our productivity estimates for 
this particular operation were too optimistic. Therefore, we 
have to spend more money to capture the data but that has 
nothing to do with the two-pass. So, that would be why you----
    Mr. Miller. The total is going to cost like $52 million 
more to capture the data?
    Mr. Prewitt. No. The second pass costs $17 million.
    Mr. Miller. Okay.
    Mr. Prewitt. The productivity--but that would be true in 
any operation.
    Mr. Miller. Because GAO was a little concerned also about 
shifting personnel around and all. They had some concerns about 
it. But I think it is going to eventually get done but with a 
delay.
    Mr. Prewitt. Yes.
    Mr. Miller. So, the bottom line is I think it is going to 
get done.
    I have some questions about this polling data. You say it 
was a private company. Because this whole concern about privacy 
is something that I think we are all going to wrestle with over 
these next months and years, actually, for the entire Bureau 
because the Bureau does a lot more than just the Decennial. 
They collect data, as you well know, for Labor, the Bureau of 
Labor and Statistics and such. So it would be interesting to 
know about this polling data, and I am just very curious.
    Mr. Prewitt. Oh, sure.
    Mr. Miller. And I do not know if----
    Mr. Prewitt. I will share that with you in a minute.
    Mr. Miller. I know it may be private information, but----
    Mr. Prewitt. Oh, no, it is not private information. It is 
funded by private foundations.
    Mr. Miller. All right. Great.
    Mr. Prewitt. And it is being funded for scholarly purposes, 
the people who do analysis of the census. So it is all public-
use data. It is not private data. It is nothing I have that you 
cannot have.

                             Privacy Issue

    Mr. Miller. Great. Thank you. I would appreciate it.
    Just one last question on this privacy issue because I do 
not want to beat a dead horse with this issue, but it is 
something that as far as the long form is concerned, I feel the 
media is taking advantage of this to some extent. And I will 
give you an illustration. Some talk show people do not want Ms. 
Maloney and myself opposite each other because we agree on this 
issue. They want controversy. They want a fight. And that is 
unfortunate because, basically, we are all agreeing do the best 
job to get the form completed, and we are saying that, but that 
is not what some media want to report. And it is unfortunate 
that that is being perceived out there.
    The question I have, and I brought it up briefly yesterday, 
is the dress rehearsal had a 10- to 15-percent differential 
between short form and long form, and you did not seem to think 
that was very significant as a predictor of the problem and, 
the concerns we have today. Explain that and how it compares 
with the 1988 Dress Rehearsal. I assume we did a dress 
rehearsal.
    There was a 6-percent differential in 1990 total.
    Mr. Prewitt. Correct.
    Mr. Miller. The dress rehearsal had that 10 to 15 percent.
    Mr. Prewitt. Correct.
    Mr. Miller. In Sacramento. And it is interesting, 
Sacramento had a higher response differential than South 
Carolina, which is a rural southern area. So I do not know if 
the data would be available for 1988 to see that. Because, to 
me, that, again, we are looking at hindsight now, and by the 
time we got that data, it was too late to do anything about the 
long form anyway.
    Mr. Prewitt. No. I do not have the pre-1990 dress rehearsal 
data. I do not even know the history of that dress rehearsal 
very well. I doubt that it was conducted the same way that we 
did the dress rehearsal because the 1990 census was different, 
and therefore the way we would have conducted the dress 
rehearsal would have been different. And I simply do not know 
that at this stage.
    What I meant to say yesterday, Congressman, or I think 
tried to say yesterday, was that there are certain things in a 
dress rehearsal which are predictive. And if you have trouble 
capturing the data, as we did, we went back and retooled that 
system and fixed it. We learned some things in dress rehearsal.
    What you cannot do is easily generalize from one or two 
communities what a large data pattern would look like; that is, 
we do not use the dress rehearsal to predict the mail response 
rate in the Decennial. If we did, we would not have come in to 
you with a budget for 61 percent, we would have come in with a 
budget at 50 or 51 percent. So we did not want to use that as 
the predictor----
    Mr. Miller. But the differential is the question. We are 
talking about differential rather than the total----
    Mr. Prewitt. But I am saying----
    Mr. Miller. In hindsight, we probably should have----
    Mr. Prewitt. Surely. Quite possibly. We did not think of 
that as predictive of what we would get in 2000. And I am not 
saying we should not have, but we simply, that was not the--
what we are trying to do is test the operations and not try to 
assess the way the entire population will behave in a Decennial 
environment.
    Mr. Miller. Mr. Chairman, thank you very much.

            Accuracy, Coverage and Evaluation Program (ACE)

    Mr. Rogers. Thank you, Mr. Miller.
    Director Prewitt, the administration's position is that 
statistical adjustment can be used for all purposes except 
apportionment. Many of us disagree with that, but we will not 
debate that here because that will be a court decision 
eventually.
    But I do have some questions about the statistical 
adjustment procedures that you are using or proposing to use. 
And as of late last summer, I know that the Bureau was still 
working on trying to develop the design for the adjustment, the 
Accuracy, Coverage and Evaluation program, or ACE. Has a final 
design for the ACE been nailed down yet or are there still some 
outstanding issues and questions yet to be decided?
    Mr. Prewitt. All of the major features of the design are 
now fixed. We, indeed, we are still, in any kind of big 
operation, you are still improving it as you go. But all of the 
field listing of our sample blocks has been completed. We did 
have a National Academy of Science-sponsored major meeting, 
where we brought in the critics, as well as the supporters, and 
we had them critique and discuss the design. And obviously on 
the basis of that, we made some modest adjustments. But 
fundamentally, sir, it is designed.
    Mr. Rogers. I am talking about the design, not necessarily 
the procedural aspects of it. But the design is essentially in 
place.
    Mr. Prewitt. Yes, sir.
    Mr. Rogers. Has that been shared with Congress yet?
    Mr. Prewitt. Oh, surely. Yes.
    Mr. Rogers. From what we have seen, it looks a lot like the 
1990 design, which at that time was rejected by the Secretary 
of Commerce, and he disallowed it to be used, which was a good 
thing because it took Census almost 3 years to discover that 
the adjusted numbers were wrong after the fact. They 
overestimated the undercount by a half a percentage point.
    Obviously, this is an issue of great interest because the 
present ACE looks a lot like that same very controversial, and 
disputed, and then rejected and then disproven design of 1990. 
How will your design be different from the one that failed in 
1990?
    Mr. Prewitt. Well, sir, as I said a minute ago in my 
comments, it obviously did not fail because every economic 
statistic in this country is based upon that adjusted number, 
every economic statistic that has been collected since 1992. So 
it clearly could not have failed or we would not be using it as 
a country.
    Mr. Rogers. Well, but it was rejected for purposes of 
apportionment.
    Mr. Prewitt. Yes, sir, but the----
    Mr. Rogers. And redistricting as well.
    Mr. Prewitt. But the point is that the methodology did not 
fail or else the Bureau of Labor Statistics would not have 
decided to use it for all Bureau of Labor Statistics' 
statistics, which is the----
    Mr. Rogers. But you admit that it overestimated the 
undercount by a half a percent.
    Mr. Prewitt. Yes, sir. There was a coding error. However, 
do not for a minute think that a coding error is only part--a 
coding error can occur anywhere in this system. We can have a 
coding error in the apportionment number, which we learn 6 
months later. We hope we do not, but we can. You can have a 
coding error that would occur. And we may learn that 6 months 
later and have to come back and tell you, ``Look, the 
apportionment number is wrong.'' A coding error is not unique 
to that particular methodology. A coding error is a coding 
error.
    Mr. Rogers. Well, those so-called coding errors can have 
real----
    Mr. Prewitt. Enormous consequences, yes, sir. I do not 
trivialize it. I am only saying that it is property----
    Mr. Rogers. Including the make-up of Congress.
    Mr. Prewitt. That would be true if it were a coding error 
in the apportionment number, sir. I am only saying that it is 
not the property of adjustment that creates a coding error. It 
was a coding error for which the Census Bureau, you know, is 
deeply apologetic, regretful. And we certainly have all kinds 
of procedures in place to try to prevent that happening now. We 
are certainly not running into any of those kinds of problems 
thus far in the operations.
    And if we find a coding error 6 months or 6 years after we 
give you the apportionment number, we will come back and tell 
you.
    Mr. Rogers. By then we will have eight members of Congress 
that are no longer here because of that, and they will not like 
that very much.
    Mr. Prewitt. I appreciate that, sir. I appreciate that.
    Mr. Rogers. In fact, I still maintain that because of the 
bungled 1990 census, Kentucky lost one of its seven seats, down 
to six, and caused enormous reapportionment and redistricting 
problems for the remaining six. It is just a small personal 
footnote, aside here. [Laughter.]
    Mr. Rogers. But the methodology, the design of your 
statistical sample that you proposed to be used for 
redistricting purposes within States is, of course, of great 
enormous importance to the make-up of the political body that 
rules the country, and that is no small incidental effect. And 
so you would understand that we will want to look at your 
design under a big microscope.
    Mr. Prewitt. We are delighted to have that done, sir. I 
should say that the undercount also affects the distribution of 
seats in the House, and we know that there is an undercount.

                            Census Schedule

    Mr. Rogers. Based on your plan, you have to produce and 
disseminate very detailed statistically adjusted numbers for 
every State for redistricting all of the way down to the block 
level, and all of this has to happen in a very short time 
period. We already know from the 1998 dress rehearsals that the 
adjustment took much longer than had been anticipated and 
planned for. In fact, your own evaluation stated that ``Every 
group of major tasks took longer than planned. Several tasks 
took at least twice as long as planned. A large effort was 
expended in the dress rehearsal to ensure final data would be 
available on schedule.''
    Given that every major task ran seriously behind schedule 
in the dress rehearsal, and that was adjusted at two test 
sites, how can you assure us that you will be able to produce 
these numbers in the actual world, the actual census?
    Mr. Prewitt. I cannot assure you, sir. I can only say the 
following: Every major operation thus far has functioned at 
schedule. The update leave operation, the list enumerate 
operation, the special SPE, the Special Place Enumeration, 
every major operation of the census, the data capture, we are 
meeting all of our goals and targets. If we do not meet our 
goals and targets, then we will come in and tell you. But right 
now we are meeting our goals and targets.
    And as I said to Mr. Miller's committee yesterday, and I am 
happy to repeat again today, because I have said in public in 
front of the National Academy of Science, if the Census Bureau 
does not have confidence in the quality of the accuracy and 
coverage evaluation, it will not use it. It only will use data 
products it has confidence in. And if the time schedule means 
we are not going to have confidence in the data, it will not be 
used because we would not do that. And so we can only tell you 
that right now we are meeting all of our major operational 
changes.
    Mr. Rogers, we could easily be sitting here talking about 
serious problems; i.e., a response rate that is not going to 
hit 61 this weekend, but a response rate at 50, and that would 
be a big--or our data capture is not working. That would be 
serious. Or that we are not running 110 percent of our 
recruitment goals, but 80 percent of our recruitment goals. 
That would be serious.
    None of the big issues that affect the operations of the 
census right now are not on schedule and happening the way we 
told you they would happen. We believe that will also be true 
of ACE. If we are wrong, you will know about it.
    Mr. Rogers. I expect you are right. [Laughter.]

             Census 2000 Budget Funding In FY 2001 Request

    Mr. Rogers. Now, we are over the hump in terms of funding 
the 2000 census, but we are not finished yet. Your budget still 
includes a sizable amount for the 2000 census; roughly, $420 
million for 2001. Give us a breakdown of the costs of the major 
activities in your 2001 request for the census, including the 
ACE. And you can summarize, and then we would like a detail for 
the record.
    Mr. Prewitt. Well, we certainly have detail for the record.
    I believe the ACE number specifically is $52 million.
    The issue is that the ACE money is in different frameworks, 
but the total is $52 million. Most of it is, of course, for 
data dissemination. That is the major part of the----
    Mr. Rogers. If you will, provide us a breakout on the ACE 
number, for the record, if you will, please.
    Mr. Prewitt. Yes, sir.
    What we have is the field data collection support systems 
is still the largest part of our total budget because we are 
still in the field, of course, in part of 2001. That is $122 
million, and then there is still telecommunication support is 
$115 million. But we can certainly give you the ACE number 
broken out from across these frameworks, yes.
    [The information follows:]
           [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 

    Mr. Rogers. Any further questions over here?

                     Counting U.S. Citizens Abroad

    Mr. Latham. I do not want this to take long at all, but 
there was a story in a recent paper about counting U.S. 
citizens abroad, and we all know that they vote. And you were 
quoted as saying that you have no mandate to carry out the 
count of citizens abroad, which may be true. But I just wonder 
if you had any advice or counsel to us how we, since they do 
vote, how do we----
    Mr. Prewitt. Surely.
    Mr. Latham [continuing]. And pay taxes, how do we bring 
them into to be represented?
    Mr. Prewitt. We have met with leadership from the Americans 
Abroad, and there is a coalition. We have met with them. 
Congressman Miller had a hearing. I subsequently met with him 
again for a full day at the Census Bureau with all of our 
senior staff, and we now have a group at work at the Census 
Bureau trying to figure out how we can best come to tell the 
Congress how we would actually do this and a rough estimate of 
what it would cost.
    We have not put that in the current budget because we are 
still working on that. But we believe by 2002, we will be able 
to come back and tell you. The Census Bureau has no reason not 
to want to count the Americans abroad. It is a great technical 
challenge. In fact, I met with a group of them just as recently 
as 2 weeks ago and asked them the simple question: Please 
define for me what is an American abroad. And the group did not 
have an answer. Is it somebody married to an American? Is it 
somebody who has only been abroad for 3 years? What about 47 
years and does not ever intend to come back, has children at 
home there, are they still an American?
    So we have to start from very basic, you know, what 
constitutes the population we are trying to find and then how 
will we count them in a way that does not create injustices 
because you find some of them easier than you find others. But 
we are delighted to accept that technical challenge.
    Mr. Latham. I would think the basis would be whether or not 
they vote and if they are represented in Congress.
    Mr. Prewitt. Well, that would mean we would count very 
differently abroad than we do in the States, of course. We do 
not just count voters in the United States.
    Mr. Latham. As far as people, yes. And there are cross 
purposes, you are right, and then that is the problem that--
okay.
    Thank you, Mr. Chairman.
    Mr. Rogers. Thank you.
    Mr. Miller?
    Mr. Miller. Let me ask a couple of brief questions. We 
agree that we need to do something about these Americans 
abroad. There is a fairness issue, and we are all going to be 
committed I think to try and accomplish that for the 2010 
census.
    You mentioned earlier that the design for the ACE is 
complete. We have not received a copy yet. So if it is 
complete, could we get a copy later today?
    Mr. Prewitt. Oh, surely.

                                Accuracy

    Mr. Miller. Thank you. I appreciate that.
    Let me just confirm something you said just a few minutes 
ago and also you have said before, you said yesterday, too, is 
that there is no statement or knowledge today that the ACE-
adjusted numbers are better numbers than the actual enumeration 
numbers. That decision cannot be made until next year, right? 
Which is more accurate? Which numbers are going to be more 
accurate, the ACE-adjusted numbers or the full enumeration 
numbers?
    What you have said, in effect, is you cannot make that 
decision until you have the ACE completed, right?
    Mr. Prewitt. I am not trying to play word games, but there 
is a very serious conversation to have about the difference in 
distributional accuracy and numerical accuracy. We are 
convinced that the adjusted number is more numerically 
accurate; that is, it will result in a count which is closer to 
the true count of the American population. Distributional 
accuracy has to do with whether that adjusted count is 
distributed across the population, geographic areas----
    Mr. Miller. Census block.
    Mr. Prewitt [continuing]. In the same proposition that it 
would have been in the absence of that count. That is a very 
different criteria. That is the Mosbacher issue. The Mosbacher 
issue was we ought to measure this in terms of its 
distributional accuracy. The Census Bureau actually conducts a 
census to achieve numerical accuracy. Let me give you one 
example.
    As you know, Mr. Miller, we have put in place a special 
procedure for new construction; that is, houses that were moved 
into over the last 2 months. These are not undercounted 
populations. These are suburbs of Kansas City, and Phoenix and 
so forth, the new housing developments. We want to count them 
every bit as much as we want to count everyone else. So our 
goal is to be as numerically accurate as we can. I am 
absolutely convinced today, based on what I know, that the 
adjusted number is more numerically accurate than the 
unadjusted number because the unadjusted number has double 
counts and undercounts.
    Mr. Miller. When you get to census block, that is the data 
that we are talking about. When you do redistricting, it is 
census block data. Can you tell me categorically right now that 
the adjusted data is more accurate than the full enumeration 
data?
    Mr. Prewitt. Well, I just said it.
    Mr. Miller. A census block.
    Mr. Prewitt. From a numerical accuracy point of view, yes; 
that the adjusted count is more accurate than the unadjusted 
count. We have figured out a way to count to include into the 
count people who otherwise would have been missed and to take 
people out who were double counted.
    Mr. Miller. We are going to have this debate----
    Mr. Rogers. Is that on the block level?
    Mr. Prewitt. In every individual block; is that what you 
are asking?
    Mr. Rogers. Yes.
    Mr. Prewitt. No, I cannot say that because there are all 
kinds of--but I can also tell you the enumeration number is not 
very good at the block level. The block level data are very 
unstable.
    Mr. Miller. But that is what is used for redistricting.
    Mr. Prewitt. No. Actually----
    Mr. Miller. Wait a minute.
    Mr. Prewitt. Sorry.
    Mr. Miller. I thought block data was used for 
redistricting.
    Mr. Prewitt. Block data is used for redistricting.
    Mr. Miller. Okay.
    Mr. Prewitt. It is one of the things that is used in 
redistricting.
    Mr. Miller. And adjusted data is more accurate at the block 
level you are saying, yes or no? Is there a yes or no answer to 
it?
    Mr. Prewitt. Yes, there is a yes or no answer to it. On 
average, absolutely.
    Mr. Miller. That is not yes or no.
    Mr. Prewitt. But of course.
    Mr. Miller. My feet are in the oven, my head is in the 
freezer, and on average, I am okay. [Laughter.]
    Mr. Prewitt. No, that is not true. That is not true. There 
are a lot of blocks, a lot of blocks, which have a better 
numerical count now than they would in the absence of adjusted, 
more blocks than do not. That is just the fact. But you are a 
statistician----

               Adjusted Data for Statistical Information

    Mr. Miller. Well, Mosbacher had that decision.
    You mentioned that the adjusted data in 1990 is used for 
all of this statistical information. I thought there were so 
many problems with that data that we have not used it. We use 
other data. So you are telling me that the PES-adjusted data is 
the foundation of statistical analysis by the Census Bureau.
    Mr. Prewitt. No, I did not say that. I said the Bureau of 
Labor Statistics made a decision in 1992 to use the adjusted 
data as the frame for all of its ongoing survey work, which 
includes the CPI work and the unemployment work. And I said 
economic statistics that use Bureau of Labor Statistics' 
fundamental data are all based--I did not say the Census 
Bureau. I said the Bureau of----
    Mr. Miller. Okay. The Bureau does not use it.
    Mr. Prewitt. The Bureau does not use it.
    Mr. Miller. And they ended up adjusting it three times or 
so, did they not? I mean, before they ever got the set of 
numbers, it took them about 2 years to get the right set of 
numbers for the PES in 1990. And it was not until 1992 that 
they finally got a set of numbers.
    There were mistakes in the first set of numbers. But I do 
not want to take all of the time now. I think we are running 
out of time.
    Mr. Rogers. Mr. Serrano.

                 American Citizens in U.S. Territories

    Mr. Serrano. Thank you. My question was Mr. Latham opened 
up the subject I wanted to close with, and it is probably a 
question to Mr. Miller as much as it is to you, Dr. Prewitt. 
Have we made any progress on what I believe was my fair and 
just desire to have American citizens who live in our 
territories counted within some of the figures? When I say 
``some,'' I know that you cannot say there are 300 million 
folks who live within the 50 States and include Puerto Rico and 
the Virgin Islands and so on because they do not live within 
the 50 States.
    But certainly if part of your work, and it is, is to tell 
me, for instance, how many Mexican Americans there are in the 
country, and how many African Americans there are in the 
country, and how many Puerto Ricans there are in the country, 
well, specifically in the case of Puerto Rico when you tell me, 
as you will, that there are 4 million, wrong. There are 8 
million who live within the country. They do not live within 
the States, but 4 million live under the American flag as 
citizens.
    And I continue to point out how unfair it is to count, and 
I want them counted, an undocumented alien in California or in 
New York in the national 50-State figure and 4 million American 
citizens will not be counted in those figures simply because 
someone interprets the Constitution to say only within the 
States. But the Constitution never envisioned citizenship 
outside the States. And so I do not think it would create a 
court challenge for us to interpret that this means count 
Americans and residents within the States.
    And since we are going to have more than one figure, more 
than one table, I cannot see what the problem is to say: For 
purposes of the total population, there are ``x'' amount who 
live within the 50 States and ``x'' amount of folks who live 
under the American flag in other places. And then when you say 
to me there are a million-and-a-half Cubans, and there are 8 
million Puerto Ricans, you should take into account those that 
live in the territories. Everybody else does. Cheerios takes it 
into account when they are selling their product; TV takes it 
into account; the record industry certainly does. They did not 
bar Ricky Martin because he was not living within one of the 
States. Why can we not do this? Why are we having such a 
difficult time counting my cousins in some of the figures that 
I am going to get counted in?
    Mr. Prewitt. Is that a question to Mr. Miller?
    Mr. Serrano. To both, actually. [Laughter.]
    Mr. Serrano. But since you are the one at the table--I know 
you would rather it would be a question for Mr. Miller.
    Mr. Prewitt. Well, I think, as the Congressman knows, there 
was a congressional hearing before Chairman Miller on this 
topic. And at that time, I did try to explain as best I could 
that the 2000 census equips us, and we will provide many, many, 
many data products which do this to incorporate the Puerto Rico 
count into all of the rest of the counts.
    The tough issue that you raised in that hearing, which I 
did try to address, was, ``Well, what about the national 
totals?'' And what I responded then and have to repeat today is 
that that number is not just the Census Bureau's number; that 
is, that the entire statistical system has a way to define the 
national total, which includes the 50 States and the District 
of Columbia. And I, indeed, have talked to the chief 
statistician at OMB about this issue after our hearing, and we 
continue to have a conversation about it. Indeed, I am going to 
bring it up again at an Agency head meeting later this week.
    So the data are there, but it would have to be a decision 
by the statistical system not just the Census Bureau.
    Mr. Serrano. Okay. But without pounding this to death, what 
is the problem? What is their problem that they cannot say, 
yes, that is included? And I am not necessarily suggesting, 
although I will probably regret saying this, that you include 
the 4 million in the national figure because I guess the 
argument could be that they are not living within the 50 
States. But they are living under the American flag. They are 
covered and governed by our Constitution and by our President. 
They serve in our armed forces, but we do not count them.
    And at least, at least, could you commit yourself to either 
doing or convincing people to at least include them within the 
other breakdowns? For instance, like I said, when you give me 
the number of Puerto Ricans in the Nation, will you include the 
4 million from Puerto Rico or are you going to give me a 50-
State count, which is technically not accurate?
    Mr. Prewitt. Well, I am going to be a little cautious so I 
do not mislead you or make a promise that I cannot fulfill 
because we have so many different kinds of data products. But 
certainly there will be counts of the Puerto Ricans in the 
United States, which will include the Puerto Rico Puerto 
Ricans. That will be a data product. There may be other data 
products which are conceptualized differently, which do not. 
And there are so many different kinds of things that if I give 
you a categorical answer----
    Mr. Serrano. If you do not count toilets in Puerto Rico, 
and I am being sarcastic, people may not get upset about that. 
But my question to you is do you think we are moving, and I 
will close with this, do you think we are moving in the 
direction where this year I and my cousins will be counted in 
one figure, any figure within those figures, where we will be 
counted together?
    Mr. Prewitt. Yes. Yes, I can produce that.
    Mr. Serrano. And that will be part of the official final 
report.
    Mr. Prewitt. Certainly. One of our official data products, 
yes.
    Mr. Serrano. Then I am happy.
    Mr. Rogers. We are all happy. [Laughter.]
    Mr. Rogers. Dr. Prewitt, thank you so much for being here 
today. You spend a lot of your time up here on the Hill 
explaining and trying to answer questions for all of us. But 
that is, I guess, a part of the turf that you have to put up 
with.
    Let me close the hearing by saying that we urge every 
single American to mail that form back in forthwith. We need 
you. America needs you. Your local Congressman needs you. We 
cannot represent our people unless we know that they are there 
and what they are there for. We cannot help them with veterans' 
benefits or Social Security problems or Visa applications or 
the like unless we know about them. And so we urge every single 
person to mail that form in immediately, long or short, 
whatever it may be, because this really is democracy at work. 
It is the biggest peacetime mobilization of America, outside 
war, and we are spending billions of dollars to make this 
happen. And unless it does, our democracy will not be as good 
as it could have been.
    And that reminds me, and I will close with this, of that 
old saying, that a person was asked if he had heard that apathy 
and ignorance would finally kill democracy. He said, ``I do not 
know, and I do not care.'' [Laughter.]
    Mr. Rogers. I hope we are not a Nation of people who do not 
care.
    And we thank you for your being here today and the work you 
are doing and all of your staff. And we wish for you 100-
percent success. Thank you.


 
                           W I T N E S S E S

                              ----------                              
                                                                   Page
Baker, D.J.......................................................   129
Barshefsky, Ambassador Charlene..................................    55
Daley, Hon. W.M..................................................     1
Gudes, S.B.......................................................   129
Hopkins, John....................................................    55
Prewitt, Kenneth.................................................   211
Sullens, J.L.....................................................   129

 
                               I N D E X

                              ----------                              
                                                                   Page

            NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION

Biography of D. James Baker......................................   188
AWIPS Build 4.2 and 5.0..........................................   191
Coastal Impact Assistance Fund Authorization.....................   207
Coral Reef Task Force............................................   203
ECOHAB Program Funding...........................................   203
Fishing Vessel Buyback Program Funding...........................   202
FY 2000 Emergency Supplemental...................................   194
Global Disaster Information Network..............................   208
National Weather Service Modernization...........................   189
Nautical Charting Backlog........................................   209
Net and Long-Lining Bans.........................................   202
NOAA Fee Collections.............................................   189
NOAA Program Increases...........................................   189
Pacific Coastal Salmon Recovery..................................   205
Program Authorizations...........................................   198
Satellite Funding................................................   204
Shark Research...................................................   203
Summer Forecast for the Midwest..................................   197
Supplemental Request for Vieques, Puerto Rico....................   196
Supplemental Request for West Coast Groundfish...................   195
Written Statement of Dr. D. James Baker..........................   132

                          BUREAU OF THE CENSUS

Accuracy.........................................................   269
Accuracy, Coverage and Evaluation Program (ACE)..................   263
Census Funding...................................................   250
Adjusted Data for Statistical Information........................   270
American Citizens in U.S. Territories............................   270
American Community Survey (ACS)..................................   243
Biography of Dr. Kenneth Prewitt.................................   233
Census 2000......................................................   234
Census 2000 Budget Funding in FY 2001 Request....................   266
Census Long Form.................................................   240
Census Quality...................................................   236
Census Schedule................................................235, 265
Suitland, Maryland Facility......................................   259
Chairman Rogers' Opening Remarks.................................   211
Counting US Citizens Abroad......................................   268
Data Capture System, DCS-2000..................................251, 261
Economic Indicators..............................................   242
Electronic Commerce Initative....................................   257
Evaluation of the 2000 Census....................................   249
GAO Report Concerning the 2000 Census............................   238
History of the ACS...............................................   246
Local Update of Census Addresses.................................   256
Long Form in Rural Areas.........................................   248
Opening Statement of Dr. Prewitt.................................   212
Polling Data.....................................................   247
Prepared Statement of Dr. Prewitt................................   215
Privacy Concerns..........................................244, 254, 262
Proxy Rates......................................................   237
Reprogramming of Census Funds....................................   253
Response Rate....................................................   250
Restoration of FY 1999 Operating Levels..........................   258
Voluntary Census.................................................   242

                   UNITED STATES TRADE REPRESENTATIVE

Agriculture Trade................................................   106
Biography of Ambassador Charlene Barshefsky......................    88
Citrus Trade.....................................................   104
Film Production Industry Incentives..............................   103
Intellectual Property............................................   111
Permanent Normal Trade Relations with China......................    98
Questions from Rep. Miller.......................................   117
Questions from Rep. Mollohan.....................................   124
Seattle WTO......................................................   110
Sugar Trade......................................................   104
Testimony of Ambassador Charlene Barshefsky......................    56
Trade Deficit....................................................    94
Trade Monitoring and Enforcement.................................   102
Trade with Japan and China.......................................    95
WTO Transparency.................................................   112

                         DEPARTMENT OF COMMERCE

                         Secretary of Commerce

Advanced Technology Program......................................    37
Apple Juice Dumping..............................................    34
Biography of Secretary Daley.....................................    13
Broadband........................................................    29
Census Bureau....................................................    30
China's Accession to the WTO.....................................    20
Coastal Zone Management..........................................    37
Decennial Census.................................................22, 31
Digital Divide...................................................    19
Economic Development Administration..............................    38
Ergonomics.......................................................    40
Fisheries Fees...................................................    37
Free Trade.......................................................    38
Home Internet Access Program.................................21, 29, 35
International Commercial Infrastructure Development..............    29
National Oceanic and Atmospheric Administration..................    36
Navigation Fees..................................................    36
OSHA.............................................................    40
Pacific Coastal Salmon...........................................    37
Questions Submitted by Congressman Obey..........................    43
Questions Submitted by Congressman Regula........................    41
Questions Submitted by Congresswoman Roybal-Allard...............    48
Statement of Secretary William M. Daley..........................     5
Taxing the Internet..............................................    32
Trade With China.................................................    35
Two-Number Census................................................    16